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

1 .

Consider the following statements :

1. Tight monetary policy of US Federal Reserve could lead to capital flight.

2. Capital flight may increase the interest cost of firms with existing External Commercial Borrowings (ECBs).

3. Devaluation of domestic currency decreases the currency risk associated with ECBs.

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: Tight monetary policy of the US federal Reserve could lead to capital flight. It is also called ‘Taper Tantrum’.

Statement 2 is correct: Interest risk associated with capital flight: capital flight increases the interest rate on firms with Existing borrowings.

Statement 3 is incorrect: Capital Risk associated with capital flight: Devaluation of domestic currency will increase the risk with external commercial borrowings.

It will increase the liability of domestic firms in terms of domestic currency.

Source : Press release of January 2022, RBI

Year : 2022

Category : General Studies

2 .

Consider the following States :

1. Andhra Pradesh

2. Kerala

3. Himachal Pradesh

4. Tripura

How many of the above are generally known as tea-producing States ?

A)

Only one State

B)

Only two States

C)

Only three States

D)

All four States

Correct Answer : Option (D) - All four States

Note :

Assam, West Bengal, Tamil Nadu, and Kerala are the major tea producing states in India.

Other states that produce tea include Himachal Pradesh, Uttarakhand, Meghalaya, Andhra Pradesh and Tripura.

Source : Tea association of India, News- Tea estates facing Crisis (Economic Times)

Year : 2022

Category : General Studies

3 .

Consider the following statements :

1. In India, credit rating agencies are regulated by Reserve Bank of India.

2. The rating agency popularly known as ICRA is a public limited company.

3. Brickwork Ratings is an Indian credit rating agency.

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 (B) - 2 and 3 only

Note :

Statement 1 is incorrect: Credit Rating Agencies (CRA) analyze a debtor’s ability to repay the debt and also rate their credit risk.

All the credit rating agencies in India are regulated by SEBI (Credit Rating Agencies) Regulations, 1999 of the Securities and Exchange Board of India Act, 1992.

There are a total of six credit agencies in India viz, CRISIL, CARE, ICRA, SMREA, Brickwork Rating, and India Rating and Research Pvt. Ltd.

Statement 2 is correct: ICRA Limited is a public limited company that was set up in 1991 in Gurugram. The company was formerly known as Investment Information and Credit Rating Agency of India Limited.

Statement 3 is correct: Brickwork Ratings is recognised as external credit assessment agency (ECAI) by Reserve Bank of India (RBI) to carry out credit ratings in India.

Brickwork Rating was established in 2007 and is promoted by Canara Bank. It offers ratings for bank loans, SMEs, corporate governance rating, municipal corporation, capital market instrument, and financial institutions.

Year : 2022

Category : General Studies

4 .

With reference to the ‘Banks Board Bureau (BBB), which of the following statements are correct ?

1. The Governor of RBI is the Chairman of BBB.

2. BBB recommends for the selection of heads for Public Sector Banks.

3. BBB helps the Public Sector Banks in developing strategies and capital raising plans.

Select the correct answer using the code given below:

A)

1 and 2 only

B)

2 and 3 only

C)

1 and 3 only

D)

1, 2 and 3

Correct Answer : Option (B) - 2 and 3 only

Note :

* Statement 1 is incorrect: It is not mandated that the Governor of RBI will be the chairman of Bank Board Bureau (BBB).

* Statements 2 & 3 are correct: The BBB is empowered to select the heads of Public sector Banks. It also helps PSBs to develop strategies and capital raising plans.

* The broad agenda of the Banks Board Bureau was the administration of state-owned lenders. Its functions involve:

* providing assistance to Public Sector Banks to restructure their business strategies

* Assisting banks with the strategies to deal with issues of bad loans or stressed assets

* Strategies for raising capitals through innovative financial instruments and methods

* Recommendations to the government on top-level appointments like full-time Directors, non-Executive Chairman in PSBs.

* suggest plans for consolidation and merger with other banks while they are trapped in the problem of high collective gross NPAs.

* To advise the Central Government on matters relating to appointments, confirmation or extension of tenure and termination of services of the Directors of nationalised banks.

* To build a data bank containing data relating to the performance of nationalised banks and its officers.

* To advise the Central Government on the formulation and enforcement of a code of conduct and ethics for managerial personnel in nationalised banks.

* To advise the Central Government on evolving suitable training and development programs for managerial personnel in nationalised banks.

* So By Elimination the other two statements are correct.

Source : Bank Board Bureau official website, Indian Express

Year : 2022

Category : General Studies

5 .

With reference to Convertible Bonds, consider the following statements :

1. As there is an option to exchange the bond for equity, Convertible Bonds pay a lower rate of interest.

2. The option to convert to equity affords the bondholder a degree of indexation to rising consumer prices.

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

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

Note :

Both the statements are correct.

Convertible bonds : Convertible bonds are hybrid securities that offer investors the best of both stocks and bonds. Like any other kind of bond, they provide a guaranteed income stream and pay back the amount you originally lent the company.

Convertible bonds typically carry lower interest rates payments than straight corporate bonds—the savings in interest expense can be significant. Investors accept the lower interest payments because the conversion option offers the opportunity to benefit from increases in the stock price. Hence statement 1 is correct.

Governments might use indexation as a way to potentially alleviate the negative effects inflation can have on the recipients of transfer payments and entitlements. Social Security payments, for example, are indexed to the annual increase in the Consumer Price Index.

