IAS Prelims Test Series 2021 Practice Test 21

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Practice Test 21

Q.1) what best describes the policy of “Pump Priming”?

  1. Policy of increasing tax and increasing government expenditure
  2. Policy of lowering tax and increasing government expenditure
  3. Policy of increasing tax and lowering government expenditure
  4. Policy of lowering tax and lowering government expenditure

Q.2) Consider the following medium of money supply:

  1. Currency with public
  2. Demand deposits with Commercial banks
  3. Time deposits with Commercial banks
  4. Demand deposits with Post Office Saving Bank
  5. Time deposits with Post Office Saving Bank

Which of the given medium is included in M3 indicator, usually known as Aggregate Money Supply?

  1. 1 and 2 only
  2. 1, 2 and 3 only
  3. 1, 2 and 4 only
  4. 1, 2, 3, 4 and 5

Q.3) Which of the following is likely to happen, when RBI will increase Statuary Liquidity Ratio by 50 basis point?

  1. It may drastically increase the liquidity to the banking system.
  2. India’s GDP growth rate falls drastically.
  3. Foreign Institutional Investor may take more capital out from country.
  4. Scheduled Commercial Banks may increase their Lending rates.

Q.4) ‘Financial Stability Report’, which outlines the risks to financial stability as well as the resilience of the financial system in the contemporary context, is released by –

  1. Ministry of Finance
  2. Ministry of Commerce
  3. Reserve Bank of India
  4. None of the above

Q.5) Consider the following pairs:

(Committee) : : (Associated with)

  1. Arvind Mayaram Committee : : FDI liberalizations
  2. Tarapore committee : : Capital account convertibility
  3. N K Singh committee : : Fiscal Responsibility and Budget Management (FRBM) review

Which of the pairs given above is/are correct?

  1. 1 and 2
  2. 2 and 3
  3. 1 only
  4. 1, 2 and 3

Q.6) Consider the following statements

  1. Monetary policy deals with supply of money in the market and it is handled by Finance ministry at the centre.
  2. Fiscal policy deals with financing the needs of the nation, it is carried out by central Bank i.e., RBI.

Choose the correct statement/s using the codes given below:

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Q.7) In which of the following situation would a contractionary fiscal policy be adopted?

  1. Hyper-inflation
  2. Galloping inflation
  3. Recession
  4. Economic boom

Choose the correct answer using the codes given below

  1. 2 and 4 only
  2. 1 and 3 only
  3. 1, 2 and 4 only
  4. All of the above

Q.8) Match the following statements with the related terms given below:

DescriptionMonetary Policy tool
1.     It is rate at which scheduled banks can borrow funds overnight from RBI against government securities.A.     Reverse Repo Rate
2.     It is the amount that banks have to maintain a stipulated proportion of their net demand and time liabilities (NDTL) in form of liquid assets.B.     Repo Rate
3.     It is amount of funds that banks have to keep with RBI.C.     Marginal Standing Facility (MSF) Rate
4.     It is rate at which banks lend funds to RBI.D.     Cash Reserve Ratio (CRR)
E.     Statutory Liquidity Ratio (SLR)

Select the correct answer using the following codes:

  1. 1-E; 2-C; 3-B; 4-A
  2. 1-E; 2-C; 3-A; 4-B
  3. 1-C; 2-E; 3-D; 4-A
  4. 1-C; 2-E; 3-D; 4-B

Q.9) Which of the following measures would result in an increase in the money supply in the economy?

  1. Purchase of government securities by the Central Bank
  2. Deposit of currency in the commercial bank
  3. Increasing reverse repo rate by the central bank
  4. Sale of government securities to the public by the Central Bank

Select the correct answer using the codes given below:

  1. 1 only
  2. 2 and 4 only
  3. 1 and 3 only
  4. 2, 3 and 4

Q.10) Consider the following statements with respect to Core Inflation:

  1. Core inflation excludes food and fuel components while calculating inflation.
  2. Food and energy prices are exempt from this calculation because their prices can be too volatile or fluctuate wildly.

Which of the above statement is/are correct?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Q.11) Consider the following statements with reference to their definition:

  1. Deflation: is a situation in which the rate of inflation falls over a period of time.
  2. Disinflation: is when the overall price level in the economy falls for a period of time.
  3. Headline inflation: it demonstrates overall inflation in the economy

Which of the above statement is/are correct?

