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TEST - 11

User Name :

chandan paswan

Total Marks :

200

Mark Scored :

-2

IA

1 How can two nations with the same money supply have different Gross Domestic
Product (GDP)?
1. Circulation of the same money supply happens differently in both economies.
2. Labour productivity can be different in the two economies.
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer : C
Correct Answer : C
Answer Justification :

TS

Justification:Statement 1: Suppose money is ideally sitting in an economy and does


not changes hands. It does not generate any output then! A nation that circulates
money more, i.e. where money changes more hands will have greater economic
activity, and where it is lesser will have lesser economic activity and lesser GDP.
So, 1 is correct.

The concept is called velocity of money.

Statement 2: Even if circulation of money becomes the same, how much the same
unity of labour produces in the two economies can be different. A low skilled
economy will not generate higher outputs, whereas a high skill base will generate
more output with the same money wages. So, 2 is also correct.

IN
SI

Q Source: Improvisation: Page 10: Chapter 2: 12th Macroeconomics NCERT

2 As per Classical Economic thought, if the buyers and sellers in each market take their
decisions following only their own self-interest, then which of these follow?
A. Market will inevitably fail
B. Markets will need to be corrected by government intervention.
C. There will be need of an effective regulator.
D. Markets will function well.
User Answer : C
Correct Answer : D
Answer Justification :
Justification: Classical thought is also known as the non-interventionist school.
As per them, markets function best without government interference. So, (b) is

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TEST - 11

User Name :

chandan paswan

Total Marks

200

Mark Scored

-2

wrong.
Similarly, (c) will also be wrong.

Classical economists observe that markets generally regulate themselves, when free
of coercion. Adam Smith referred to this as a metaphorical "invisible hand," which
moves markets toward their natural equilibrium. So, (d) is correct and (a) incorrect.

IA

Learning:In contrast to classical economics, Keynesian economics supports policies


such as government intervention, deficit spending, control of the money supply, and
a progressive income tax to counter recession and income inequality.
Most classical economists reject these ideas. They assert that state intervention
makes situations of economic slowdown worse.

TS

Q Source:Page 5: Chapter 1: 12th Macroeconomics NCERT

3 Which of the following statements is correct about how Francois Bernier describes India?
A. A bleak situation in comparison to developments in Europe.
B. A land of high spiritual and scientific intelligence
C. A land of astounding beauty and natural resources
D. A highly affluent society integrated with the world
User Answer : A
Correct Answer : A
Answer Justification :

IN
SI

Learning:Francois Bernier, a Frenchman, was a doctor, political philosopher and


historian. Like many others, he came to the Mughal Empire in search of
opportunities.
Bernier often travelled with the army.
In virtually every instance Bernier described what he saw in India as a bleak
situation in comparison to developments in Europe.
Q Source:Page 122: Chapter 5: Themes in Indian History- II: 12th NCERT

4 It is theorized that over the long run exchange rates between any two national currencies
adjust to reflect differences in the price levels in the two countries. The theory would
become invalid when

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TEST - 11

User Name :

chandan paswan

Total Marks :

200

Mark Scored :

-2

IA

1. There are barriers to trade and investment.


2. There is difference in productivity of labour and capital between nations.
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer :
Correct Answer : C
Answer Justification :

Justification: When trade happens without barriers, market forces start operating
across national borders.

TS

People would import only the cheapest commodities (assuming quality is same
everywhere), and only that nation will export which produces it cheapest. Exports
from all other nations will come to zero.

Gradually all nations will export the commodities of their comparative advantage
(e.g. Gems and Jewelleries from India) and import those of their least comparative
advantage (e.g. handicrafts imported by USA).

Slowly the exchange rates start converging, and reflect only the difference in prices
between nations, as hypothesized by the Purchasing Power Parity (PPP) theory.

IN
SI

Q Source: Page 82: Chapter 6: 12th Macroeconomics NCERT


5 GDP deflator is a measure of
A. Level of prices in the economy
B. International competitiveness of the domestic sector
C. Industrial activity in the economy
D. Depreciation of production assets
User Answer : B
Correct Answer : A
Answer Justification :
Justification: It is the ratio of the value of goods and services an economy produces
in a particular year at current prices to that at prices prevailing during any other
reference (base) year.
This ratio basically shows to what extent an increase in GDP or gross value added

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User Name :

chandan paswan

Total Marks

200

Mark Scored

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(GVA) in an economy has happened on account of higher prices, rather than


increased output.
Since the deflator covers the entire range of goods and services produced in the
economy - as against the limited commodity baskets for the wholesale or consumer
price indices - it is seen as a more comprehensive measure of inflation.

IA

Option (b): While level of inflation in an economy may show its international
competitiveness, this is not why GDP deflator is used. Moreover, the ration of real
and nominal GDP does not make much sense for international players as much the
actual price level does. Inflation may be high in an economy, yet it may be highly
competitive internationally due to low base prices of goods. So, (b) will be wrong.

TS

Q Source: Page 28: Chapter 2: 12th Macroeconomics NCERT

IN
SI

6 A country will necessarily be economically developed if


1. It has large reserves of natural resources.
2. It has a large base of working age population.
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer : C
Correct Answer : D
Answer Justification :

Justification: Statement 1: The resource rich Africa and Latin America have some
of the poorest countries in the world, whereas many prosperous countries have
scarcely any natural wealth.
The economic wealth, or well-being, of a country thus does not necessarily depend
on the mere possession of resources; it is how these resources are used in generating
a flow of production and how, as a consequence, income and wealth are generated
from that process.
So, 1 will be incorrect.
Statement 2: It is called as demographic dividend, but its fruition depends on how
skilled, healthy and well-managed is the labour force. India is a well known case.

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TEST - 11

User Name :

chandan paswan

Total Marks :

200

Mark Scored :

-2

Q Source: Page 10: Chapter 2: 12th Macroeconomics NCERT

IA

7 Lingayats do not practise funerary rites prescribed in the Dharmashastras because they
believed
A. Funerary rites lead to environmental pollution.
B. After death a devotee will not return to this world.
C. Funerary rites are not needed as the soul will take another birth soon.
D. It was a Brahmanical practice and they opposed its domination.
User Answer : D
Correct Answer : B
Answer Justification :

TS

Justification: Lingayats believe that on death the devotee will be united with Shiva
and will not return to this world. Therefore they do not practise funerary rites such
as cremation, prescribed in the Dharmashastras. Instead, they ceremonially bury
their dead.

Learning: The twelfth century witnessed the emergence of a new movement in


Karnataka, led by a Brahmana named Basavanna (1106-68) who was initially a
Jaina and a minister in the court of a Chalukya king. His followers were known as
Virashaivas (heroes of Shiva) or Lingayats (wearers of the linga).

The Lingayats challenged the idea of caste and the "pollution" attributed to certain
groups by Brahmanas. They also questioned the theory of rebirth

IN
SI

Q Source: Page 147: Chapter 6: Themes in Indian History - II: 12th NCERT
8 An economy generally sacrifices consumption goods in order to produce more capital
goods. Why is it done?
1. To generate long-term growth
2. To avoid inflationary situations
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer :
Correct Answer : C
Answer Justification :

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TEST - 11

User Name :

chandan paswan

Total Marks

200

Mark Scored

-2

Justification: Statement 1 & 2: Capital goods are tools, implements and machines
etc that make production of consumption goods like furniture possible.
Since resources are limited in an economy, they can either be channelized for
immediate consumption or immediate investment to feed long-term consumption.

IA

If they are channelized for immediate consumption (i.e. say we are producing more
aerated drinks but not drink making machines), a time would come when demand
would overshoot supply and economic stagnation would follow.
If however, a balance is maintained by sacrificing some consumption goods to
produce more capital goods, we can have more aerated drinks in the future as there
will be more machines to fulfil demand.

TS

Only this generates long-term growth. This is why the RBI Governor has prescribed
moving from consumption spending to investment spending for the Indian economy.
Q Source: Page 11-12: Chapter 2: 12th Macroeconomics NCERT

IN
SI

9 Why RBI is called as the 'lender of last resort'?


A. If commercial banks refuse to give loan to a poor, he can always turn to RBI
for approval.
B. It acts as a guarantor for banks and extends loans to ensure the solvency of
the latter.
C. All heavy infrastructure projects that cannot be financed by individual banks
are financed by the RBI.
D. It is the last agency to assess the credit worthiness of borrowers.
User Answer :
Correct Answer : B
Answer Justification :
Learning: The total amount of deposits held by all commercial banks in the country
is much larger than the total size of their reserves.
So, if all the account-holders of all commercial banks in the country want their
deposits back at the same time, the banks will not have enough means to satisfy the
need of every accountholder and there will be bank failures.
The Reserve Bank of India plays a crucial role here. In case of a crisis like the above
it stands by the commercial banks as a guarantor and extends loans to ensure the
solvency of the latter.

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TEST - 11

User Name :

chandan paswan

Total Marks :

200

Mark Scored :

-2

This system of guarantee assures individual account-holders that their banks will be
able to pay their money back in case of a crisis and there is no need to panic thus
avoiding bank runs.
This role of the monetary authority is known as the lender of last resort.

Q Source: Page 45: Chapter 3: 12th Macroeconomics NCERT

TS

IA

10 Which of the following reduce accumulation of capital stock in the economy?


1. Depreciation of assets
2. Spending on infrastructure rather than capacity building of financial institutions
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer :
Correct Answer : A
Answer Justification :

Justification: Statement 1: Depreciation is the gradual decrease in the economic


value of the capital stock of a firm, nation or other entity.

IN
SI

It can happen either by physical depreciation like wear and tear or obsolescence or
by changes in the demand for the services of the capital in question. So, 1 is correct.
Statement 2: Capital stock is anything that adds to the productive capacity of the
economy. Spending on infrastructure actually increase the capital stock of the
nation. So, 2 is wrong.
Q Source: Page 11: Chapter 2: 12th Macroeconomics NCERT

11 "The lotus which blooms without flower" or the "Fire raging in the ocean" were terms
used by the Kabir to describe
A. Socio-economic status of India
B. Efforts towards religious reforms in India
C. Nature of the Ultimate Reality
D. Poetical nature of Bhakti literature produced in India
User Answer : D
Correct Answer : C

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User Name :

chandan paswan

Total Marks

200

Mark Scored

-2

Answer Justification :
Learning: Some of Kabir's poems are known as ulatbansi (upside-down sayings),
are written in a form in which everyday meanings are inverted.

These hint at the difficulties of capturing the nature of the Ultimate Reality in
words: expressions such as "the lotus which blooms without flower" or the "fire
raging in the ocean" convey a sense of Kabir's mystical experiences.

IA

He also used terms drawn from Vedantic traditions, alakh (the unseen), nirakar
(formless), Brahman, Atman, etc. Other terms with mystical connotations such as
shabda (sound) or shunya (emptiness) were drawn from yogic traditions.