Source : Forbes, Corporate Finance Institute paper on Convertible Bonds

Year : 2022

Category : General Studies

6 .

Consider the following:

1. Asian Infrastructure Investment Bank

2. Missile Technology Control Regime

3. Shanghai Cooperation Organisation

India is a member of which of the above ?

A)

1 and 2 only

B)

3 only

C)

2 and 3 only

D)

1, 2 and 3

Correct Answer : Option (D) - 1, 2 and 3

Note :

India is the member of all the Organizations.

* The SCO currently comprises eight Member States (China, India, Kazakhstan, Kyrgyzstan, Russia, Pakistan, Tajikistan and Uzbekistan).

* Missile Technology Control Regime: On 27 June, India became a full member of the MTCR after a “deal” was struck with Italy. This marks the first entry into any multilateral export control regime for India.

* Asian Infrastructure Investment Bank: On 24 October 2014, twenty-one countries signed a Memorandum of Understanding (MOU) regarding the AIIB in Beijing, China: Bangladesh, Brunei, Cambodia, India, Kazakhstan, Kuwait, Laos, Malaysia, Myanmar, Mongolia, Nepal, Oman, Pakistan, Philippines, Qatar, Singapore, Sri Lanka, Thailand, Uzbekistan and Vietnam.

Source : Organizations in News, The Hindu

Year : 2022

Category : General Studies

7 .

Consider the following statements :

1. Vietnam has been one of the fastest growing economies in the world in the recent years.

2. Vietnam is led by a multi-party political system.

3. Vietnam's economic growth is linked to its integration with global supply chains and focus on exports.

4. For a long time Vietnam's low labour costs and stable exchange rates have attracted global manufacturers.

5. Vietnam has the most productive e-service sector in the Indo-Pacific region.

Which of the statements given above are correct?

A)

2 and 4

B)

3 and 5

C)

1, 3 and 4

D)

1 and 2

Correct Answer : Option (C) - 1, 3 and 4

Note :

Statement 1 is correct: According to a forecast by PricewaterhouseCoopers in February 2017, Vietnam may be the fastest-growing of the world's economies, with a potential annual GDP growth rate of about 5.1%, which would make its economy the 10th-largest in the world by 2050.

Statement 2 is incorrect: Vietnam is a Marxist–Leninist one-party state based on democratic centralism.

Statement 3 is correct: Vietnam’s economic growth is linked to its integration with global supply chains and focus on exports.

Statement 4 is correct: Vietnam has low labour costs and stable exchange rates which attract global investments.

Year : 2022

Category : General Studies

8 .

In India, which one of the following is responsible for maintaining price stability by controlling inflation?

A)

Department of Consumer Affairs

B)

Expenditure Management Commission

C)

Financial Stability and Development Council

D)

Reserve Bank of India

Correct Answer : Reserve Bank of India

Note :

* Reserve Bank of India is responsible for maintaining price stability and controlling inflation.

* It is the responsibility of MPC in India, but RBI itself plays a large role in MPC and also carries out task of monetary policy committee.

* So RBI is the correct answer if MPC is not given in the options.

Source : Monetary Functions by RBI

Year : 2022

Category : General Studies

9 .

With reference to Non-Fungible Tokens (NFTs), consider the following statements :

1. They enable the digital representation of physical assets.

2. They are unique cryptographic tokens that exist on a blockchain.

3. They can be traded or exchanged at equivalency and therefore can be used as a medium of commercial transactions.

Which of the statements given above are correct?

A)

1 and 2 only

B)

2 and 3 only

C)

1 and 3 only 1

D)

1, 2 and 3

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

Note :

* NFTs typically contain references to digital files such as photos, videos, and audio. Because NFTs are uniquely identifiable, they differ from cryptocurrencies, which are fungible. The market value of an NFT is associated with the digital file it references.

* Non-fungible tokens (NFTs) are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other.

* Statement 3 is incorrect : Unlike cryptocurrencies, they cannot be traded or exchanged at equivalency. This differs from fungible tokens like cryptocurrencies, which are identical to each other and, therefore, can serve as a medium for commercial transactions.

* NFTs are unique cryptographic tokens that exist on a blockchain and cannot be replicated.

* NFTs can represent real-world items like artwork and real estate.

* "Tokenizing" these real-world tangible assets makes buying, selling, and trading them more efficient while reducing the probability of fraud.

* NFTs can also function to represent individuals' identities, property rights, and more.

* The distinct construction of each NFT has the potential for several use cases. For example, they are an ideal vehicle to digitally represent physical assets like real estate and artwork. Because they are based on blockchains, NFTs can also work to remove intermediaries and connect artists with audiences or for identity management. NFTs can remove intermediaries, simplify transactions, and create new markets.

More Sources : Investopedia and Website Planet

Year : 2022

Category : General Studies

10 .

Consider the following pairs:

Reservoirs States

1. Ghataprabha – Telangana

2. Gandhi Sagar – Madhya Pradesh

3. Indira Sagar – Andhra Pradesh

4. Maithon – Chhattisgarh

How many pairs given above are not correctly matched ?

A)

Only one pair

B)

Only two pairs

C)

Only three pairs

D)

All four pairs

Correct Answer : Option (A) - Only one pair

Note :

Only one pair is correct.

Ghataprabha- Karnataka

Gandhi Sagar- Madhya Pradesh

Indira Sagar – Madhya Pradesh

Maithon- Jharkhand

Source : Indian Geography, Indian Map

Year : 2022

Category : General Studies