Financial Market and External Sector Overview
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Questions and Answers

Which term refers to the phenomenon where individuals tend to overuse a common resource?

  • Trade Creation
  • Transfer Price
  • Usury
  • Tragedy of the Commons (correct)

Which of the following concepts relates to the government payments made to individuals without any exchange of goods or services?

  • Unsecured Loan
  • Transfer Earnings
  • Transfer Payments (correct)
  • Underwriting

What is the term used to describe the phenomenon of increased consumption due to the perceived luxury status of a product?

  • Usury
  • Veblen Effect (correct)
  • Trade Policy
  • UGIPS

What does usury refer to in economic terms?

<p>The act of lending money at exorbitant rates of interest (C)</p> Signup and view all the answers

Which financial concept refers to the price at which goods or services are traded between different parties?

<p>Transfer Price (D)</p> Signup and view all the answers

Which of the following topics relates to India's Taxation and Budgeting reforms?

<p>Understanding the economy through GST (A)</p> Signup and view all the answers

What concept is associated with the assessment of public health in India?

<p>Burden of Diseases (B)</p> Signup and view all the answers

Which Act is relevant to the recent updates in India's financial market?

<p>Insolvency and Bankruptcy Law (C)</p> Signup and view all the answers

Which of the following is NOT a focus of the revised Sustainability and Climate Change section?

<p>India's Trade Relations (A)</p> Signup and view all the answers

Which of these topics was NOT mentioned regarding the Human Development in India updates?

<p>External Debt Composition (A)</p> Signup and view all the answers

What is a significant recent addition in the Economic Concepts and Terminologies section?

<p>Liquidity Coverage Ratio (C)</p> Signup and view all the answers

In the context of India's external sector, which of the following topics was updated?

<p>Composition of Trade (B)</p> Signup and view all the answers

What topic concerning financial regulations is highlighted in the recent updates?

<p>Recapitalisation of PSBs (D)</p> Signup and view all the answers

What is the focus of the evaluation outlined in the Critical Evaluation section?

<p>Centralized decision-making in governance (A), Perspective and comprehensive planning (B), Balanced growth and development (C)</p> Signup and view all the answers

Which of the following represents the highest level of planning in the multi-level planning framework?

<p>Centre-level Planning (B)</p> Signup and view all the answers

What is one of the major criticisms regarding the implementation of economic reforms?

<p>Emphasis on public sector undertakings (B)</p> Signup and view all the answers

What is NITI Aayog primarily concerned with?

<p>Decentralized governance and planning (C)</p> Signup and view all the answers

Which level of planning is represented as the grassroots stratum in the planning framework?

<p>Local-level Planning (D)</p> Signup and view all the answers

What is a primary focus of the Planning Commission as per the provided content?

<p>Centralized economic guidance (B)</p> Signup and view all the answers

Which strategy is highlighted as problematic due to its lop-sided nature?

<p>Employment strategy (A)</p> Signup and view all the answers

Which of the following is labeled as a faulty strategy in the planning process?

<p>Industrial location policy (A)</p> Signup and view all the answers

What is a key aspect of economic study according to the definitions provided?

<p>How societies utilize scarce resources (D)</p> Signup and view all the answers

Which statement about human wants and resources is accurate?

<p>Resources are limited and human wants are infinite (D)</p> Signup and view all the answers

What does efficient resource use in economics imply?

<p>Prioritizing some needs over others due to scarcity (C)</p> Signup and view all the answers

Which definition emphasizes the societal aspect of economics?

<p>Economics examines how societies use scarce resources (C)</p> Signup and view all the answers

What is implied by the term 'scarcity' in economics?

<p>Resources are limited compared to human wants (D)</p> Signup and view all the answers

How are choices depicted in the context of economics?

<p>Choices must be made prioritizing limited resources (D)</p> Signup and view all the answers

What is a primary reason economics is considered an important discipline?

<p>It addresses the challenge of resource allocation under scarcity (D)</p> Signup and view all the answers

In economics, what often happens to some needs when choices are made?

<p>They may never get fulfilled (C)</p> Signup and view all the answers

What is one primary challenge that economies face?

<p>Guaranteeing the availability of goods and services (A)</p> Signup and view all the answers

What determines the distribution of goods and services in an economy?

<p>The socio-economic composition of the population (C)</p> Signup and view all the answers

What is essential for ensuring that the production capacity is built in an economy?

<p>Proper capital formation or investment (D)</p> Signup and view all the answers

Which of the following is a question regarding the organization of the production process in an economy?