TS

Q Source: Page 161: Chapter 6: Themes in Indian History- II: 12th NCERT

12 The term 'Base Effect' is often used while discussing inflationary trends in the Indian
economy. It refers to
A. Segment wise inflation trends
B. Cost push inflation
C. Demand pull inflation
D. None of the above
User Answer :
Correct Answer : D
Answer Justification :

IN
SI

Learning: The base effect refers to the impact of the rise in price level (i.e. last
year's inflation) in the previous year over the corresponding rise in price levels in the
current year (i.e., current inflation): if the price index had risen at a high rate in the
corresponding period of the previous year leading to a high inflation rate, some of
the potential rise is already factored in, therefore a similar absolute increase in the
Price index in the current year will lead to a relatively lower inflation rates.
On the other hand, if the inflation rate was too low in the corresponding period of
the previous year, even a relatively smaller rise in the Price Index will arithmetically
give a high rate of current inflation.
Q Source: Often appears in Business news and Economic Surveys

13 Why do policymakers stress on high savings rate in the Indian economy?


1. Investments are financed by savings.

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TEST - 11

User Name :

chandan paswan

Total Marks :

200

Mark Scored :

-2

IA

2. Saving discourages inflation causing consumption expenditure.


Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer : A
Correct Answer : C
Answer Justification :

Justification: The basic macroeconomic identity that one should know is:
C+S+T = C+I+G.... (i)

So, S+T=I+G..... (ii)

TS

Here C is consumption, S is savings, T is taxes, I is investment and G is government


spending.

Any increase in investments can either be financed by high savings or high taxes.
So, 1 is correct.

Also, in equation (i), total income = C+S+T. When S increases C will decrease also
controlling inflationary trends in the economy.

IN
SI

Q Source: Improvisation: Page 25: Chapter 2: 12th Macroeconomics NCERT


14 Revenue expenditure consists of all those expenditures of the government which
A. Generally do not result in creation of physical or financial assets
B. Generally are withdrawn from the Public Accounts Fund of India
C. Tackle special contingencies and exigencies of the government departments
D. Help in implementation of new projects of the Government
User Answer :
Correct Answer : A
Answer Justification :
Learning: Revenue expenditure consists of all those expenditures of the
government which do not result in creation of physical or financial assets.
It relates to those expenses incurred for the normal functioning of the government
departments and various services, interest payments on debt incurred by the

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User Name :

chandan paswan

Total Marks

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Mark Scored

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government, and grants given to state governments and other parties (even though
some of the grants may be meant for creation of assets).
Q Source: Page 64: Chapter 5: 12th Macroeconomics NCERT

TS

IA

15 The amara-nayaka system was a major political innovation of the Vijayanagara Empire.
The amara-nayakas were
A. Military commanders who were given territories to govern
B. Chiefs of major municipalities
C. Peasants who were made independent cultivators in order to encourage
greater loyalty to the crown
D. Independent spy advisors to the King
User Answer :
Correct Answer : A
Answer Justification :
Learning: Amara-nayakas collected taxes and other dues from peasants,
craftspersons and traders in the area.

They retained part of the revenue for personal use and for maintaining a stipulated
contingent of horses and elephants.

These contingents provided the Vijayanagara kings with an effective fighting force
with which they brought the entire southern peninsula under their control.

IN
SI

The amara-nayakas sent tribute to the king annually and personally appeared in the
royal court with gifts to express their loyalty.
Q Source: Page 175: Chapter 7: Themes in Indian History- II: 12th NCERT

16 The term 'factor cost' is often used in the estimation of national income. It is
A. Final market price of goods and services
B. Total Subsidies and taxes levied on factors
C. Total concessions given to units of production
D. None of the above
User Answer :
Correct Answer : D
Answer Justification :
Learning: Factor Cost or Factor Income are the incomes received by the owners of

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User Name :

chandan paswan

Total Marks :

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Mark Scored :

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the production (the households) for rendering their factor services to the producers.
It is a measure of national income or output based on the cost of factors of
production, instead of market prices.

This allows the effect of any subsidy or indirect tax to be removed from the final
measure.

IA

Q Source: Page 26: Chapter 2: 12th Macroeconomics NCERT

TS

17 If Gross Domestic Product (GDP) at market prices is growing at 5% every year, what
does it necessarily imply?
1. Manufacturing activity must be growing nearly 5% annually.
2. Total volume of goods and services produced must be growing at 5% annually.
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer : B
Correct Answer : D
Answer Justification :

IN
SI

Justification: GDP at market prices calculates total value of goods and services
produced within a year at market prices, and not at their actual cost of production.
So, even if only prices increased by 5% for all final goods and services produced,
GDP will increase by 5% without any 'real' increase in production
So, both 1 and 2 are incorrect.
Q Source: Page 28: Chapter 2: 12th Macroeconomics NCERT

18 If both the Consumer Price Index (CPI) and Wholesale Price Index (WPI) increased by
more than 10% within an year then
1. Prices of all goods and services musts have increased by more than 10% within a
year.
2. Labour wages must have increased by more than 10% within a year.
Which of the above is/are correct?
A. 1 only

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TEST - 11

User Name :

chandan paswan

Total Marks

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Mark Scored

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B. 2 only
C. Both 1 and 2
D. None
User Answer : A
Correct Answer : D
Answer Justification :

IA

Justification:CPI and WPI do not capture increase in prices of all goods and
services in the economy.

So, 1 will be wrong as prices of only sample (representative goods) may have
increase leaving the prices of other goods and services constant.
GDP deflator takes into account all such goods and services.

TS

CPI and WPI do not capture growth in labour wages. Even the CPI for workers
captures inflation in items consumed by the working class and not wages per se. So,
2 would be wrong.

Q Source: Page 28-29: Chapter 2: 12th Macroeconomics NCERT

IN
SI

19 The Mansabdari system was introduced by Akbar. What did 'Mansab' of an officer
imply in the system?
1. Salary of the officer
2. Land granted to the Officer
3. Number of soldiers maintained by the officer
Select the correct answer using the codes below.
A. 1 and 2 only
B. 1 and 3 only
C. 3 only
D. 1, 2 and 3
User Answer : C
Correct Answer : B
Answer Justification :
Learning: The word mansab is of Arabic origin meaning rank or position. The
system, hence, determined the rank of a government official.
Every civil and military officer was given a 'mansab' and different numbers which
could be divided by ten were used for ranking officers.It was also meant for fixing
the salaries and allowances of officers.

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TEST - 11

User Name :

chandan paswan

Total Marks :

200

Mark Scored :

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It was a system whereby nobles were granted the rights to hold a jagir, which meant
revenue assignments (not land itself) for services rendered by them but the authority
bestowed upon them was not unbridled but with the direct control of these nobles in
the hands of the king. So, 2 would be wrong.

Q Source: Page 214: Chapter 8: Themes in Indian History- II: 12th NCERT

TS

IA

20 In economics, the term 'Social Marginal Cost (SMC)' stands for


A. Cost incurred in use of an additional unit of physical capital
B. Total social productivity of skilled labour
C. Costs that occur to the society in addition to the producer
D. All of the above
User Answer :
Correct Answer : C
Answer Justification :

Learning: Externalities refer to the benefits (or harms) a firm or an individual


causes to another for which they are not paid (or penalised).

Firms have a private marginal cost and a social marginal cost.

The total cost to society as a whole for producing one further unit, or taking one
further action, in an economy is called as social cost.

IN
SI

This total cost of producing one extra unit of something is not simply the direct cost
borne by the producer, but also must include the costs to the external environment
and other stakeholders.
The idea of SMC is taken into account in evaluating investment projects.
Q Source: Improvisation on concept of marginal cost asked in Previous UPSC
papers: Chapter 2 (Point on Externalities): 12th Macroeconomics NCERT

21 Net factor income from abroad includes


1. Remittances
2. Foreign investment
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2

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D. None
User Answer :
Correct Answer : C
Answer Justification :

Learning: The difference between a nation's gross national product (GNP) and
gross domestic product (GDP) is called NFIA.

IA

Net foreign factor income or NFIA is the difference between the aggregate amount
that a country's citizens and companies earn abroad, and the aggregate amount that
foreign citizens and overseas companies earn in that country.
The NFIA level is generally not substantial in most nations, since factor payments
earned by their citizens and those paid to foreigners more or less offset each other.

TS

However, the NFAI's impact may be significant in smaller nations with substantial
foreign investment in relation to their economy and few assets overseas, since their
GDP will be quite high compared to GNP.

Q Source: Page 26: Chapter 2: 12th Macroeconomics NCERT

IN
SI

22 Public finance aims at which of the following objectives?


1. Allocating resources
2. Redistributing resources
3. Stabilising national income and employment
Select the correct answer using the codes below.
A. 1 and 2 only
B. 1 only
C. 2 and 3 only
D. 1, 2 and 3
User Answer :
Correct Answer : D
Answer Justification :
Justification & Learning: First, certain goods, referred to as public goods (such as
national defence, roads, government administration), as distinct from private goods
(like clothes, cars, food items), cannot be provided through the market mechanism,
i.e. by transactions between individual consumers and producers and must be
provided by the government. This is the allocation function.
Second, through its tax and expenditure policy, the government attempts to bring

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about a distribution of income that is considered 'fair' by society. The government


affects the personal disposable income of households by making transfer payments
and collecting taxes and, therefore, can alter the income distribution. This is the
distribution function.

IA

Third, the economy tends to be subject to substantial fluctuations and may suffer
from prolonged periods of unemployment or inflation. The overall level of
employment and prices in the economy depends upon the level of aggregate demand
which is a function of the spending decisions of millions of private economic agents
apart from the government.
Q Source: Page 62: Chapter 5: 12th Macroeconomics NCERT

TS

23 During a situation of low demand, what role monetary policy can play?
1. It can boost aggregate demand by printing more currency.
2. It can Increase liquidity in the market by selling bonds to the public.
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer :
Correct Answer : D
Answer Justification :

IN
SI

Justification: Printing currency does not come under monetary policy. It is a part of
fiscal policy when the government desires to borrow freshly printed money from
RBI in exchange for government securities. So, 1 is incorrect.
It will however stimulate demand.
Selling bonds to the public will actually reduce the liquidity in the market as public
now invest their savings in bonds and bills. So, 2 would not stimulate aggregate
demand and actually reduce it.
Q Source: Chapter 4: 12th Macroeconomics NCERT

24 Which of the following were the consequences of the Green Revolution in India?
1. Revival of agricultural growth
2. Self-sufficiency in food grain production

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3. End of exploitative feudal relationships all over India.


Select the correct answer using the codes below.
A. 1 and 2 only
B. 1 and 3 only
C. 2 and 3 only
D. 1, 2 and 3
User Answer :
Correct Answer : A
Answer Justification :

TEST - 11

User Name :

Justification: Statement 1: Agriculture growth, which had stagnated in the 1950s,


revived to more than 3% annually.

TS

Statement 2: India became self-sufficient in food production. Food production


increased to 159 million tonnes in the mid 1980s from meagre 50 mT in the 1950s.

Statement 3: Regions where GR was not introduced lagged behind prosperous GR


regions. These backward regions also witnessed rising inter-caste violence due to
the exploitative feudal relationships. So, it did not end from India. Statement 3 is
incorrect.

Q Source: Page 62: Chapter 4: 12th NCERT: Social Change and Development in
India

IN
SI

25 Consider the following.


1. Real GDP has increased year after year.
2. Government is continuously running a budget surplus.
The above then necessarily imply that
A. The Government is not spending on infrastructure creation.
B. The economy is suffering with very high inflation.
C. Tax yields are very low in the economy.
D. None of the above can be a correct assessment.
User Answer :
Correct Answer : D
Answer Justification :
Justification: Option (a): It is not necessary only a government running a fiscal
deficit focuses on infrastructure financing. If the Indian government radically
increases its tax collections, its can achieve both a surplus and spending on
infrastructure.

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Option (b): We cannot say. Moreover, the government is not spending excess money
and total supply in the economy is increasing.
Option (c): If tax yields were low, then a situation of budget surplus maynot be
achieved. Even if achieved, we cannot surely conclude this is the case.

