UPSC Civil Services 2022 Prelims (General Studies) Question Paper With Answer Key

1 .

"Rapid Financing Instrument" and "Rapid Credit Facility" are related to the provisions of lending by which one of the following?

A)

Asian Development Bank

B)

International Monetary Fund

C)

United Nations Environment Programme Finance Initiative

D)

World Bank

Correct Answer : International Monetary Fund

Note : The Rapid Financing Instrument (RFI) provides rapid financial assistance, which is available to all member countries facing an urgent balance of payments need. The RFI was created as part of a broader reform to make the IMF’s financial support more flexible to address the diverse needs of member countries. The RFI replaced the IMF’s previous emergency assistance policy and can be used in a wide range of circumstances.

Category : General Studies

2 .

Which refrence to the Indian Economy, consider the following statements;

1. An increase in the Nominal Effective Exchange Rate (NEER) indicates the appreciation of rupee.

2. An increase in the Real Effective Exchange Rate (REER) indicates improvement in trade competitiveness.

3. An increasing in trend in domestic inflation relative to inflation in order countries is likely to cause an increasing divergence between NEER and REER.

A)

1 and 2

B)

2 and 3

C)

1 and 3

D)

1, 2 and 3

Correct Answer : Option (C) - 1 and 3

Category : Economic and Social Development

3 .

With reference to the Indian Economy, consider the follwing?

1. If the inflation is too high, RBI is likely to buy government securities

2. If the rupee is rapidly depreciating, RBI is likely to sell dollars in the market

3. If intereste rate in USA or European Union were to fall, that is likely to induce RBI to buy dollars

Which of the following is correct?

A)

1 and 2

B)

2 and 3

C)

1 and 3

D)

1, 2 and 3

Correct Answer : Option (B) - 2 and 3

Category : Economic and Social Development

4 .

With reference to the "G 20 Common Framework", consider the following statements:

1. It is the initiative endorsed by G 20 together with the Paris Club.

2. It is the initiative to support Low Income Countries with unsuitable debt.

A)

1 only

B)

2 only

C)

1 and 2

D)

Neither 1 nor 2

Correct Answer : Option (C) - 1 and 2

Note : The G20 Common Framework for debt treatment beyond the DSSI (Common Framework) is an initiative endorsed by the G20, together with the Paris Club, last November to support, in a structural manner, Low Income Countries with unsustainable debt

Category : International Institutions

5 .

With reference to the India economy, what are the advantages of “Inflation-Indexed Bonds (IIBs)”?

1. Government can reduce the coupon rates on its borrowing by way of IIBs.

2. IIGs provide protection to the investors from uncertainty regarding inflation.

3. The interest received as well as capital gains on IIBs are not taxable.

Which of the statements given above are correct?

A)

1 and 2 only

B)

2 and 3 only

C)

1 and 3 only

D)

1, 2 and 3

Correct Answer : Option (A) - 1 and 2 only

Note :

Statement 1 is correct : Since these bonds provide no risk of capital loss, it can offer a lesser rate of interest (coupon) as interest is directly proportional to risk.

Statement 2 is correct : Inflation indexed bonds provide protection to investors from uncertainty regarding inflation.

Statement 3 is incorrect : Interest or inflation compensation both are taxable. There is no special treatment for these bonds.

Category : General Studies

6 .

With reference to foreign-owned e-commerce firms operating in India, which of the following statements is/are correct?

1. They can sell their own goods in addition to offering their platforms as market-places.

2. The degree to which they can own big sellers on their platforms is limited.

Select the correct answer using the code given below:

A)

1 only

B)

2 only

C)

Both 1 and 2

D)

Neither 1 nor 2

Correct Answer : Option (C) - Both 1 and 2

Note :

Statement 1 is correct: E- commerce firms can sell their own products in addition to offering their platforms as market place.

Statement 2 is correct: Big sellers have the limit of 25% for sale on e-commerce platform

Source : Vakil Search

Category : General Studies

7 .

Which of the following activities constitute real sector in the economy?

1. Farmers harvesting their crops

2. Textile mills converting raw cotton into fabrics

3. A commercial bank lending money to a trading company

4. A corporate body issuing Rupee Denominated Bonds overseas

Select the correct answer using the code given below:

A)

1 and 2 only

B)

2, 3 and 4 only

C)

1, 3 and 4 only

D)

1, 2, 3 and 4

Correct Answer : Option (A) - 1 and 2 only

Note : The real sector of the economy deals with the production side, while the nominal economy deals with the financial side. Financial activities majorly support real(production) activity, but does not contribute itself too much except the factor income it generates.

Category : General Studies

8 .

Which one of the following situations best reflects “Indirect Transfers” often talked about in media recently with reference to India?

A)

An Indian company investing in a foreign enterprise and paying taxes to the foreign country on the profits arising out of its investment

B)

A foreign company investing in India and paying taxes to the country of its base on the profits arising out of its investment

C)

An Indian company purchases tangible assets in a foreign country and sells such assets after their value increases and transfers the proceeds to India

D)

A foreign company transfers shares and such shares derive their substantial value from assets located in India

Correct Answer : A foreign company transfers shares and such shares derive their substantial value from assets located in India

Note : Indirect transfers refer to situations where when foreign entities own shares or assets in India, the shares of such foreign entities are transferred instead of a direct transfer of the underlying assets in India.

Source : Nishith Desai

Category : General Studies

9 .

With reference to the expenditure made by an organization or a company, which of the following statements is/are correct?

1. Acquiring new technology is capital expenditure.

2. Debt financing is considered capital expenditure, while equity financing is considered revenue expenditure.

Select the correct answer using the code given below:

A)

1 only

B)

2 only

C)

Both 1 and 2

D)

Neither 1 nor 2

Correct Answer : Option (A) - 1 only

Note :

Statement 1 is correct: Acquiring new technology is considered as capital expenditure as it will generate profit in the future and helps in creation of new assets.

Statement 2 is incorrect: Debt Financing and equity financing are considered under capital expenditure.

Category : General Studies

10 .

With reference to the Indian economy, consider the following statements:

1. A share of the household financial savings goes towards government borrowings.

2. Dated securities issued at market-related rates in auctions form a large component of internal debt.

Which of the above statements is/are correct?

A)

1 only

B)

2 only

C)

Both 1 and 2

D)

Neither 1 nor 2

Correct Answer : Option (C) - Both 1 and 2

Note :

Statement 1 is correct: A share of household financial savings goes to the government borrowings, as part of public accounts of India. It mainly consists of provident funds.

Statement 2 is correct: Dated securities means regular government bonds, whereas T-bills are considered separately. Dated securities issued at market related rates comprise a large share of internal debt.

Category : General Studies

UPSC 2022 (Prelims) Questions