<p>Should production be managed by a mixture of state and private enterprises? (A)</p> Signup and view all the answers

What is a significant concern regarding the source of investment in an economy?

<p>The selection of the government, domestic private sector, or foreign entities (B)</p> Signup and view all the answers

How do economies generally address the challenge of fulfilling the population's needs?

<p>By ensuring a proper level of production capacity (D)</p> Signup and view all the answers

What role does a distribution network play in an economy?

<p>It ensures communication between producers and consumers (D)</p> Signup and view all the answers

What does building an effective supply network require?

<p>A blend of both state and market-driven approaches (C)</p> Signup and view all the answers

What is the primary concept proposed by Marx regarding the transition from Socialism to communism?

<p>It is a transitional stage that may not occur in reality. (A)</p> Signup and view all the answers

What role does competition play in a market economy according to the content?

<p>It is essential for public well-being. (D)</p> Signup and view all the answers

Which economic system is characterized by decisions taken solely by the state?

<p>Centrally Planned Economy. (A)</p> Signup and view all the answers

How did capitalism respond to critiques from socialist and communist economies?

<p>By labeling socialist practices as 'state capitalism'. (A)</p> Signup and view all the answers

What is meant by the 'invisible hand' in economic terms?

<p>Market forces creating equilibrium without interference. (A)</p> Signup and view all the answers

What is a common characteristic of a Mixed Economy?

<p>Integration of both private and state enterprises. (A)</p> Signup and view all the answers

What aspect of capitalism was recognized in the USA immediately after its independence?

<p>Adam Smith's ideas were integrated into public policy. (B)</p> Signup and view all the answers

In a Market Economy, who typically makes decisions regarding production and pricing?

<p>Private enterprises exclusively. (D)</p> Signup and view all the answers

Flashcards

NPAs

Non-Performing Assets in Financial Markets

FRDI Bill

Financial Resolution and Deposit Insurance Bill, aimed at financial stability.

Liquidity Coverage Ratio

Ratio measuring a company's ability to meet short-term obligations.

SWIFT

Society for Worldwide Interbank Financial Telecommunication

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DALY

Disability Adjusted Life Year- a measure reflecting the loss of healthy life years due to disease or injury

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GST

Goods and Services Tax – a tax on goods and services

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COP22

Conference of Parties 22 under the Framework Convention on Climate Change

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Fiscal Glide Path

Projected course of government finances

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Five-Year Plans

A set of economic development plans in India, executed over five years.

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Multi-Level Planning

A system of planning with different levels of administration, from national to local

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Centralized Planning

Planning where the central government plays a main role in all planning decision-making.

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NITI Aayog

A governmental body in India, helping plan for economic development at various levels.

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Economic Reforms

Changes in India's economic policies and strategies to improve the state of the economy

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Balanced Growth

A type of development that equally promotes all sectors of the economy: agriculture, industry, and others.

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Planning Commission

A former central body in India, advising the government on economic strategies.

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Washington Consensus

A set of economic policy recommendations by Washington D.C. to promote growth in developing countries.

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Trade Creation

The increase in trade that results from the formation of a free trade area or customs union.

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Tragedy of the Commons

A situation where individuals acting independently and rationally in their own self-interest deplete a shared resource, even when it's detrimental to the group as a whole.

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Transfer Payments

Payments made or given to individuals or groups without expecting anything in return.

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Transfer Earnings

The return on capital or labor that is due only to its ownership, not because of any effort from the owner.

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Usury

Charging excessively high interest rates on loans.

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Why study economics?

Economics explores how individuals, firms, and governments make choices with limited resources. It also investigates how these choices impact resource allocation and societal well-being.

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Scarcity in economics

Scarcity refers to the fundamental concept that resources are finite, while human wants are infinite. This creates a need for choices and resource management.

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What is a working definition of economics?

Economics is the study of how societies manage scarce resources to produce valuable goods, distribute them among individuals, and make efficient choices in the process.

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Why is economics important?

Economics is crucial because it helps individuals, firms, and governments understand resource allocation, make efficient decisions, and address economic challenges like scarcity and inequality.

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Economic choices are...

Economic choices involve making decisions and trade-offs based on limited resources to satisfy our unlimited wants. This process includes prioritizing needs and managing scarcity effectively.

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How is economics both an art and a science?

Economics is considered an art due to the judgment, intuition, and creative problem-solving involved in making economic choices. It is also a science because it uses data, analysis, and theories to understand economic phenomena.

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Economic Challenge: Goods & Services

The first major challenge an economy faces is ensuring sufficient supply of goods and services its population needs.

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Economic Challenge: Supply Network

The second challenge is creating a reliable network to distribute the produced goods and services efficiently to the population.