TS

IA

26 Plan expenditure includes those kinds of expenditure which


A. Fall under Revenue expenditure
B. Create assets for the nation
C. Involve printing of currency
D. Generate tax expenditure
User Answer :
Correct Answer : B
Answer Justification :

Q Source: Chapter 5: 12th NCERT Macroeconomics

Learning: The following may not apply to the present situation when Planning
Commission has been abolished.

For stepping up the rate of economic development five-year plans were formulated.
The expenditure incurred on the items relating to five year plans is termed as plan
expenditure. Such expenditure is incurred by the Central Government.

IN
SI

A provision is made for such expenditure in the budget of the Central Government.
Assistance given by the Central Government to the State Governments and Union
Territories for plan purposes also forms part of the plan expenditure.
Q Source: Chapter 5: 12th NCERT Macroeconomics

27 Which of these bodies/agencies help augment human capital in India?


1. National Council of Educational Research and Training (NCERT)
2. All India Council of Technical Education (AICTE)
3. Indian Council for Medical Research (ICMR)
4. University Grants Commission (UGC)
Select the correct answer using the codes below.
A. 1 and 3 only
B. 1, 2 and 4 only
C. 2 and 4 only
D. 1, 2, 3 and 4

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TEST - 11

User Name :

chandan paswan

Total Marks

200

Mark Scored

-2

User Answer :
Correct Answer : D
Answer Justification :

Justification: The concept of human capital recognizes that not all labor is equal
and that the quality of employees can be improved by investing in them. The
education, experience and abilities of an employee have an economic value for
employers and for the economy as a whole.

IA

Education or health provided/facilitated by these bodies can significantly increase


human capital. So, all 1, 2, 3 and 4 are correct.
Q Source: Revision: 12th NCERT: Human Geography

TS

28 Why is paper money accepted as a unit of exchange?


A. It has intrinsic value.
B. It is authorized by the Central Bank as a legal tender.
C. It derives its legitimacy from conventions.
D. International Monetary Fund (IMF) authorizes the use of paper money in all
nations.
User Answer :
Correct Answer : B
Answer Justification :

IN
SI

Justification: The value of the currency notes and coins is derived from the
guarantee provided by the issuing authority of these items.
Every currency note bears on its face a promise from the Governor of RBI that if
someone produces the note to RBI, or any other commercial bank, RBI will be
responsible for giving the person purchasing power equal to the value printed on the
note.
The same is also true of coins. Currency notes and coins are therefore called fiat
money. They do not have intrinsic value like a gold or silver coin. They are also
called legal tenders as they cannot be refused by any citizen of the country for
settlement of any kind of transaction.
Q Source: Page 40: Chapter 3: 12th Macroeconomics NCERT
29 What is speculative demand of money?

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chandan paswan

Total Marks :

200

Mark Scored :

-2

A. Money that people require for immediate purchases


B. Money that is invested in long-term capital market instruments
C. Money that is saved with the households in anticipation of a crisis
D. Money which is used to buy and sell short-term market instruments
User Answer :
Correct Answer : D
Answer Justification :

IA

Learning: This is a Keynesian term. Option (a) is called transactions demand of


money.
Option (b) is not speculative demand of money as long-term investments are in
nature of savings, not speculation.

TS

Option (c) is precautionary demand of money, again a Keynesian term.


Learning: An individual may hold her wealth in the form of landed property,
bullion, bonds, money etc.

When they invest in bonds, different people have different expectations regarding
the future movements in the market rate of interest based on their private
information regarding the economy.

IN
SI

When the interest rate is very high everyone expects it to fall in future and hence
anticipates capital gains from bond-holding. Hence people convert their money into
bonds. Thus, speculative demand for money is low.
The reverse condition is true also.
Q Source: Page 40: Chapter 3: 12th Macroeconomics NCERT

30 Consider the following statements about Kashmir Stag.


1. It is the State Animal of Jammu and Kashmir.
2. Its only habitat is dense riverine forests.
3. It is listed as critically endangered by the IUCN.
Select the correct answer using the codes below.
A. 1 and 2 only
B. 1 only
C. 2 and 3 only
D. 1 and 3 only
User Answer :

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19

TEST - 11

User Name :

chandan paswan

Total Marks

200

Mark Scored

-2

Correct Answer : D
Answer Justification :
Justification: It lives in dense riverine forests, high valleys, and mountains of the
Kashmir valley and northern Chamba in Himachal Pradesh. So, 2 is wrong.

Due to habitat destruction, over-grazing by domestic livestock, and poaching they


are at threat.

IA

Hangul, the only Asiatic survivor or sub-species of the European red deer, was once
widely distributed in the mountains of Kashmir.
But, they are now scattered within 141 km of the Dachigam National Park located
on foothills of Zabarwan range on the outskirts of Srinagar.

TS

Q Source: Revision: Critically Endangered Species and State animals

31 Monetary policy becomes ineffective in stimulating demand in an economy when


A. Liquidity trap occurs.
B. Economy is operating at excess capacity.
C. The government is running a fiscal deficit.
D. Foreign Exchange Rate is stable.
User Answer :
Correct Answer : A
Answer Justification :

IN
SI

Justification: A liquidity trap occurs when low / zero interest rates fail to stimulate
consumer spending and monetary policy becomes ineffective.
In such as situation, an increase in the money supply could fail to increase spending
because interest rates can't fall further.
A liquidity trap means consumers' preference for liquid assets (cash) is greater than
the rate at which the quantity of money is growing.
So any attempt by policymakers to get individuals to hold non-liquid assets in the
form of consumption by increasing the money supply won't work.
Q Source: Page 39: Chapter 3: 12th Macroeconomics NCERT

32 Consider the following statements.

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chandan paswan

Total Marks :

200

Mark Scored :

-2

IA

1. Debtors suffer due to low inflation.


2. Lenders suffer due to high inflation.
3. Bond Holders suffer due to sudden spike of interest rates.
Select the correct answer using the codes below.
A. 1 and 2 only
B. 3 only
C. 1 only
D. 1, 2 and 3 only
User Answer :
Correct Answer : D
Answer Justification :

TEST - 11

User Name :

TS

Justification: Suppose a bank (lender) gave loan to a customer (debtor) at 10%


annual simple interest rate.
Assume inflation is at 6% right now, i.e. the value of money is eroded by 6% every
year or effective money holding reduces by 6%.

This means the real or effective interest rate (or return on loan) that the bank
receives is only 4% (10-6).
If inflation increases, real returns to banks decrease and thus 2 would be correct.

By the same logic, 1 would be correct too.

IN
SI

If interest rates spike suddenly, bonds become unattractive for bond holders. This is
because now a lower priced bond can offer the same fixed return that now their high
priced bond (purchased at promise of low interest rates) does. So, 3 is also correct.
Q Source: Page 39: Chapter 3: 12th Macroeconomics NCERT

33 Chronologically, which of these event(s) happened after the invasion of Nadir Shah?
1. Ahmad Shah Abdali defeats the Marathas in the third battle of Panipat
2. The diwani of Bengal transferred to the East India Company
3. Humayun defeated by Sher Shah
Select the correct answer using the codes below.
A. 1 and 2 only
B. 2 only
C. 1 and 3 only
D. 1, 2 and 3
User Answer :

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TEST - 11

User Name :

chandan paswan

Total Marks

200

Mark Scored

-2

Correct Answer : A
Answer Justification :

Learning: The Mughal empire had been weakened by ruinous wars of succession in
the three decades following the death of Aurangzeb, the Hindu Marathas of the
Maratha Empire had captured vast swathes of territory in Central and Northern
India, whilst many of the Mughal nobles had asserted their independence and
founded small states.

IA

Its ruler, Muhammad Shah, proved unable to stop the disintegration of the empire.

TS

The imperial court administration was corrupt and weak whereas the country was
extremely rich whilst Delhi's prosperity and prestige was still at a high. Nadir Shah,
attracted by the country's wealth, then sought plunder like so many other foreign
invaders before him.
Q Source: Page 221: Chapter 8: Themes in Indian History- II: 12th NCERT

IN
SI

34 Narrow and Broad Money is differentiated based on their


A. Issuing authority
B. Liquidity
C. Total volume of circulation
D. Convertibility to foreign exchange
User Answer :
Correct Answer : B
Answer Justification :

Justification: It is not (a) since all currency that can be classified as either narrow or
broad money is issued by the RBI.
It cannot be (d) either as whether narrow or broad money all are convertible upto
legal limits.
RBI publishes figures for four alternative measures of money supply, viz. M1, M2,
M3 and M4.
M1 is most liquid and easiest for transactions whereas M4 is least liquid of all. M3
is the most commonly used measure of money supply. It is also known as aggregate
monetary resources
Q Source: Page 40: Chapter 3: 12th Macroeconomics NCERT

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22

TEST - 11

User Name :

chandan paswan

Total Marks :

200

Mark Scored :

-2

TS

IA

35 Banks hold a part of the money people keep in their bank deposits as reserve money.
Why?
1. It is profitable for the banks to do so.
2. It is mandated by the RBI.
3. It helps avoid bank failures.
4. It is contributed to the forex reserves.
Select the correct answer using the codes below.
A. 1 and 2 only
B. 2 and 3 only
C. 1 only
D. 2, 3 and 4 only
User Answer :
Correct Answer : B
Answer Justification :
Justification: Keeping reserves is costly for banks, as, otherwise, they could lend
this balance to interest earning investment projects. So, 1 is wrong.

RBI requires commercial banks to keep reserves in order to ensure that banks have a
safe cushion of assets to draw on when account holders want to be paid. So, 2 and 3
are correct.

4 is wrong as Forex reserves are made of foreign exchange, SDR and Gold.

IN
SI

Q Source: Page 41: Chapter 3: 12th Macroeconomics NCERT


36 The zamindars held extensive personal lands - milkiyat - in Mughal India. These lands
could NOT be
1. Cultivated for the private use of zamindars
2. Sold or mortgaged at will by Zamindars
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer :
Correct Answer : D
Answer Justification :
Justification & Learning:Milkiyat lands were cultivated for the private use of
zamindars, often with the help of hired or servile labour. The zamindars could sell,

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User Name :

chandan paswan

Total Marks

200

Mark Scored

-2

bequeath or mortgage these lands at will. So, both 1 and 2 are wrong.
Zamindars also derived their power from the fact that they could often collect
revenue on behalf of the state, a service for which they were compensated
financially.

TS

IA

37 When the Statutory Liquidity Ratio (SLR) is increased


A. Banks may cut their lending rates.
B. Money circulation in the economy becomes weak.
C. Inflation will shoot up in the next quarter.
D. Banks will lend lesser funds to retail customers.
User Answer :
Correct Answer : D
Answer Justification :

Q Source:Page 211: Chapter 8: Themes in Indian History - II: 12th NCERT

Justification:Statutory Liquidity Ratio which requires the banks to maintain a given


fraction of their total demand and time deposits in the form of specified liquid
assets.

It can be in cash, gold or securities etc. Therefore, as SLR increases, banks have less
to lend.

IN
SI

Q Source:Page 41: Chapter 3: 12th Macroeconomics NCERT


38 High powered money is the
A. Total liability of the monetary authority of the country
B. Reserves kept with RBI
C. Money circulating in security markets
D. Special deposits kept with the Government of India
User Answer :
Correct Answer : A
Answer Justification :
Learning:It is also called as monetary base.
It consists of currency (notes and coins in circulation with the public and vault cash
of commercial banks) and deposits held by the Government of India and commercial
banks with RBI.