  1. 1 and 3 only
  2. 2 and 3 only
  3. 1 and 2 only
  4. 3 only

Q.12) Consider the following statements about Open Market Operations of Reserve Bank of India:

  1. RBI buying Government Security means money supply will decrease in the market.
  2. RBI selling Government Security means money supply will increase in the market.

Choose the correct answer from given options below:

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Q.13) Consider the following statements regarding the Long-Term Repo Operation (LTRO):

  1. LTRO offers lower interest rate as compared to Bank rate.
  2. Only government securities are accepted as collateral.
  3. Corporate bond market will get boost from LTRO operations.

Which of the statements given above is/are correct?

  1. 1 only
  2. 1 and 2 only
  3. 2 and 3 only
  4. All of the above

Q.14) When inflation or ‘inflation expectation’ in the economy is high, RBI tries to keep the policy rate at a higher level to:

  1. Lower the money circulation in the economy.
  2. Lower the economic activity in economy.
  3. Lower the purchasing power parity.
  4. Lower the purchasing power of money.

Select the correct option:

  1. 1, 2 and 4 only
  2. 1, 3 and 4 only
  3. 1 and 4 only
  4. 1 only

Q.15) Which of the following is/are the implication of inflation?

  1. Money loses value
  2. Consumer’s purchasing power gets eroded
  3. Exports price more and imports cost less

Select the correct option:

  1. 1 only
  2. 1 and 2 only
  3. 1 and 3 only
  4. All of the above

Q.16) Consider the following statements about Price Index:

  1. Consumer Price Index (All India) is released by National Statistical Office.
  2. Weight of Household goods & Services is less than weight of food and beverages.
  3. Core CPI is Headline CPI minus inflation in food & energy.

Which of the above statements is/are correct?

  1. 1 and 2 only
  2. 1 only 3 only
  3. 2 and 3 only
  4. 1, 2 and 3

Q.17) Which of the following will cause cost push inflation?

  1. Increase in the price of oil
  2. Lockdown during COVID-19 and shutting of factories.
  3. Locust attack and large-scale damage to the crops.
  4. Implementation of 7th pay commission.

Select the correct option:

  1. 1 and 2 only
  2. 1, 2 and 3 only
  3. 1, 3 and 4 only
  4. All of the above

Q.18) Consider the following statements:

  1. Lending institutions raise the interest rate during inflation.
  2. Inflation is advantageous to borrowers and loss to lenders.

Choose the correct answer using the codes given below:

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. None of the above

Q.19) Which of the following are fiscal measures to combat inflation?

  1. Credit control
  2. Increase in Taxes
  3. Public debt
  4. Demonetization of currency

Choose the correct answer using the codes given below:

  1. 2 and 4 only
  2. 2 and 3 only
  3. 2, 3 and 4 only
  4. All of the above

Q.20) Consider the following statements:

  1. The GDP deflator measures the prices of all goods and services produced, unlike the CPI which measures the prices of only the goods and services bought by consumers.
  2. The GDP deflator includes only domestically produced goods.

Choose the correct answer using the codes given below:

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. None of the above

Q.21) With reference to G20, consider the following statements:

  1. Its members account for more than 80% of world GDP.
  2. One of its objectives is to create a new international financial architecture.
  3. Its permanent secretariat located in Geneva, Switzerland.

Which of the statements given above is/are correct?

  1. 1 only
  2. 1 and 2 only
  3. 2 and 3 only
  4. 1, 2 and 3

Q.22) The Great Barrington Declaration often seen in news is related to which of the following?

  1. Implementation of Paris Agreement on Climate Change
  2. An alternative approach to the COVID-19 pandemic
  3. Establish rule based global governance
  4. Prevent and reduce plastic pollution to protect marine biodiversity

Q.23) The technology of desalination plant has been experimented in which of the following States of India?

  1. Kerala
  2. Gujarat
  3. Tamil Nadu
  4. Maharashtra
  5. Karnataka

Select the correct answer using the code given below:

  1. 1, 3 and 4 only
  2. 3, 4 and 5 only
  3. 2, 3 and 4 only
  4. 1, 2, 3 and 5 only

Q.24) Consider the following pairs:

Marine Protected AreaOcean associated
1.     Ross seaSouthern Ocean
2.     Phoenix IslandsPacific Ocean
3.     Tristan da CunhaIndian Ocean

Which of the pairs given above are correctly matched?

  1. 1 and 2 only
  2. 3 only
  3. 2 and 3 only
  4. 1, 2 and 3

Q.25) Which of the following sectors are included in Production-Linked Incentive (PLI) Scheme for enhancing India’s manufacturing capabilities?