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Investment Sources

Deciding where the funds for production and infrastructure will come from: government, private companies, or foreign investors?

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State vs. Market

Different economies decide how goods and services are distributed: some are provided by the government (free or subsidized), while others are sold by private companies.

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Distribution Network Models

The mix of goods and services provided by the state and the market changes over time depending on the evolving needs of the population.

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Organizing Production: Who Decides?

A major debate in economics: should the government, the private sector, or a combination of both control production?

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Joint Effort: State & Private

Some economies adopt a 'mixed' model, where the government and private companies work together in production.

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Contentious History

Deciding how to organize production and distribution has been a major debate throughout human civilization.

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Laissez-faire

An economic doctrine that advocates for minimal government intervention in the market, letting market forces dictate economic activity.

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Invisible Hand

A metaphorical concept describing the self-regulating mechanism of the free market, driven by individual self-interest, which leads to optimal economic outcomes.

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What is the role of the government in a capitalist economy?

In a pure capitalist economy, the government's role is minimal, only intervening to enforce property rights, maintain a stable legal framework, and ensure fair competition.

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What is a Centrally Planned Economy?

An economic system where the government makes all economic decisions regarding production, distribution, and pricing, with no private enterprise allowed.

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How did the theory of Capitalism emerge?

The theory of capitalism developed in response to mercantilism, advocating for free markets and individual initiative, driven by Adam Smith's ideas in 'The Wealth of Nations'.

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State Capitalism

An economic system that resembles capitalism but where the state holds significant control over production and distribution, often through state-owned enterprises.

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How did the idea of Communism emerge?

Communism emerged as a response to capitalism, aiming to replace private ownership with collective ownership and eliminate class differences.

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What is a Mixed Economy?

An economic system that combines elements of both capitalism and socialism, allowing private enterprise but also incorporating government regulation and social welfare programs.

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Study Notes

Financial Market

  • Revised and updated with new items: NPAs upsurge, Standing Deposit Facility Scheme, Insolvency and Bankruptcy Law, PSB recapitalisation, FRDI Bill, Insurance penetration and density.

External Sector

  • Revised and updated with topics: India's external performance, trading partners, trade composition, foreign exchange reserves, external debt (and its composition), WTO Buenos Aires Conference, and India's role.

Taxation and Budgeting

  • New topics added: understanding the economy through GST, demonetisation's impact on tax compliance, following FRBM Review Committee advice, debt rule, fiscal glide path, and general government fiscal situation.

Sustainability and Climate Change

  • Revised and updated to reflect changing challenges and priorities: COP22, COP23, India & SDGs, climate change finance, and future policy outlook.

Human Development in India

  • New issues included: burden of diseases, the "India: Health of Nation's States-2017" report, DALY concept, Swachh Bharat Mission performance, healthcare expenditure, and related concerns.

Economic Concepts and Terminologies

  • Revised and updated with contemporary issues: Liquidity Coverage Ratio, Letter of Undertaking, Net Stable Funding Ratio, Standing Deposit Facility Scheme, SWIFT, and more.

Multiple Choice Questions (MCQs)

  • Updated to reflect current issues: Standing Deposit Facility Scheme, Letter of Undertaking, SWIFT, Liquidity, Interest Rate, FRBM Act Review, Liquidity Coverage Ratio, Rupee convertibility, inverted custom duty, Net Stable Funding Ratio, Cryptocurrency, new national income accounting method, comprehensive public asset management, and Happiness Index.

Five-Year Plans

  • Key elements of India's 5-year plan framework, programme evaluation, organisational structure, evaluation as a plan scheme, NITI Aayog's role, transforming India, changing contours of India, and the principle guiding planning

Economic Reforms

  • Introduction, economic reforms, planning models, Washington Consensus, mixed economy models, etc.

Economic Studies Overview

  • Economics studies resource allocation choices, individual, firm, government, and societal choices. Human life needs are infinite but resources are limited, necessitating choice-making. Economics studies how society makes prioritized choices using scarce resources to meet needs and wants (it's both an art and a science). Different economies face challenges in resource availability and supply networks, impacting living standards.
  • Different economic distribution models exist, varying according to population needs, and state vs. market supply.
  • Economists have various definitions, including how societies use scarce resources to produce valuable commodities and distribute them among people, highlighting resource scarcity and efficient use.

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Description

Test your knowledge on key updates and revisions in the financial market and external sector of India. This quiz covers critical topics such as NPAs, insolvency laws, India's trade performance, GST, and climate change policies. Stay informed on how these elements shape the economy and environment.

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