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User Name :

chandan paswan

Total Marks :

200

Mark Scored :

-2

If a member of the public produces a currency note to RBI the latter must pay her
value equal to the figure printed on the note.
Similarly, the deposits are also refundable by RBI on demand from deposit-holders.
These items are claims which the general public, government or banks have on RBI
and hence are considered to be the liability of RBI.

Q Source:Page 43: Chapter 3: 12th Macroeconomics NCERT

TS

IA

39 The word Yavana was used in India for


A. Greeks and other peoples who entered the Indian subcontinent
B. Prisoners sentenced for seditious acts
C. Messengers who visited Royal courts
D. Devadasis who performed for social service
User Answer :
Correct Answer : A
Answer Justification :

Learning:In Sanskrit sources, the usage of the words "Yona", "Yauna", "Yonaka",
"Yavana" or "Javana" etc. appears repeatedly, and particularly in relation to the
Greek kingdoms which neighbored or sometimes occupied the Punjab region over a
period of several centuries from the 4th century BCE to the first century CE.

IN
SI

Examples are the Seleucid Empire, the Greco-Bactrian Kingdom and the Indo-Greek
Kingdom.
The Yavanas are mentioned in detail in Sangam literature epics such as
Pattinappalai, describing their brisk trade with the Early Cholas in the Sangam
period.
Q Source:Page 174: Chapter 7: Themes in Indian History - II: 12th NCERT

40 If RBI undertakes Open Market Operations (OMOs), which of the following is most
likely to occur?
A. The GDP of India will suddenly increase.
B. It will alter the total money supply in the economy in the short-term.
C. Foreign Institutional Investors (FIIs) will suddenly withdraw from the Indian
markets.
D. It will immediately cut operating costs for banks.
User Answer :

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TEST - 11

User Name :

chandan paswan

Total Marks

200

Mark Scored

-2

Correct Answer : B
Answer Justification :
Justification:RBI purchases (or sells) government securities to the general public in
a bid to increase (or decrease) the stock of high powered money in the economy.

FIIs would not withdraw as OMOs concern with general public. Moreover, OMOs
only affect money supply, and not the confidence of FIIs. So, (c) will be wrong.

IA

GDP of India may increase or decrease, but that is a medium term phenomenon
about which nothing can be accurately said. (a) is not the most appropriate here.
Operating and lending costs of banks can be cut if their reserve size is reduced.
OMOs do not aim at this, and hence (d) is wrong.

TS

Q Source:Page 46: Chapter 3: 12th Macroeconomics NCERT

IN
SI

41 According to Francois Bernier, some of the fundamental differences between Mughal


India and Europe was/were
1. Lack of private property in land in Mughal India
2. Non-existent armies in Europe unlike in Mughal India
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer :
Correct Answer : A
Answer Justification :
Justification:Statement 1: Owing to crown ownership of land, argued Bernier,
landholders could not pass on their land to their children. So they were averse to any
long-term investment in the sustenance and expansion of production.
Statement 2: Strong armies existed in both Europe and Mughal India. The
organization systems were different though.
Q Source:Page 130: Chapter 5: Themes in Indian History - II: 12th NCERT
42 What is 'Paradox of Thrift'?

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TEST - 11

User Name :

chandan paswan

Total Marks :

200

Mark Scored :

-2

IA

A. Individuals save more during a recession which further depletes growth


prospects.
B. Capital not flowing from developed countries to developing countries despite
high savings in developed economies
C. Increase in economic efficiency and savings leading to reduced demand
D. If everyone tries to work during times of recession there will be even more
unemployment.
User Answer :
Correct Answer : A
Answer Justification :

TS

Learning:It states that individuals try to save more during an economic recession,
which essentially leads to a fall in aggregate demand and hence in economic growth.
Such a situation is harmful for everybody as investments give lower returns than
normal.
This theory was heavily criticized by non-Keynesian economists on the ground that
an increase in savings allows banks to lend more. This will make interest rates go
down and lead to an increase in lending and, therefore, spending.

Q Source:Page 58 (Fig 4.6): Chapter 4: 12th Macroeconomics NCERT

IN
SI

43 Public goods are always


1. Rival goods
2. Exclusive goods
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer :
Correct Answer : D
Answer Justification :
Justification:A rival good is a good whose consumption by one consumer prevents
simultaneous consumption by other consumers, for e.g. a berth on train. But, not all
public goods are rival, for e.g. defense, police security, public parks etc. So, 1 is
wrong.
Excludable goods are those for which one can at low cost prevent those who have
not paid for the good from consuming it. You can require people to pay for a stamp

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User Name :

chandan paswan

Total Marks

200

Mark Scored

-2

before you deliver mail or pay for a ticket before they board a train; you cannot
cheaply or easily prevent people from entering a park or from listening to a radio
station. So, 2 is not always correct.
Q Source: Page 63: Chapter 5: 12th Macroeconomics NCERT

TS

IA

44 Which of the following taxes form part of revenue receipts of the Government of India?
1. Corporation Tax
2. Excise Taxes
3. Income Tax
Select the correct answer using the code below.
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
User Answer :
Correct Answer : D
Answer Justification :

Learning:Tax revenues, an important component of revenue receipts, comprise of


direct taxes - which fall directly on individuals (personal income tax) and firms
(corporation tax), and indirect taxes like excise taxes (duties levied on goods
produced within the country), customs duties (taxes imposed

IN
SI

on goods imported into and exported out of India) and service tax.
Q Source:Page 63: Chapter 5: 12th Macroeconomics NCERT

45 Consider the following about Alvars and Nayanars.


1. They disapproved of the caste based discrimination in India.
2. They did not produce any written compositions.
3. Women devotees were not allowed within the Sangha.
Select the correct answer using the codes below.
A. 1 and 2 only
B. 1 only
C. 2 and 3 only
D. 3 only
User Answer :
Correct Answer : B
Answer Justification :

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TEST - 11

User Name :

chandan paswan

Total Marks :

200

Mark Scored :

-2

Justification:Statement 1: Some historians suggest that the Alvars and Nayanars


initiated a movement of protest against the caste system and the dominance of
Brahmanas or at least attempted to reform the system.

To some extent this is corroborated by the fact that bhaktas hailed from diverse
social backgrounds ranging from Brahmanas to artisans and cultivators and even
from castes considered "untouchable".

IA

Statement 2 & 3: The compositions of Andal, a woman Alvar, were widely sung.
Another woman, Karaikkal Ammaiyar, a devotee of Shiva, adopted the path of
extreme asceticism in order to attain her goal. So, 3 is wrong.

TS

One of the major anthologies of compositions by the Alvars, the Nalayira


Divyaprabandham, was frequently described as the Tamil Veda, thus claiming that
the text was as significant as the four Vedas in Sanskrit that were cherished by the
Brahmanas. So, 2 is also wrong.
Q Source:Page 144: Chapter 6: Themes in Indian History - II: 12th NCERT

IN
SI

46 In an open economy without government intervention, trade deficit can be financed by


1. Excess of investments over savings
2. Capital inflows
3. High consumption expenditure
Select the correct answer using the codes below.
A. 1 and 2 only
B. 2 only
C. 1 and 3 only
D. 1, 2 and 3
User Answer :
Correct Answer : B
Answer Justification :
Justification:Trade deficit is financed by excess of savings over investments, not
the other way round. Only with more savings can we pay for the imports bill as well
as manage the domestic investments. So, 1 is wrong.
Total balance of payments consists of current account (includes trade, invisibles,
remittances etc) as well as capital account. Capital inflows like FDI, FII help bridge
the trade deficit and neutralize BoP. So, 2 is correct.
High consumption expenditure will further inflate the import bill and cause trade

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User Name :

chandan paswan

Total Marks

200

Mark Scored

-2

deficit. So, 3 is incorrect.


Q Source:Chapter 6: 12th Macroeconomics NCERT

TS

IA

47 Which of these bills presented along with the Annual Financial Statement, provides
details of the imposition, abolition, remission, alteration or regulation of taxes proposed in
the Budget?
A. Appropriate Bill
B. Medium Term Framework Bill
C. Finance Bill
D. Budget Amendment Bill
User Answer :
Correct Answer : C
Answer Justification :

Learning:While the Finance Bill generally seeks approval of the Parliament for
raising resources through taxes, cess etc., an Appropriation Bill seeks Parliament's
approval for the withdrawal from the Consolidated Fund of India to meet the
approved expenditures of the Government. So, (a) is wrong.
No such bill as (b) exists.

IN
SI

Finance Bill is a secret bill introduced every year in Lok Sabha (Lower chamber of
the Parliament) immediately after the presentation of the Union Budget, to give
effect to the financial proposals of the Government of India for the immediately
following financial year.
It is through the Finance Act that amendments are made to the various Acts like
Income Tax Act 1961, Customs Act 1962 etc.
Q Source:Page 62 (Footnote): Chapter 5: 12th Macroeconomics NCERT

48 The main items of non-plan expenditure are


1. Interest payments
2. Defence services
3. Subsidies
4. Salaries
5. Pensions
Select the correct answer using the code below.
A. 3, 4 and 5 only

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User Name :

chandan paswan

Total Marks :

200

Mark Scored :

-2

B. 1 and 2 only
C. 1, 2 and 3 only
D. 1, 2, 3, 4 and 5
User Answer :
Correct Answer : D
Answer Justification :

IA

Learning:Budget documents classify total revenue expenditure into plan and nonplan expenditure.
Plan revenue expenditure relates to central Plans (the Five-Year Plans) and central
assistance for State and Union Territory Plans.

TS

Non-plan expenditure, the more important component of revenue expenditure,


covers a vast range of general, economic and social services of the government.
Interest payments on market loans, external loans and from various reserve funds
constitute one of the single largest components of non-plan revenue expenditure.

Q Source:Page 63: Chapter 5: 12th Macroeconomics NCERT

IN
SI

49 The main items of capital receipts of the government are


1. Monetization of RBI's reserves
2. Market borrowings of the government from the public
3. Earnings from import and export duties
4. Loans received from international organisations
5. Sale of shares in Public Sector Undertakings (PSUs)
Select the correct answer using the code below.
A. 2, 4 and 5 only
B. 1 and 2 only
C. 1, 4 and 5 only
D. 1, 2, 3, 4 and 5
User Answer :
Correct Answer : A
Answer Justification :
Learning:The main items of capital receipts are loans raised by the government
from the public which are called market borrowings, borrowing by the government
from the Reserve Bank and commercial banks and other financial institutions
through the sale of treasury bills, loans received from foreign

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User Name :

chandan paswan

Total Marks

200

Mark Scored

-2

governments and international organisations, and recoveries of loans granted by the


central government.

Q Source:Page 63: Chapter 5: 12th Macroeconomics NCERT

Other items include small savings (Post-Office Savings Accounts, National Savings
Certificates, etc), provident funds and net receipts obtained from the sale of shares in
Public Sector Undertakings (PSUs).

