Indian Economy MCQs

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Fund of Funds (FOF) is an investment vehicle that pools capital to invest in multiple mutual funds. FOFs do not invest in stocks or bonds directly. In India, FOFs are regulated by the Securities and Exchange Board of India (SEBI). They can invest in mutual funds within the same fund house (fettered) or across different fund houses (unfettered). FOFs offer diversification and professional fund management.

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The Commission for Agricultural Costs and Prices (CACP) was established in 1965. CACP is an attached office of the Ministry of Agriculture and Farmers Welfare, Government of India. CACP annually recommends Minimum Support Prices for 23 agricultural commodities. The recommendations consider cost of production, market price trends, and inter-crop price parity. Government decides final MSPs based on CACP’s advice.

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The International Monetary Fund was created in 1944 at the Bretton Woods Conference. Its main function is to provide temporary financial assistance to member countries facing balance of payments deficits. The IMF uses facilities like Stand-By Arrangements and Extended Fund Facility. Membership includes 190 countries as of 2023. The IMF also conducts economic surveillance and policy advice, but direct financial support for balance of payments stability is its core function.

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Sterilization involves central banks selling government securities in the open market to absorb liquidity created by foreign capital inflows. The Reserve Bank of India uses open market operations for this purpose. By selling government securities, the central bank withdraws excess rupee liquidity from the banking system. This method helps limit the expansion of the money supply and manage inflationary pressures resulting from increased foreign exchange reserves.

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The correct answer is Suresh Tendulkar. He chaired the expert committee set up by the Planning Commission of India in 2009, which recommended using “Consumption Expenditure” as a criterion for identifying Below Poverty Line (BPL) households. This approach aimed to provide a more accurate assessment of poverty by focusing on actual consumption rather than income, reflecting the living standards of households. The Tendulkar Committee’s recommendations have importantly influenced India’s poverty measurement and policy formulation.

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Under the Reserve Bank – Integrated Ombudsman Scheme, 2021, the Executive Director in charge of the Consumer Education and Protection Department of RBI is the appellate authority for appeals against Banking Ombudsman decisions. Appeals must be filed within 30 days through the RBI portal or email. Previous schemes listed the Deputy Governor, but the current scheme specifies the Executive Director.

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Vertical farming uses multi-storey buildings to grow crops in urban environments. The method utilizes hydroponics or aeroponics. This allows for agriculture independent from soil and weather conditions. The technique optimizes space and supports year-round production. Commercial vertical farms have been established in countries such as Japan, Singapore, and the United States since the early 2000s.

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The correct answer is “Base Rate.” The Base Rate is the minimum interest rate set by a bank for lending to its customers. It serves as a benchmark for various loans and is influenced by factors like the central bank’s policy rate and the bank’s cost of funds. The Base Rate ensures that banks cover their costs and maintain profitability while lending. In many countries, including India, the Base Rate is a crucial component of monetary policy and financial stability.

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The Wholesale Price Index (WPI) is released monthly by the Office of the Economic Adviser, Ministry of Commerce and Industry. WPI has been the main index for measuring headline inflation in India since 1942. It covers commodities at the wholesale stage and is published with a base year of 2011-12. The index includes 697 items, such as primary articles, fuel, and manufactured products.

Notes:
Current Assets minus Current Liabilities is known as working capital.