KAS Prelims 2020 Test KAS-107 Key Answer Part-1

Q.1) Answer (c)

The current account consists of the balance of trade and balance of invisibles.

Q.2) Answer (c)

The first statement is correct because with Micro irrigation, Fertigation can be used to check the loss of the nutrients. The second statement is incorrect. The third statement is correct, because Micro irrigation has evolved from the sub irrigation where irrigation water is supplied to the plant by “raising the water table” up to the root zone.

Q.3) Answer (a)

World Bank is made up of two development institutions owned by 189 member countries:

International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA). IBRD aims to reduce poverty in middle-income and creditworthy poorer countries, while IDA focuses on world’s poorest countries. Their work is complemented by that of the International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA) and International Centre for the Settlement of Investment Disputes (ICSID).

There is a difference between the World Bank and the World Bank Group.

Q.4) Answer (b)

World Trade Organization (WTO) is a body making global trade rules with binding effects on its members. It is not only an institution, but also a set of agreements. The WTO regime is known as the rules based multilateral trading system. The history of the Organization dates back to 1947, when the General Agreement on Tariffs and Trade (GATT) was set up to reduce tariffs barriers, remove trade barriers and facilitate international trade in goods and services. Over the years, GATT held eight rounds of multilateral trade negotiations, the last and most extensive being the Uruguay Round (1986-1994). The WTO came into being at Marrakesh in 1995, following the conclusion of the Uruguay Round. Ater this GATT ceased to exist, and its legal texts were incorporated into the WTO as GATT– 1994. The eastern bloc nations have no special status as a member of WTO.

Q.5) Answer (c)

Narrow money is the most liquid part of the money supply because the demand deposits can be withdrawn anytime during the banking hours. Time deposits on the other hand have a fixed maturity period and hence cannot be withdrawn before expiry of this period. When we add the time despots into the narrow money, we get the broad money, which is denoted by M3. M3 = Narrow money + Time Deposits of public with banks. We note here that the Broad money does not include the interbank deposits such as deposits of banks with RBI or other banks. At the same time, time deposits of public with all banks including the cooperative banks are included in the Broad Money.

Q.6) Answer (b)

SLR or the Statutory Liquidity Ratio is that ration of total deposits which a commercial bank has to maintain with itself at any given point of time in the form of liquid assets like cash in hand, current balances with other banks and first class securities which can be turned into cash (gold, cash or other approve securities). This ratio at present is 25%. Some assets have to be in liquid form to take care of financial emergencies which every bank has to face. It regulates the credit growth in India.

Q.7) Answer (b)

In 1995, the World Trade Organization (WTO) replaced the GATT as the administrative body. A current round of multilateral trade negotiations was conducted in the Doha Development Agenda round.

IDA as an agency to provide ‘soft-loans’ to developing countries, was floated within the Bank under the stewardship of President Eugene Black.

Historically, the bulk of non-concessional IMF assistance has been provided through SBAs. The SBA is designed to help countries address short-term balance of payments problems.

Most of IBRD’s lending generally falls under two categories: investment project financing and development policy operations.

Q.8) Answer (c)

Functions of RBI: sole authority to issue currency; government’s bank; banker’s bank; guardian of money market; lender of the last resort; sole reservoir of Foreign exchange reserves; controller of credit; clearing house for settling interbank transactions. It follows an independent monetary policy.

Q.9) Answer (b)

Debenture is a long-term bond issued by a company in return for a loan which have a fixed rate of interest.

Q.10) Answer (b)

Shangai – Shcomp; Singapore – SIMEX, Straits Time. Shcomp is a composite index of Shanghai Stock exchange. SIMEX and Strait Times are indicators for Singapore.

Q.11) Answer (a)

International Development Association (IDA) , is that part of the World Bank that helps the world’s poorest countries. It complements the World Bank’s other lending arm— the International Bank for Reconstruction and Development (IBRD) which serves middle-income countries with capital investment and advisory services. IDA was created in 1960.

Q.12) Answer (c)

The basic aim of Lead Bank scheme is that the bank should adopt particular districts for intensive development by offering loans and banking services.

Q.13) Answer (c)

The Balance of Payments (BoPs) accounts are an accounting record of all monetary transactions between country and the rest of the world. These transactions include payment for the country’s exports and imports of goods, services, financial capitals and financial transfers. The balance of payments can show if a country has a deficit or surplus

Q.14) Answer (d)

The Reserve Bank of India is the main monetary authority of the country and beside that, in its capacity as the central bank, acts as the bank of the national and state governments. Sometimes it happens that some of the banks closedown due to non-recovery of loans or such other issues. In such conditions people have to suffer the loss. For this reason, there is provision for winding up of the banking company under the Banking Regulation Act, 1949. The power of winding up of Bank lies in the hand of Reserve Bank of India.

Q.15) Answer (a)

Those who benefit from higher inflation are debtors and those who suffer from it are creditors. If one has substantial debt, each rupee one has to repay would be worth less than when it was borrowed. In this way, one pays back less in real terms.

One thought on “KAS Prelims 2020 Test KAS-107 Key Answer Part-1”

Comments are closed.