TS

IA

50 Consider the following statements about Lala Lajpat Rai.


1. He was a co-founder of the Anglo-Vedic School alongwith Dayanand Saraswati.
2. He was the founder of Servants of the People Society.
3. He had been the President of the Indian National Congress (INC).
Select the correct answer using the codes below.
A. 2 only
B. 1 and 3 only
C. 2 and 3 only
D. 1, 2 and 3
User Answer :
Correct Answer : C
Answer Justification :

IN
SI

Learning:Statement 1: He had helped establish the nationalistic Dayanand AngloVedic School and became a follower of Dayanand Saraswati (founder of the Arya
Samaj). He was not its co-founder.
Statement 2: In 1921, he had founded Servants of the People Society, a non-profit
welfare organisation, in Lahore, which shifted based to Delhi after partition, and has
branches in many parts of India.
Statement 3: In 1888 and 1889 he was a delegate to the annual sessions of Indian
National Congress (INC) and was
elected as its President in the Calcutta Special Session of 1920.
Q Source:150th birth anniversary of Lala Lajpat Rai.
51 The exercise of Gender Budgeting usually involves which of these activities in India?
1. Special initiatives for empowering women
2. Examination of the utilisation of resources allocated for women

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User Name :

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Total Marks :

200

Mark Scored :

-2

IA

3. Impact of public expenditure and policies of the government on women


Select the correct answer using the code below.
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
User Answer :
Correct Answer : D
Answer Justification :

Learning:GB entails dissection of the Government budgets to establish its gender


differential impacts and to ensure that gender commitments are translated in to
budgetary commitments.

TS

Gender Budgeting Cells (GBCs) in Union Government are envisaged to serve as


focal points for coordinating gender budgeting initiatives within their Ministries and
across Departments. So far 56 Ministries/Department have confirmed setting up of a
cell/nominating a nodal person.

Q Source:Page 64 (Footnote): Chapter 5: 12th Macroeconomics NCERT

IN
SI

52 The Central Bank does not intervene via foreign reserve transactions in the system of
A. Flexible Exchange Rates
B. Fixed Exchange Rates
C. Managed Exchange rates
D. All of the above
User Answer :
Correct Answer : A
Answer Justification :
Learning:In a system of flexible exchange rates (also known as floating exchange
rates), the exchange rate is determined by the forces of market demand and supply.
In a completely flexible system, the central banks follow a simple set of rules - they
do nothing to directly affect the level of the exchange rate, in other words they do
not intervene in the foreign exchange market (and therefore, there are no official
reserve transactions).
Q Source:Page 80: Chapter 6: 12th Macroeconomics NCERT

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User Name :

chandan paswan

Total Marks

200

Mark Scored

-2

IA

53 The Union Government has issued detailed guidelines to tackle the outbreak of Zika
Virus Disease in the wake of reported cases in Americas. Which of the following would
help best control its outbreak in India?
A. Controlling mosquito population
B. Proper Polio immunization
C. Cutting down air pollution in cities
D. Sterilizing soil by special chemicals
User Answer :
Correct Answer : A
Answer Justification :

TS

Learning:Zika virus is spread to people through mosquito bites. The most common
symptoms of Zika virus disease are fever, rash, joint pain, and conjunctivitis (red
eyes). The illness is usually mild with symptoms lasting from several days to a
week. Severe disease requiring hospitalization is uncommon.
The World Health Organisation (WHO) has declared an international public health
emergency over the explosive spread of the mosquito-borne Zika virus.

Q Source:http://pib.nic.in/newsite/PrintRelease.aspx?relid=135922

IN
SI

54 Consider the following statements.


1. Fiscal deficit will always cause inflation.
2. Fiscal deficit will always slowdown the economy.
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer :
Correct Answer : D
Answer Justification :
Justification:Statement 1: One of the main criticisms of deficits is that they are
inflationary. This is because when government increases spending or cuts taxes,
aggregate demand increases. If firms can't match (supply) increased demand,
inflation will occur.
However, if there are unutilised resources, output is held back by lack of demand. A
high fiscal deficit is accompanied by higher demand and greater output and,
therefore, need not be inflationary.

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User Name :

chandan paswan

Total Marks :

200

Mark Scored :

-2

Statement 2: Only when persistently high fiscal deficit is run by the government, it
crowds out private sector investment, leads to inflation and slows down the
economy.
But a carefully crafted fiscal deficit will actually facilitate production by private
sector by building human and physical capital. So, 2 is also wrong.

Q Source:Page 73: Chapter 5: 12th Macroeconomics NCERT

TS

IA

55 The degree of openness of an economy can be measured best by


A. Total foreign trade as a proportion of GDP
B. Annual GDP growth trends
C. Volume of total money supply as a proportion of GDP
D. Number of financial institutions active in the economy
User Answer :
Correct Answer : A
Answer Justification :

Learning:An open economy is one that trades with other nations in goods and
services and, most often, also in financial assets.

First, when a nation buys foreign goods, this spending escapes as a leakage from the
circular flow of income decreasing aggregate demand.

IN
SI

Second, our exports to foreigners enter as an injection into the circular flow,
increasing aggregate demand for domestically produced goods.
Total foreign trade (exports + imports) as a proportion of GDP is a common
measure of the degree of openness of an economy.
Even a closed economy can have high number of FIs or have high GDP growth rate
or high circulation of money supply. So, other options are wrong.
Q Source:Page 76: Chapter 6: 12th Macroeconomics NCERT

56 Union Law Ministry has constituted an expert committee to review the Specific Relief
Act, 1963. The review will help
A. Ensure ease of doing business
B. Reduce atrocities against Scheduled Castes
C. Cut down total number of laws in the country

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D. Modify the framework for implementation of Directive Principles of State


Policy
User Answer :
Correct Answer : A
Answer Justification :

Learning:The committee has been tasked to examine the Act in the context of
present scenario involving many issues and dealing with its various provisions.

IA

The present scenario issues mainly include public private partnerships, contract
based infrastructure development and other public projects involving enforceability
of the contracts and huge investments thereof.

TS

The review of the Act will also ensure ease of doing business as it has been not
amended since its inception to meet need of changing time.
Q Source: http://pib.nic.in/newsite/PrintRelease.aspx?relid=135898

IN
SI

57 The current account of India records


1. Exports and imports in goods and services
2. Remittances
3. Official Gifts and grants by foreign nations
Select the correct answer using the code below.
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
User Answer :
Correct Answer : D
Answer Justification :

Learning:The current account records exports and imports in goods and services
and transfer payments.
Trade in services denoted as invisible trade (because they are not seen to cross
national borders) includes both factor income (payment for inputs-investment
income, that is, the interest, profits and dividends on our assets abroad minus the
income foreigners earn on assets they own in India) and non-factor
income (shipping, banking, insurance, tourism, software services, etc.).

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User Name :

chandan paswan

Total Marks :

200

Mark Scored :

-2

Transfer payments are receipts which the residents of a country receive 'for free',
without having to make any present or future payments in return.
They consist of remittances, gifts and grants. They could be official or private.

TS

IA

58 Which of these factors affect the exchange rate of rupee?


1. Demand for Indian goods abroad
2. Net foreign investments in India
3. Political stability of India
Select the correct answer using the code below.
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
User Answer :
Correct Answer : D
Answer Justification :

Q Source:Page 77: Chapter 6: 12th Macroeconomics NCERT

Justification:Statement 1 refers to Indian exports. More the exports, more is the


demand of rupee abroad, and higher is the appreciation of the currency.

IN
SI

Statement 2: Higher FDI movements also indicate demand for rupee as investors
must convert their currency into rupees for investments.
Statement 3: Due to political instability FIIs can fly away from the country, FDI
becomes less attractive. So, exchange rate fluctuates due to in and out movement of
foreign capital.
Q Source: Page 79: Chapter 6: 12th Macroeconomics NCERT

59 The term 'Agrarian structure' in context of rural India implies


1. Distribution of landholding
2. Land management system
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None

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chandan paswan

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Mark Scored

-2

User Answer :
Correct Answer : C
Answer Justification :

Learning:The term Agrarian Structure denotes all of the existing and lasting
production and living conditions found in a rural region. It comprises social,
technological, and economic elements and determines the achievable productivity,
income and its distribution, and the rural population's social situation.

IA

The system of land tenure governs the traditional or legal rights individuals or
groups have to land and the resulting social relationships among the rural
population. Its components are the system of land ownership and system of labour
organization.

TS

The land management system covers the factors on which the cultivation of land is
possible. The main factors on which the cultivation of a land depends are land, labor
and capital.

Q Source: Page 58: Chapter 4: 12th NCERT: Social Change and Development in
India

IN
SI

60 'Credit creation' in terms of money multiplier is done by


A. Only Central Bank
B. Only governments
C. Banks
D. Financial authorities that regulate markets
User Answer :
Correct Answer : C
Answer Justification :
Justification & Learning:Money creation is the process by which the money
supply of a country or a monetary region (such as the Eurozone) is increased. A
central bank may introduce new money into the economy (termed "expansionary
monetary policy", or "money printing" by detractors) by purchasing financial assets
or lending money to financial institutions.
Commercial bank lending also creates money in the form of demand deposits.
Through fractional reserve banking, bank lending multiplies the amount of broad
money beyond the amount of base money originally created by the central bank.
The exact process has been explained very well in the NCERT book.

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chandan paswan

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200

Mark Scored :

-2

Q Source:Chapter 4: 12th NCERT Macroeconomics

IA

61 Fiscal deficit is the difference between


A. Government's total expenditure and its total receipts excluding borrowing
B. Government's total revenue expenditure and its revenue receipts excluding
borrowing
C. Government's planned expenditure and its total receipts
D. Government's total expenditure and its total receipts including borrowing
User Answer :
Correct Answer : A
Answer Justification :

TS

Justification:Gross fiscal deficit = Total expenditure - (Revenue receipts + Nondebt creating capital receipts)
Non-debt creating capital receipts are those receipts which are not borrowings and,
therefore, do not give rise to debt. Examples are recovery of loans and the proceeds
from the sale of PSUs.

Q Source: Page 64: Chapter 5: 12th Macroeconomics NCERT

IN
SI

62 Consider the following statements.


1. Assertion (A): A rise in the interest rates at home often leads to an appreciation of
the domestic currency.
2. Reason (R): Higher interest rates attract foreign capital.
In the context of the above, which of these is correct?
A. A is correct, and R is an appropriate explanation of A.
B. A is correct, but R is not an appropriate explanation of A.
C. A is correct, but R is incorrect.
D. Both A and R are incorrect.
User Answer :
Correct Answer : A
Answer Justification :
Justification:There are huge funds owned by banks, multinational corporations and
wealthy individuals which move around the world in search of the highest interest
rates.
The country offering higher interest rates (with safe assets) attract foreign capital
and increase the demand for the currency of that nation (since foreign currency must

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User Name :

chandan paswan

Total Marks

200

Mark Scored

-2

be converted to domestic currency for investment).


Higher demand for domestic currency leads to its appreciation.

TS

IA

63 Which of the following raises the productivity of the economy?


A. Factor payments
B. Investment expenditure
C. Rent expenditure
D. Transfer payments
User Answer :
Correct Answer : D
Answer Justification :

Q Source:Page 81: Chapter 6: 12th Macroeconomics NCERT

Justification:You should choose the most appropriate option here.

Factor payments include payment towards land, labour, raw material etc. Since these
are regular payments towards factors which are already productive, they don't add to
their productive capacity. For e.g. a training programme may have increased labour
productivity. Mere wage payment may not lead to the same. So, (a) is not most
appropriate here.
By the same logic, (c) is incorrect.