  1. Telecom and Networking Products
  2. Automobiles Components
  3. Food products
  4. Speciality Steel

Select the correct answer using the code given below:

  1. 1, 2 and 3 only
  2. 1, 2 and 4 only
  3. 2, 3 and 4 only
  4. 1, 2, 3 and 4

Q.26) Match the following technologies in Drinking Water and Sanitation which were recommended recently by the Technical Committee:

MethodsTechnology
1.     A solar energy based water treatment plant based on ultra-filtrationA.     Johkasou technology
2.     An inbuilt sewage and Kitchen and bath water treatment systemB.     FBTec
3.     An Internet of things (IoT) based electric vehicleC.     GrundfosAQpure
4.     A decentralised sewage treatment system using fixed filter mediaD.     Janajal Water on Wheel

Select the correct answer using the code given below:

  1. 1 – A; 2 – C; 3 – D; 4 – B
  2. 1 – A; 2 – C; 3 – B; 4 – D
  3. 1 – C; 2 – A; 3 – D; 4 – B
  4. 1 – C; 2 – A; 3 – B; 4 – D

Q.27) Which of the following State government passed a resolution to recognise Sarna religion and include it as a separate code in the Census of 2021?

  1. Orissa
  2. Chhattisgarh
  3. Rajasthan
  4. Jharkhand

Q.28) With reference to M dwarfs consider the following statements:

  1. These are the stars that have masses more than 50 percent of the Sun’s mass.
  2. More than 70 percent of all stars in our Galaxy are M dwarfs.
  3. These are often referred to as “failed stars”.

Which of the statements given above is/are correct?

  1. 1 and 3 only
  2. 2 only
  3. 2 and 3 only
  4. 1, 2 and 3

Q.29) Which of the following is the first country in the world to make period products free for all?

  1. Ireland
  2. Costa Rica
  3. Scotland
  4. Norway

Q.30) The Commission for Air Quality Management (CAQM) replaces which of the following organisation?

  1. National Green Tribunal (NGT)
  2. Environment Pollution Prevention and Control Authority (EPCA)
  3. Central Pollution Control Board (CPCB)
  4. Centre for Science and Environment (CSE)

Directions for the following 3 (three) questions:

Read the following passage and answer the questions that follow. Your answer to these questions should be based on passage only.

Ani Di, our Manav Sadhna family member from UK, had been mentoring and guiding our lovely Paryavaran Mitra sisters on the values of life such as kindness, gratitude etc.

Last two Saturday Specials, she planted the seeds of ‘Joy of giving’ within the sisters. The experiment was very simple. Rs.50 was gifted to each sister and they were humbly asked to spend it in a thoughtful manner trying to bring smile on the faces around us. Idea was to make ourselves aware of the feeling we go through when we do something for someone with selfless intention. It could simply be spending time with someone, sharing something with someone. Sisters were given a week time to implement this experiment.

One of our sisters Laxmiben fed cows buying fresh grass from this amount while Muriben got 50 toffees and treated every kid coming her way. Ratanben made shira/halwa(Indian sweet which is luxury for our sisters) for feeding the street dog while Mogiben got another sweets for the kids of our pre-school. All were excited and proud to share their joyful experience.

The underlying learning we all had was that practicing the Joy of giving makes our soul happier and healthier.

Q.31) According to the passage, what is the only thing needed to practice ‘Joy of Giving’?

  1. Intention
  2. Money
  3. Time
  4. None of these

Q.32) What is the underlying learning from the experiment of ‘Joy of Giving’?

  1. It makes the person at the receiving end happy and satisfied.
  2. The soul of the person practicing these acts is happier and healthier.
  3. Everyone loves the act of giving and feel happy about it.

Which of the following options is/are correct?

  1. Only 1
  2. Both 1 and 2
  3. Both 2 and 3
  4. All of these

Q.33) Is it important to practice the Joy of Giving with a selfless intention?

  1. Yes
  2. No
  3. Not sure
  4. None of these

Q.34) What is the area of the shaded portion if each side of the square measures 21 cm?

  1. 86.5 cm2
  2. 102 cm2
  3. 94.5 cm2
  4. 81.5 cm2

Q.35) The price of sugar is increased by 20%. By what percentage must one cut down on the consumption of sugar, so that no extra amount has to be incurred on sugar?

  1. 14(1/3)%
  2. 16(2/3)%
  3. 18%
  4. 19(1/3)%

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