Q.1 Consider the following statements regarding balance of payments of India during 2011-12 are correct? 1. Trade balance, which is defined as exports minus imports of goods and services was negative 2. Net invisibles , which includes remittances from Indians settled abroad, was positive 3. Net Foreign Direct Investment was negative Select the correct answer using the code given below : A) 1, 2 and 3 B) 1 and 2 only C) 2 only D) 1 and 3 only Ans. D Highlights of BoP during January-March (Q4) of 2012-13 • India’s current account deficit (CAD) moderated sharply to 3.6 per cent of GDP in Q4 of 2012-13 from a historically high level of 6.7 per cent of GDP in Q3 of 2012-13 as trade deficit narrowed. • Merchandise exports (BoP basis) increased by 5.9 per cent in Q4 of 2012-13 as compared with 2.6 per cent in Q4 of 2011-12. • Merchandise imports recorded a marginal decline of 1.0 per cent in Q4 of 2012-13 as against an increase of 22.6 per cent in Q4 of 2011-12. Essentially non-oil non-gold component of imports showed a decline, reflecting slowdown in domestic economic activity. • As a result, trade deficit narrowed to US$ 45.6 billion in Q4 of 2012-13 from US$ 51.6 billion in Q4 of 2011-12. • Net invisibles, however, recorded a decline of 7.7 per cent in Q4 of 2012-13 as compared to a growth of 27.5 per cent in Q4 of 2011-12 on account of decline in net services, transfers and income receipts. • Net capital inflows under financial account moderated in Q4 of 2012-13 largely due to slowdown in net portfolio investment and net repayment of loans by banks and corporate. However, net capital inflows were more than adequate to finance CAD, resulting in accretion of US$ 2.7 billion to the foreign exchange reserves. Q.2 The decision of government of India to allow oil companies to increase the price of the diesel in small increments at regular intervals will have the impact of A) Widening fiscal deficit B) Increase in demand for diesel cars C) Lowering the price of consumer goods D) Reducing the amount of subsidies in the Union Budget Ans. D Q.3 Which one among the following is not true regarding the nature of savings in India? A) savings comes from three sources, viz., households, private corporate sectors and the public sector B) In recent years public sector is the largest source of savings in India C) Savings rate has been more than 30% of GDP during the last 10 years D) The share of private corporate sector in savings in India is on the increase during the last 10 years Ans. B In India, the biggest source of savings is the household sector, followed by the private corporate sector and the public sector. Q.4 Which one among the following is not a major reason for the deceleration of growth in Indian economy since 2011-2012? A) High inflation following the monetary and fiscal stimulus during the global recession B) Decline in investment in infrastructure due to high interest rate C) Slowing down in population growth rate leading to erosion of demographic dividend D) Slowing global economy leading to fall in exports Ans. B Q.5 The BASIC group of industries mainly coordinates their policies and stances related to A) Maritime security B) Climate change C) UN reform D) Financial stability Ans. D Q.6 Annual GDP growth of sub-5 percent for four successive years was witnessed in the A) Mid 1980s B) Mid 1990s C) Mid 2000s D) Mid 1980s and mid 1990s Ans. A

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