IN
SI

Transfer payments do not directly absorb resources or create output. They are
considered as a redistribution of resources in the economic system, e.g. pensions.
So, (d) is also not correct.
Learning:Investment expenditure refers to the expenditure incurred either by an
individual or a firm or the government for the creation of new capital assets like
machinery, building etc.
Net investment expenditure is calculated by deducting the depreciation charges from
the value of existing capital assets.
Q Source:Page 7: Chapter 1: 12th Macroeconomics NCERT

64 The term 'twin deficits' is often in news. It occurs


A. When an economy has both current account deficit and fiscal deficit

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Mark Scored :

-2

B. When an economy has deficits in both trade and remittances


C. When an economy is suffering from both depreciation of exchange rate and
high inflation
D. When a nation with high fiscal deficit is suffering from savings deficit
User Answer :
Correct Answer : A
Answer Justification :

IA

Learning:Twin deficit identity is used to refer to a nation's current account deficits


and a simultaneous fiscal deficit.

TS

The term became widely used in the 1980s until the 1990s because the United States
experienced the "twin" deficits during this timeframe. However, there is no reason
why current account deficits and government budget deficits occurs at the same
time.
This is an insightful article on the issue

http://www.thehindubusinessline.com/opinion/columns/harish-damodaran/the-twindeficits-myth/article3961796.ece
India was running high twin deficits in the post-2008 phase.

Q Source:Page 94: Chapter 6: 12th Macroeconomics NCERT

IN
SI

65 United Nations Disengagement Observer Force (UNDOF) maintains the ceasefire


between
A. Syria and Israel
B. Jordan and Egypt
C. Kuwait and Iraq
D. Saudi Arabia and Kuwait
User Answer :
Correct Answer : A
Answer Justification :
Learning: The UNDOF was established in 1974 by United Nations Security
Council (UNSC) following the agreed disengagement of Syrian and Israeli forces in
the Golan Heights.
Since then, UNDOF has remained in the area to maintain the ceasefire between
Syrian and Israeli forces and to supervise the implementation of the disengagement

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User Name :

chandan paswan

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200

Mark Scored

-2

agreement.
Major General Jai Shanker Menon of India has been appointed as the Head of
Mission and Force Commander of the United Nations Disengagement Observer
Force (UNDOF).

IA

Q
Source:http://www.thehindu.com/news/international/ban-appoints-major-general-m
enon-as-undof-head/article8188708.ece

TS

66 If we subtract 'X' from the fiscal deficit we will obtain 'Primary deficit'. Here 'X is
A. Interest payments
B. Major subsidies
C. Defence expenditure
D. Recovery of loans
User Answer :
Correct Answer : A
Answer Justification :

Learning:Primary deficit refers to difference between fiscal deficit of the current


year and interest payments on the previous borrowings. Primary Deficit = Fiscal
Deficit - Interest Payments

IN
SI

The total borrowing requirement of the government includes the interest


commitments on accumulated debts. Primary deficit reflects the extent to which
such interest commitments have compelled the government to borrow in the current
period.
Q Source:Page 65: Chapter 5: 12th Macroeconomics NCERT

67 Which of these are recent reforms in the International Monetary Fund (IMF)?
1. Voting quotas of some emerging economies has been increased.
2. IMF's Executive Board will now consist entirely of elected Executive Directors.
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer :
Correct Answer : C

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User Name :

chandan paswan

Total Marks :

200

Mark Scored :

-2

Answer Justification :

Justification:Statement 1: India's voting rights increased by 0.3% from the current


2.3% to 2.6%. China's voting rights increased by 2.2% from current 3.8% to 6 %.
These reforms shifted more than 6% of the quota shares to emerging and developing
countries from the US and European countries. Russia and Brazil also have gained
from the reforms.

IA

Statement 2: Currently, US, Japan, France, Germany, Italy, United Kingdom,


Canada and Saudi Arabia are among the top ten members of the IMF.
But, the member countries with the 5 largest quotas appointed the Executive
Director, which will be made to an entirely elected system now. So, 2 is correct.

TS

Learning:The reforms were agreed upon by the 188 members of the IMF in 2010 in
the aftermath of the global financial meltdown. However, there implementations
were delayed due to the time taken by the US Congress to approve the changes.

Q
Source:http://www.thehindu.com/business/india-gets-more-voting-rights-in-imf-ref
orms/article8163827.ece

IN
SI

68 Which of the following cities have been shortlisted under the Smart Cities Mission?
1. Bhubneshwar
2. Jabalpur
3. Udaipur
4. Guwahati
Select the correct answer using the codes below.
A. 1 and 2 only
B. 2 and 4 only
C. 1 only
D. 1, 2, 3 and 4
User Answer :
Correct Answer : D
Answer Justification :
Learning:The Union Ministry of Urban Development has shortlisted 20 cities from
11 States and Delhi Union Territory in the list of first batch of Smart Cities Mission.
Among the shortlisted 20 Smart cities, 3 are from Madhya Pradesh, 2 each are from
Maharashtra, Rajasthan Tamil Nadu, Karnataka, Gujarat and Andhra Pradesh and 1

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Mark Scored

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each from Odisha, Kerala, Delhi (UT), Assam and Punjab.


Q
Source:http://indianexpress.com/article/india/india-news-india/india-20-smart-cities
-list/

TS

IA

69 Which of these argument(s) support the existence of an International Monetary System


(IMS)?
1. An international payment system will fail if there is no authority to force the use of a
particular currency in all international transactions.
2. An IMS is needed to decide on the exchange rate values of all currencies used in
international transactions.
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer :
Correct Answer : D
Answer Justification :

Justification:Statement 1: Even presently, there is no IMS that enforces the use of a


particular currency in all international transactions. What is required is confidence in
a currency, which is given by national governments themselves

IN
SI

announcing the free convertibility of their currencies. So, 1 is not correct.


Statement 2: Presently a mix of managed and floating exchange rate system is
followed by most national governments themselves. The foreign exchange market
forces decide the currency value. It will be a disaster if a single authority supersedes
market forces. So, 2 is wrong.
Q Source:Page 77: Chapter 6: 12th Macroeconomics NCERT

70 Functioning of which of the following authorities have a bearing on the Indian financial
markets?
1. Reserve Bank of India (RBI)
2. Future Commodities Regulator (FCR)
3. Securities and Exchange Board of India (SEBI)
Select the correct answer using the code below.

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User Name :

chandan paswan

Total Marks :

200

Mark Scored :

-2

A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
User Answer :
Correct Answer : C
Answer Justification :

IA

Justification:RBI regulates financial markets by way of sterilization, issuing bonds,


managing liquidity like CRR, SLR etc. So, 1 is correct.
SEBI regulates security markets which are a part of the larger financial markets. So,
3 is also correct.

TS

There is no body like FCR. So, 2 is incorrect.


Learning:The Financial Markets Committee (FMC) of RBI meets daily to review
the consistency between policy rate, money market rates, and liquidity conditions.

We will covering more questions on SEBI and other financial bodies when we touch
Ramesh Singh's book on Indian economy.

Q Source:Page 5: Chapter 1: 12th Macroeconomics NCERT

IN
SI

71 Indian Computer Emergency Response Team (CERT-In) works under the


A. Ministry of Communications and Information Technology
B. Ministry of Defence
C. Ministry of Home Affairs
D. Department of Science and Technology
User Answer :
Correct Answer : A
Answer Justification :
Learning:Its objective:
To protect Indian cyberspace and software infrastructure against destructive
and hacking activities. Strengthen security-related defence of the Indian
Internet domain.
Issue guidelines, vulnerability notes, advisories, and whitepapers regarding to
information security practices, prevention, procedures, response and reporting
of cyber security incidents.

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chandan paswan

Total Marks

200

Mark Scored

-2

The Union Cabinet has recently apprised the Memorandum of Understandings


(MoUs) signed between CERT-In and 3 nations- Japan, Singapore and Malaysia.
Q Source:http://pib.nic.in/newsite/PrintRelease.aspx?relid=135831

TS

IA

72 Consider the following statements.


1. It sets a three-year rolling target for specific fiscal indicators.
2. It examines whether revenue expenditure can be financed through revenue receipts
on a sustainable basis.
3. It evaluates how productively capital receipts including market borrowings are being
utilised.
The above refer to which of these documents?
A. Fiscal Policy Strategy Statement
B. Medium-term Fiscal Policy Statement
C. Macroeconomic Framework Statement
D. Annual Financial Statement
User Answer :
Correct Answer : B
Answer Justification :

Justification:The Fiscal Policy Strategy Statement sets the priorities of the


government in the fiscal area, examining current policies and justifying any
deviation in important fiscal measures. So, (a) is incorrect.

IN
SI

The Macroeconomic Framework Statement assesses the prospects of the economy


with respect to the GDP growth rate, fiscal balance of the central government and
external balance. So, (c) is incorrect.
(d) refers to Budget.

Q Source:Page 64: Chapter 5: 12th Macroeconomics NCERT

73 Consider the following about Al-Biruni's work and stay in India.


1. He translated Patanjali's work on grammar into Arabic.
2. He rejected Indian philosophy and spiritual ideas.
3. Al-Biruni disapproved of the existence of the caste system in India.
Which of the above is/are correct?
A. 1 only
B. 2 and 3 only
C. 1 and 3 only

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Mark Scored :

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D. 1, 2 and 3
User Answer :
Correct Answer : A
Answer Justification :

IA

Learning:Statement 1: Al-Biruni's expertise in several languages allowed him to


compare languages and translate texts. He translated several Sanskrit works,
including Patanjali's work on grammar, into Arabic. For his Brahmana friends, he
translated the works of Euclid (a Greek mathematician) into Sanskrit.
Statement 2: Al-Biruni spent years in the company of Brahmana priests and
scholars, learning Sanskrit, and studying religious and philosophical texts. So, 2 is
wrong.

TS

Statement 3: In spite of his acceptance of the Brahmanical description of the caste


system, Al-Biruni disapproved of the notion of pollution. He remarked that
everything which falls into a state of impurity strives and succeeds in regaining its
original condition of purity.

Q Source:Page 116: Chapter 5: Themes in Indian History- II: 12th NCERT

IN
SI

74 Suppose the economy has slowed down causing massive unemployment and high
inflation. Keynesians may solve the problem by?
A. Reducing the regulation of financial markets
B. Liberalizing private economic system
C. A combination of fiscal stimulus and appropriate monetary policies
D. De-nationalizing public sector units to increase efficiency of economic
system
User Answer :
Correct Answer : C
Answer Justification :
Justification:Options (a) and (b) do not give any clear way as to how the crisis
would be managed. Also, both (a) and (b) may lead to further deterioration of the
situation as per Keynesians.
Option (d) may not solve the crisis as greater privatization does not solve the
problems of high unemployment. It is also not clear how this will tackle inflation.
So, (d) is incorrect.
Learning:Keynesian economists often argue that private sector decisions sometimes

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Mark Scored

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lead to inefficient macroeconomic outcomes which require active policy responses


by the public sector, in particular, monetary policy actions by the central bank and
fiscal policy actions by the government, in order to stabilize output over the business
cycle.

TS

75 'Sterilization' by RBI is related most with


A. Foreign capital flows
B. Domestic infrastructure investment
C. Fiscal deficit
D. Taxation policy of the government
User Answer :
Correct Answer : A
Answer Justification :

IA

Q Source:Page 6: Chapter 1: 12th Macroeconomics NCERT

Keynesian economics advocates a mixed economy- predominantly private sector,


but with a role for government intervention during recessions.

Learning:Entry or outgo of foreign exchange in India has the potential to alter total
money supply. This is because the inflow must be converted into Indian currency,
and the outflow must be converted from Indian currency back to foreign exchange.

