1. It was established in 2020.

2. It was established for the purpose of recommending persons for appointment as whole-time directors and non-executive chairpersons on the boards of financial services institutions.

3. It does not advise on matters relating to personnel management.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Explanation

— The Financial Services Institutions Bureau (FSIB), the body which selects the Chairman and MDs of public sector banks and insurance companies.

— FSIB has recommended the name of Challa Sreenivasulu Setty as the next Chairman of State Bank of India (SBI), India’s largest bank.

— The final decision on the appointment of the SBI Chairman will be made by the Appointments Committee of the Cabinet (ACC) headed by the Prime Minister.

— FSIB was constituted in 2022 by the Central Government. Hence, statement 1 is not correct.

— FSIB was established for the purpose of recommending persons for appointment as whole-time directors and non-executive chairpersons on the boards of financial services institutions. Hence, statement 2 is correct.

— It also advises on certain other matters relating to personnel management in these institutions. Bhanu Pratap Sharma is the Chairman of the bureau. Hence, statement 3 is not correct.

Therefore, option (a) is the correct answer.

QUESTION 2

With reference to the Balance of Trade (BOT), consider the following statements:

1. It is the sum of the value of exports and the value of imports of a country’s goods in a given period.

2. Surplus BOT will arise if a country exports less goods than imports.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Explanation

— The country’s current account balance recorded a surplus of $5.7 billion, or 0.6 percent of gross domestic product (GDP) in the January-March 2024 quarter, driven by a lower merchandise trade deficit.

— The current account deficit is the difference between exports and imports of goods and services. It is a key indicator of the country’s external sector.

— The Balance of Trade (BOT) is the difference between a country’s export and import values ​​for goods during a certain time period. Hence, statement 1 is not correct.

— Exports are entered as credit items in BOT, while imports are entered as debit items. It is sometimes referred to as Trade Balance.

— BOT is said to be in balance when exports of goods equal imports of goods. Surplus BOT or trade surplus occurs when a country exports more items than it imports. Deficit BOT or trade deficit occurs when a country buys more items than it sells. Hence, statement 2 is not correct.

Therefore, option (d) is the correct answer.

(Other Source: ncert.nic.in)

QUESTION 3

With reference to physical capital in Indian economy, consider the following pairs:

	Items	Category
1	Farmer’s plough	Working capital
2	Computer	Fixed capital
3	Yarn used by the weaver	Fixed capital
4	Petrol	Working capital

How many of the above pairs are correctly matched?

(a) Only one

(b) Only two

(c) Only three

(d) All four

Explanation

Fixed Capital

— Fixed capital is an investment in long-term assets.

— Fixed capital management is allocating a company’s capital to various initiatives or assets that have long-term business ramifications.

— It must be financed using long-term capital sources such as stock or preference shares, debentures, long-term loans, and the business’s retained earnings.

— Investment in these assets would also involve expenditures for acquisition, expansion, modernization, and replacement.

— Examples of fixed capital include plant and machinery, furnishings and fixtures, land and buildings, cars, and so on.

Working capital

— Aside from investments in fixed assets, any business organization must invest in current assets. Working capital is an investment that allows the organization’s day-to-day operations to run smoothly.

— These are typically more liquid, but contribute less to profits than fixed assets.

— Examples of working capital include cash on hand/at the bank, marketable securities, invoices receivable, raw materials, prepaid expenses, and so on.

	Items	Category
1	Farmer’s plough	Fixed capital
2	Computer	Fixed capital
3	Yarn used by the weaver	Working capital
4	Petrol	Working capital

Therefore, option (b) is the correct answer.

(Other Source: ncert.nic.in)

QUESTION 4

The total fertility rate in an economy is defined as:

(a) The number of children born per 1000 people in the population in a year.

(b) the number of children born to a couple in their lifetime in a given population.

(c) the birth rate minus the death rate.

(d) the average number of live births a woman would have by the end of her child-bearing age.

Explanation

— By 2050, one out of every five Indians would be senior citizens, with fewer younger individuals to care for them. A Lancet report underlined this projected scenario, stating that India’s total fertility rate (TFR) — the average number of children born per woman — is irreversibly falling to 1.29, considerably below the replacement rate of 2.1. This entails a fast declining working-age population.

— According to research projections from the Global Burden of Disease, Injuries, and Risk Factors Study (GBD)-2021, the TFR has more than halved worldwide in the last 70 years, from approximately five children per woman in 1950 to 2.2 children in 2021 .

— In India, the TFR was 6.18 in 1950 which reduced to 4.60 in 1980 and further declined to 1.91 in 2021.

General Fertility Rate

— General fertility rate is defined as the number of live births per thousand women in the age group (15-49 years) in a given year.

Total Fertility Rate

— Total fertility rate is defined as the average number of children that would be born to a woman if she experiences the current fertility pattern throughout her reproductive span (15-49 years).

Infant Mortality Rate

– Infant mortality rate refers to the measurement of mortality in the first year of life and is computed by (relating) the number of deaths under one year of age divided by 1000 live births.

Maternal Mortality Ratio (MMR)

— Maternal Mortality Ratio is the number of maternal deaths per 100000 live births.

Therefore, option (d) is the correct answer.

(Other Source: mospi.gov.in)

QUESTION 5

Which of the following are qualitative tools used by the Reserve Bank of India (RBI) to control money supply?

1. Moral suasion

2. Margin requirements

3. Open market operations

4. Cash reserve ratio (CRR)

Select the correct answer using the codes given below:

(a) 3 and 4 only

(b) 1 and 2 only

(c) 2 and 3 only

(d) 1 and 4 only

Explanation

— The Reserve Bank is the sole organization that can issue currency. When commercial banks require additional funds to expand their lending portfolio, they may seek them from the market or the Central Bank.

— The RBI regulates the money supply in the economy in a variety of ways. The Central Bank’s tools for controlling the money supply might be both quantitative and qualitative.

— Quantitative tools govern the size of the money supply by adjusting the CRR, bank rate, or open market operations. Hence, 3 and 4 are not correct.

— Qualitative techniques include the Central Bank’s persuasion of commercial banks to prevent or stimulate lending through moral suasion, margin requirements, and so on. Hence, 1 and 2 are correct.

Therefore, option (b) is the correct answer.

(Source: rbi.gov.in)

Previous Daily Subject-Wise-Quiz

Daily subject-wise quiz — Polity and Governance (Week 65)

Daily Subject-wise quiz — History, Culture, and Social Issues (Week 65)

Daily subject-wise quiz — Environment, Geography, Science and Technology (Week 65)

Daily subject-wise quiz — Economy (Week 64)

Daily subject-wise quiz – International Relations (Week 64)

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