This is the Day-29 questions of the CAF Revision plan for prelims. The questions are based on the syllabus as provided in the schedule. Aspirants are requested to go through the detailed CAF strategy to understand the need of the UPSC prelims and to prepare well for the same. Attempt the questions honestly. The link to key answers and explanations of this test is at the end of the questions. The maximum time to attempt the 15 questions is 20 minutes.
Q.1) India’s external debt is in different currencies. Arrange the following in decreasing order of their share.
- US dollar
- Indian rupee
- SDR
- Japanese Yen
Choose the correct answers from the codes given below
(a) 1-2-3-4
(b) 2-3-1-4
(c) 1-2-4-3
(d) 1-3-2-4
Q.2) Which of the following has/have occurred in India after its liberalization of economic policies in 1991?
- Share of agriculture in GDP increased enormously.
- Share of India’s exports in world trade increased.
- FDI inflows increased.
- India’s foreign exchange reserves increased enormously.
Select the correct answer using the codes given below:
(a) 1 and 4 only
(b) 2, 3 and 4 only
(c) 2 and 3 only
(d) 1,2, 3 and 4
Q.3) Which of the following best describes the term “import cover”, sometimes seen in the news?
(a) It is the ratio of value of imports to the Gross Domestic product of a country
(b) It is the total value of imports of a country in a year.
(c) It is the ratio between the value of exports and that of imports between two countries
(d)It is the number of months of imports that could be paid for by a country’s international reserves
Q.4) ‘Broad-based Trade and Investment Agreement (BTIA)’ is sometimes seen in the news in the context of negotiations held between India and
(a) European Union
(b) Gulf Cooperation Council
(c) Organization for Economic Cooperation and Development
(d) Shanghai Cooperation Organization
Q.5) Consider the following statements:
- India has ratified the Trade Facilitation Agreement (TFA) of WTO.
- TFA is a part of WTO’s Bali Ministerial Package of 2013.
- TFA came into force in January 2016.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) 1,2 and 3
Q.6) Invisible trade is a trade
(a) Of corporate and financial institutions with government
(b) Of government with public institutions
(c) Of government with other countries
(d) Of the services like the banks, marine companies and shipping companies.
Q.7) ‘Terms of trade’ between agriculture and industry has reference to
(a) Relative price movements between the two sectors
(b) Relative quantities of production in the two sectors
(c) The extent of trade existent between the two sectors
(d) Relative international valuation of the agricultural produce in contrast to the industrial produce
Q.8) Devaluation of a currency means
(a) reduction in the value of a currency vis-a-vis major internationally traded currencies
(b) permitting the currency to seek its worth in the international market
(c) fixing the value of the currency in conjunction with the movement in the value of a basket of predetermined currencies
(d) fixing the value of a currency in multilateral consultation with the IMF, the World Bank and major trading partners
Q.9) The price of any currency in international market is decided by the
- Demand for goods/services provided by the country concerned.
- Stability of the government of the concerned country.
- World Bank
- Economic potential of the country in question.
Select the correct answer using the codes given below:
a) 1, 2 and 3 only
b) 3 and 4 only
c) 1 and 2 only
d) 1, 2, 3 and 4
Q.10) Which one of the following groups of items is included in India’s foreign exchange reserves?
a) Foreign currency assets, gold holdings of the RBI and loans from the World Bank.
b) Foreign-currency assets, Special Drawing Rights (SDRs) and loans from foreign countries.
c) Foreign-currency assets, loans from the World Bank and SDRs.
d) Foreign-currency assets, gold holdings of the RBI and SDRs.
Q.11) If there is Current Account Deficit (CAD) and fiscal deficit in an economy, then ideally
a) Investment in the economy should be equal to domestic savings.
b) Savings will naturally be much greater than investment in the economy.
c) Savings will be lesser than gross investment in the economy.
d) Investment will be equal to the total amount of capital goods and infrastructure created in the economy.
Q.12) The widening of the CAD was primarily on account of a higher trade deficit brought about by a larger increase in merchandise imports relative to exports. Which of the following are main constituents for rise in CAD?
- Gold
- Petroleum oil
- IT/BPO
Choose the correct answers from the codes given below
(a) 1 and 2
(b) 1 and 3
(c) 2 and 3
(d) 1, 2 and 3
Q.13) Which of the following is/are the components of trade balance?
- Trade in goods
- Trade in services
- Net transfers
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 1 only
(c) 2 and 3 only
(d) 1, 2 and 3 only
Q.14) Which of the following best describes tariff and non-tariff barriers?
(a) Tariff is a tax on imports and exports whereas non-tariff is free entry of goods.
(b) Tariff is a general restriction on imports and exports whereas non-tariff is a tax on listed goods and services.
(c) Tariff is a tax on imports and exports whereas non-tariff is a form of non-tax restrictions on trade.
(d) Tariff is for country’s internal trade whereas non-tariff is for international trade.
Q.15) Which of the following is/are component of balance of payments account?
- The Current account
- The Capital accounts
- Errors and omissions
- Open market operations
Choose the correct answers from the codes given below
(a) 1, 2 and 3 only
(b) 2, 3, and 4 only
(c) 1, 2 and 4 only
(d) All the above