IN
SI

RBI undertakes an open market sale of government securities of an amount equal to


the amount of foreign exchange inflow in the economy, thereby keeping the stock of
high powered money and total money supply unchanged.
Thus it sterilises the economy against adverse external shocks. This operation of
RBI is known as sterilisation.
Q Source: Page 47: Chapter 3: 12th Macroeconomics NCERT

76 As per Ibn Battuta's account of India


1. Slaves were openly sold in markets and exchanged as gifts.
2. Female slaves were employed by the Sultan to keep a watch on his nobles.
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None

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User Name :

chandan paswan

Total Marks :

200

Mark Scored :

-2

User Answer :
Correct Answer : C
Answer Justification :
Learning:It appears from Ibn Battuta's account that there was considerable
differentiation among slaves.

IA

Some female slaves in the service of the Sultan were experts in music and dance,
and Ibn Battuta enjoyed their performance at the wedding of the Sultan's sister.
Female slaves were also employed by the Sultan to keep a watch on his nobles.
Q Source:Page 135: Chapter 5: Themes in Indian History- II: 12th NCERT

IN
SI

TS

77 Non-tax revenue of the central government mainly consists of


1. Interest receipts on account of loans forwarded by the government
2. Dividends and profits on investments made by the government
3. Cash grants-in-aid from foreign countries and international organisations
4. Wealth tax and estate duties levied on select properties
Select the correct answer using the code below.
A. 1 and 4 only
B. 2 and 3 only
C. 1, 2 and 3 only
D. 1, 2, 3 and 4
User Answer :
Correct Answer : C
Answer Justification :
Learning:Statement 4 is about direct taxes like wealth tax, gift tax and estate duty
which have never been of much significance in terms of revenue yield and have thus
been referred to as 'paper taxes'. Hence, it is wrong.
Fees and other receipts for services rendered by the government also form part of
the non-tax revenue.
Q Source:Page 64: Chapter 5: 12th Macroeconomics NCERT
78 The Cabinet Committee on Economic Affairs (CCEA) has given its in principle
approval for the Hybrid Annuity Model for implementing the National Highway Projects.
Under the model

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IA

1. The government will bear all the risk of the project.


2. The highway toll tax will be collected by the private parties alone.
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer :
Correct Answer : D
Answer Justification :

TS

Justification:The highway toll tax will be collected by the government i.e. by the
National Highways Authority of India (NHAI) unlike in the build, operate and
transfer (BOT) toll model in which the private sector collects it. Thus, private party
does not have to bear traffic and inflation risks as the project cost are also inflation
indexed. So, 2 is wrong.

There is distribution of risk between the government and private players in this
model, hence, it will speed up the construction of highways in the country. So, 1 is
wrong.

The private developer will be able to recover his investment from the government by
receiving annuity payments over a period of 15 years. For toll collection, there is a
separate provision for operation and management payments by the government to
the concessionaire.

IN
SI

Q Source:http://pib.nic.in/newsite/PrintRelease.aspx?relid=135821

79 Khanqahs and silsilas are related with the tradition of


A. Gibbism
B. Batya
C. Sufism
D. Kahina
User Answer :
Correct Answer : C
Answer Justification :
Learning:Institutionally, the sufis began to organise communities around the
hospice or khanqah (Persian) controlled by a teaching master known as shaikh (in
Arabic), pir or murshid (in Persian).

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Sufi silsilas began to crystallise in different parts of the Islamic world around the
twelfth century. The word silsila literally means a chain, signifying a continuous
link between master and disciple, stretching as an unbroken spiritual genealogy to
the Prophet.

Q Source:Page 153: Chapter 6: Themes in Indian History- II: 12th NCERT

TS

IA

80 What do you understand by the term 'Total Factor Productivity (TFP)'?


A. The total rent extracted from any one of the factors
B. The total value of output produced using any one of the factors
C. Effects on total output not caused by an increase in inputs
D. High growth of land and labour in a nation
User Answer :
Correct Answer : C
Answer Justification :
Learning:You can understand TFP in this way.

Suppose a nation has the same stock of land, labour and capital, and yet the next
year its GDP increased by more than it increased last year.

How do we explain this?

Either the individual productivities of factors would have increased, or the total
combined productivity of the economy has increased.

IN
SI

This can happen either by better technology, better infrastructure etc that improve
the total factor productivity of the economy.
So, it is called as the part of the output not explained by the change in inputs.
Q Source:Improvisation- Often appears in Business news and Economic Surveys:
Chapter 2: 12th Macroeconomics NCERT

81 Consider the following statements.


1. Portuguese travellers Domingo Paes and Fernao Nuniz visited his Empire.
2. He defeated the Sultans of Bijapur, Golconda, the Bahmani Sultanate and the Raja
of Odisha.
3. The south Indian mathematician Nilakantha Somayaji lived in his Empire.
The above refer to?

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A. Sadasiya Raya
B. Krishnadevaraya
C. Venkata I
D. Thimma Bhupala
User Answer :
Correct Answer : B
Answer Justification :

IA

Learning:Krishnadeva Raya's rule was characterised by expansion and


consolidation. This was the time when the land between the Tungabhadra and
Krishna rivers (the Raichur doab) was acquired (1512), the rulers of Orissa were
subdued (1514) and severe defeats were inflicted on the Sultan of Bijapur (1520).

TS

Although the kingdom remained in a constant state of military preparedness, it


flourished under conditions of unparalleled peace and prosperity.
Krishnadeva Raya is credited with building some fine temples and adding
impressive gopurams to many important south Indian temples.

He also founded a suburban township near Vijayanagara called Nagalapuram after


his mother. Some of the most detailed descriptions of Vijayanagara come from his
time or just after.

Q Source:Page 173: Chapter 7: Themes in Indian History- II: 12th NCERT

IN
SI

82 The error of double counting in the estimation of national income is related to which of
the following goods?
A. Consumption goods
B. Intermediate goods
C. Consumer durables
D. Capital goods
User Answer :
Correct Answer : B
Answer Justification :
Justification:Intermediate goods are crucial inputs to any production process and a
significant part of our manpower and capital stock are engaged in production of
these goods.
However, since we are dealing with value of output, we should realise that the value
of the final goods already includes the value of the intermediate goods that have

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chandan paswan

Total Marks :

200

Mark Scored :

-2

entered into their production as inputs.


Counting them separately will lead to the error of double counting. Whereas
considering intermediate goods may give a fuller description of total economic
activity, counting them will highly exaggerate the final value of our economic
activity.

Q Source:Page 12: Chapter 2: 12th Macroeconomics NCERT

TS

IA

83 The difference between Gross Domestic Product (GDP) and Gross National Product
(GNP) is
A. Depreciation
B. Subsidies
C. Indirect and Direct Taxes
D. Net Factor Income from abroad
User Answer :
Correct Answer : D
Answer Justification :

Learning:GNP ? GDP + Factor income earned by the domestic factors of


production employed in the rest of the world- Factor income earned by the factors of
production of the rest of the world employed in the domestic economy
Hence, GNP ? GDP + Net factor income from abroad

IN
SI

If we deduct depreciation from GNP the measure of aggregate income that we


obtain is called Net National Product (NNP).
Q Source:Page 26: Chapter 2: 12th Macroeconomics NCERT

84 Ain-i Akbari written by Abu'l Fazl deals with records of administrative arrangements
made for
1. Ensuring cultivation by the state
2. Collection of revenue by the agencies of the state
3. Regulation of the relationship between the state and rural zamindars
Select the correct answer using the codes below.
A. 1 and 2 only
B. 1 only
C. 2 and 3 only
D. 1, 2 and 3

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chandan paswan

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200

Mark Scored

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User Answer :
Correct Answer : D
Answer Justification :

Learning:The Ain-i-Akbari is the third volume of the Akbarnama containing


information regarding Akbar's reign in the form of, what would be called in modern
times, administration reports, statistical compilations, or gazetteers.

IA

The Ain-i-Akbari is itself divided into five books. The first book deals with the
imperial household, and the second with the servants of the emperor, the military
and civil services. The third book deals with the imperial administration, containing
the regulations for the judicial and executive departments. The fourth book contains
information about Hindu philosophy, science, social customs and literature. The
fifth book contains sayings of Akbar

TS

Q Source:Page 197: Chapter 8: Themes in Indian History- II: 12th NCERT

IN
SI

85 Muqaddam or mandal in the 16th-17th century India was


A. Headman of the panchayat
B. Tax collection officer
C. Adviser to the King
D. Local police head
User Answer :
Correct Answer : A
Answer Justification :

Learning: Some sources suggest that the headman was chosen through the
consensus of the village elders, and that this choice had to be ratified by the
zamindar.
Headmen held office as long as they enjoyed the confidence of the village elders,
failing which they could be dismissed by them.
The chief function of the headman was to supervise the preparation of village
accounts, assisted by the accountant or patwari of the panchayat.
Q Source:Page 202: Chapter 8: Themes in Indian History- II: 12th NCERT

86 Cash Reserve Ratio (CRR) as a part of monetary policy instruments is used to control
1. Inflation

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2. Fiscal deficit
3. Foreign Direct Investment (FDI)
Select the correct answer using the codes below.
A. 1 and 2 only
B. 2 and 3 only
C. 1 only
D. 1, 2 and 3
User Answer :
Correct Answer : C
Answer Justification :

chandan paswan

TEST - 11

User Name :

TS

Justification:Fiscal deficit pertains to the government's financial decisions and


budget making. CRR does not control it. A very high value of CRR may however
affect fiscal deficit choices of the government. So, 2 is a wrong choice.
FDI is controlled through executive policy by way of approvals, caps etc and not
through CRR. So, 3 is also wrong.

If RBI decides to increase CRR, banks will keep more cash with RBI and lend less.
Lower money circulation would reduce economic activity, demand and thus manage
inflation.

Q Source:Page 41: Chapter 3: 12th Macroeconomics NCERT

IN
SI

87 Consider the following about land revenue collection in Mughal India.


1. Land revenue was imposed without assessing the land.
2. Payment was accepted only in kind, not in cash.
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer :
Correct Answer : D
Answer Justification :
Learning:The Mughal state tried to first acquire specific information about the
extent of the agricultural lands in the empire and what these lands produced before
fixing the burden of taxes on people. So, 1 is wrong.
The land revenue arrangements consisted of two stages- first, assessment and then

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chandan paswan

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actual collection. The jama was the amount assessed, as opposed to hasil, the
amount collected.
Akbar decreed that while he should strive to make cultivators pay in cash, the option
of payment in kind was also to be kept open. So, 2 is incorrect.

While fixing revenue, the attempt of the state was to maximise its claims.

IA

Q Source:Page 213: Chapter 8: Themes in Indian History- II: 12th NCERT

TS

88 The official Amin in Mughal India was responsible for


A. Ensuring that imperial regulations were carried out in the provinces
B. Ensuring external security and diplomatic negotiations for peace
C. Supervising the work of all welfare departments at the Centre
D. Extracting dues from defaulters
User Answer :
Correct Answer : A
Answer Justification :

Learning:This is an account of important officers appointed in Mughal India.

Appointment of two officers with specific responsibilities and jurisdiction was only
to avoid concentration of authority in one single individual and also to see that one
acts as a check over the other.

IN
SI

Sarkars were further subdivided as paraganas.


In each paragana a Shiqdar, an Amin, a Fotehdar, a Munsif, a Hindi writer
and a Persian writer were appointed besides the Patwari, Chaudari and the
Muqaddam who acted as the intermediaries between the government and the
people.
The duty of the Shiqdar was to maintain law and order, to collect the revenue
and also decide the legal matters.
The Amin was in charge of collection of the land revenue and he too tried
civil and revenue cases.
The Amin and the Shiqdar were of the same rank. The treasurer was Fotehdar
and the entire amount collected was kept in his custody.
He also maintained account of the income and expenditure of the paragana.

Q Source:Page 214: Chapter 8: Themes in Indian History- II: 12th NCERT

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89 The real exchange rate measures


A. Prices abroad relative to those at home
B. International speculation in major currencies
C. Depletion of foreign exchange reserves
D. Capital outflow abroad relative to inflow at home
User Answer :
Correct Answer : A
Answer Justification :

TEST - 11

User Name :

IA

Concept:Nominal exchange rate is the price of one currency in terms of number of


units of some other currency.
To incorporate the purchasing power and competitiveness aspect and, therefore,
make the measure more meaningful, real exchange rates are used.

TS

The real exchange rates are nothing but the nominal exchange rates multiplied by
the price indices of the two countries.

This means the market price level of goods and services, given by indices of
inflation. So if the price level in the US is higher than the price level in India, then
the real exchange rate of the rupee versus the dollar will be greater than the nominal
exchange rate.

Suppose the nominal exchange rate is Rs 50 and US prices are greater than Indian
prices, a dollar will buy more in India than what Rs 50 will buy in the US.

IN
SI

Q Source:Page 79: Chapter 6: 12th Macroeconomics NCERT

90 Which of the following were the main features of the Mansabdari system?
1. The king himself appointed the mansabdars
2. A mansabdar could be asked to give only military assistance.
3. The mansabdari system was hereditary.
Select the correct answer using the codes below.
A. 1 only
B. 1 and 2 only
C. 3 only
D. 1 and 3 only
User Answer :
Correct Answer : A
Answer Justification :

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chandan paswan

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200

Mark Scored

-2

Justification:The King could enhance the mansab, lower it or remove it and not just
appoint it. So, 1 is correct.
A mansabdar could be asked to perform any civil or military service. So, 2 is
incorrect.

The mansabdari system was not hereditary as appointments were made by the King.
So, 3 is incorrect.

IA

Learning:There were 33 categories of the mansabdars. The lowest mansabdar


commanded 10 soldiers and the highest 10,000 soldiers. Only the princes of the
royal family and most important Rajput rulers were given a mansab of 10,000.

TS

Q Source:Improvisation: Page 214: Chapter 8: Themes in Indian History- II: 12th


NCERT

91 In India, coins are issued by the


A. Government of India
B. Reserve Bank of India
C. Foreign Exchange Management Authority (FEMA)
D. State Governments
User Answer :
Correct Answer : A
Answer Justification :

IN
SI

Learning:In India currency notes are issued by the Reserve Bank of India (RBI),
which is the monetary authority in India.
However, coins are issued by the Government of India. The responsibility for
coinage vests with the Government of India on the basis of the Coinage Act, 2011 as
amended from time to time. The Government of India is also responsible for the
designing and minting of coins in various denominations.
Apart from currency notes and coins, the balance in savings, or current account
deposits, held by the public in commercial banks is also considered money.
Q Source:Page 40: Chapter 3: 12th Macroeconomics NCERT

92 Under sulh-i kul introduced by Akbar


1. Religion was placed above the authority of the state.

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IA

2. State did not arbitrarily discriminate between religions.


Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer :
Correct Answer : B
Answer Justification :

TEST - 11

User Name :

Justification:Statement 1: In sulh-i kul all religions and schools of thought and


freedom of expression but on condition that they did not undermine the authority of
the state or fight among themselves.

TS

In fact, the ideal of sulh-i kul was implemented through state policies.
Statement 2: Akbar abolished the tax on pilgrimage in 1563 and jizya in 1564 as the
two were based on religious discrimination.

All Mughal emperors gave grants to support the building and maintenance of places
of worship. Even when temples were destroyed during war, grants were later issued
for their repair.

So, 1 is wrong and 2 will be correct.

IN
SI

Q Source:Page 234: Chapter 9: Themes in Indian History- II: 12th NCERT


93 The convergence theory states that all industrial systems, whether capitalist or
communist, would converge in their social, political and economic systems because of the
determinant effects of
A. Technology
B. Human evolution
C. Natural laws
D. Administrative systems
User Answer :
Correct Answer : A
Answer Justification :
Learning:Modern industrial systems of production, it is argued, create a highly
complicated division of labour, incorporating wide-ranging skills and competencies.

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Mark Scored

-2

Furthermore, unlike preindustrial societies, industrialized societies are more open


there are greater opportunities and freedom for people to choose their work and
improve their social status, rather than this being determined by traditions and the
family they were born into.

In industrialized countries specialist education is believed to become more


important, and a higher level of literacy and skills is found among the population as
a whole.

IA

These lead to homogenization of industrial societies irrespective of the system they


follow.

TS

Q Source:Page 75: Chapter 5: 12th NCERT: Social Change and Development in


India

IN
SI

94 Why higher GDP does not necessarily imply higher welfare for a nation?
1. It may not be uniformly distributed.
2. It does not include the spending by the unorganized sector.
3. It does not capture extent of environmental degradation.
Select the correct answer using the codes below.
A. 1 and 2 only
B. 2 only
C. 1 and 3 only
D. 1, 2 and 3
User Answer :
Correct Answer : C
Answer Justification :
Justification:Statement 1: Rise in GDP may be concentrated in the hands of very
few individuals or firms. For the rest, the income may in fact have fallen. In such a
case the welfare of the entire country cannot be said to have increased.
Statement 2: It captures spending by all groups as it accounts for all goods and
services consumed in the economy. 2 is incorrect.
Statement 3: Take an example to understand this statement.
For e.g. the value added of the refinery will be counted as part of the GDP of the
economy. But in carrying out the production the refinery may also be polluting the
nearby river. This may cause harm to the people who use the water of the river.
Hence their utility will fall. So, 3 is correct.

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chandan paswan

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200

Mark Scored :

-2

Q Source:Page 30: Chapter 2: 12th Macroeconomics NCERT

IA

95 Which of the following indices best reflects the international competitiveness of a


nation's goods?
A. Real Effective Exchange Rate (NEER)
B. Nominal Exchange Rate (NER)
C. Consistent Balance of Payments (BoP) Surplus
D. Annual short-term capital Inflows
User Answer :
Correct Answer : A
Answer Justification :

TS

Justification:The real exchange rate is often taken as a measure of a country's


international competitiveness as it takes into account purchasing power at both
nations.
When RER is averaged (weighted) for all trade partners, its called REER and best
reflects international competitiveness.

Option (d) referring mainly to FIIs is more related to the overall attractiveness of the
economy and its GDP growth rate rather than its export products.

IN
SI

A nation can run a BoP surplus even by importing less and exporting just enough to
maintain it or by receiving large sums of lent money to foreign institutions. So, (c) is
also wrong.
Q Source:Page 79: Chapter 6: 12th Macroeconomics NCERT

96 Conversion of multi-crop lands to monoculture lands can be harmful to agriculture


because
1. It depletes soil nutrients severely leaving soil weak for any healthy plant growth.
2. It increases the susceptibility of farm to pests.
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer :
Correct Answer : C
Answer Justification :

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Mark Scored

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Justification:Statement 1: Planting the same crop in the same place each year zaps
nutrients from the earth and leaves soil weak and unable to support healthy plant
growth. This is because the same nutrient is depleted again and again without
replenishment.

Since soil structure and quality becomes so poor, farmers are forced to use chemical
fertilizers to encourage plant growth and fruit production.

IA

Statement 2: The ecological landscape of monoculture is that there is a massive


range of genetically identical plants, against a backdrop of genetically diverse and
adapting wild pests, which include fungi, bacteria, insects etc.

TS

These pests each have a wild population with its own biodiversity, and their
populations are constantly changing and adapting to being able to eat the crops or
benefit from the presence of whatever crops are being grown.
The monoculture crops, however, are not changing, and are not able to adapt
because they have no genetic variability and are not allowed to reproduce naturally.

Q Source: Improvisation: Page 63: Chapter 4: 12th NCERT: Social Change and
Development in India

IN
SI

97 How can the government finance spending excess of revenue receipts?


1. Borrowing from markets
2. Borrowing from foreign nations
3. Requesting grants from international bodies
Select the correct answer using the codes below.
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
User Answer :
Correct Answer : D
Answer Justification :
Learning:The fiscal deficit will have to be financed through borrowing as the
revenue generated is insufficient.
Thus, it indicates the total borrowing requirements of the government from all
sources.

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chandan paswan

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200

Mark Scored :

-2

From the financing side Gross fiscal deficit = Net borrowing at home + Borrowing
from RBI + Borrowing from abroad
Net borrowing at home includes that directly borrowed from the public through debt
instruments (for example, the various small savings schemes) and indirectly from
commercial banks through Statutory Liquidity Ratio (SLR).

Q Source: Page 64: Chapter 5: 12th Macroeconomics NCERT

TS

IA

98 A Central Public Sector Enterprise cannot attain Maharatna status if


1. It is not listed on the stock exchange.
2. Its operations are limited to India.
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
User Answer :
Correct Answer : C
Answer Justification :

Justification & Learning: The CPSEs fulfilling the following criteria are eligible to
be considered for grant of Maharatna status.

IN
SI

(i) Having Navratna status.


(ii) Listed on Indian stock exchange with minimum prescribed public shareholding
under SEBI regulations.
(iii) Average annual turnover of more than Rs. 25,000 crore, during the last 3 years.
(iv) Average annual net worth of more than Rs. 15,000 crore, during the last 3 years.
(v) Average annual net profit after tax of more than Rs. 5,000 crore, during the last 3
years.
(vi) Should have significant global presence/international operations.
Q Source:Revision: Improvisation on Navratnas (Grey Box) - 11th NCERT- Indian
Economic Development

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99 Lichens are not likely to be found in


1. Cold regions
2. Tree barks
3. Sites with heavy air pollution due to sulphur dioxide
Select the correct answer using the codes below.
A. 1 and 3 only
B. 1 and 2 only
C. 3 only
D. They can be found at all these places.
User Answer :
Correct Answer : C
Answer Justification :

TEST - 11

User Name :

TS

Justification:Lichens and mosses can be found in even Tundra regions. So, 1 is


incorrect.
Lichens can be commonly found growing on the barks of trees as a thin greenishwhite crust. So, 2 is wrong too.

The hardy lichens are useful bio-indicators for air pollution, especially sulphur
dioxide pollution, since they derive their water and essential nutrients mainly from
the atmosphere rather than from the soil. So, they are not likely to be found there
due to heavy damage. Statement 3 is correct.

IN
SI

Q Source:Revision: 12th NCERT Biology


100 In an economy, the situation of 'Liquidity Trap' happens when
A. All commercial banks fail
B. Interest rates are too low
C. External economy is highly volatile
D. Interest rates are too high
User Answer :
Correct Answer : B
Answer Justification :
Learning:Suppose interest rates are very low presently. Now seeing this, every
investor feels since the interest rates are below normal and so low, they must rise.
If the interest rates rise, the bonds that the investors hold with them become
unattractive.

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chandan paswan

Total Marks :

200

Mark Scored :

-2

Thus, everyone in the economy will hold their wealth in money balance and if
additional money is injected within the economy it will be used up to satiate people's
craving for money balances without increasing the demand for bonds and without
further lowering the rate of interest below the floor R minimum. Such a situation is
called a liquidity trap.

IN
SI

TS

IA

Q Source:Page 40: Chapter 3: 12th Macroeconomics NCERT

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