Union Public Service Commission(UPSC) Previous Years Questions and Answers

1 .

With reference to the international trade of India at present, which of the following statements is/are correct?

1. India’s merchandise exports are less than its merchandise imports.

2. India’s imports of iron and steel, chemicals, fertilisers and machinery have decreased in recent years.

3. India’s exports of services are more than its imports of services.

4. India suffers from an overall trade/current account deficit.

Select the correct answer using the code given below :

A)

1 and 2 only

B)

2 and 4 only

C)

3 only

D)

1, 3 and 4 only

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

Year : 2020

Category : General Studies

2 .

The term 'West Texas Intermediate' sometimes found in news, refers to a grade of

A)

Crude oil

B)

Bullion

C)

Rare earth elements

D)

Uranium

Correct Answer : Crude oil

Note :

West Texas Intermediate (WTI) crude oil is a specific grade of crude oil and one of the main three benchmarks in oil pricing, along with Brent and Dubai Crude.

WTI is known as a light sweet oil because it contains 0.24% sulfur, making it "sweet," and has a low density, making it "light." It is the underlying commodity of the New York Mercantile Exchange's (NYMEX) oil futures contract and is considered a high-quality oil that is easily refined.

Year : 2020

Category : General Studies

3 .

In the context of the Indian economy, non-financial debt includes which of the following?

1. Housing loans owed by households.

2. Amounts outstanding on credit cards

3. Treasury bills

Select the correct answer using the code given below :

A)

1 only

B)

1 and 2 only

C)

3 only

D)

1, 2 and 3

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

Note : Non-financial debt consists of credit instruments issued by governmental entities, households and businesses that are not included in the financial sector. It shares most of the same characteristics with financial debt, except the issuers are non-financial. It includes industrial or commercial loans, Treasury bills and credit card balances.

Year : 2020

Category : General Studies

4 .

In India, why are some nuclear reactors kept "IAEA Safeguards" while others are not?

A)

Some use uranium and others use thorium

B)

Some use imported uranium and others use domestic supplies

C)

Some are operated by foreign enterprises and others are operated by domestic enterprises

D)

Some are State-owned and others are privately-owned

Correct Answer : Some use imported uranium and others use domestic supplies

Note :

There are at present 22 operational reactors, of which 14 are under the International Atomic Energy Agency (IAEA) safeguards as they use imported fuel. India currently imports uranium from Russia, Kazakhstan and Canada. Plans are also afoot to procure the fuel from Uzbekistan and Australia. The remaining "military" facilities remained off-limits to international inspectors.

By placing the reactors under the IAEA safeguards, India gives the international nuclear energy watchdog access to them. This step was taken by the country in 2014 to demonstrate that its nuclear energy programme was for peaceful purposes. This is a necessary step under the Indo-US nuclear deal.

Year : 2020

Category : General Studies

5 .

With reference to Trade-Related Investment Measures (TRIMS), which of the following statements is/are correct?

1. Quantitative restrictions on imports by foreign investors are prohibited.

2. They apply to investment measures related to trade in both goods and services.

3. They are not concerned with the regulation of foreign investment.

Select the correct answer using the code given below :

A)

1 and 2 only

B)

2 only

C)

1 and 3 only

D)

1, 2 and 3

Correct Answer : Option (C) - 1 and 3 only

Note :

The Agreement on Trade-Related Investment Measures (TRIMS) recognizes that certain investment measures can restrict and distort trade. It states that WTO members may not apply any measure that discriminates against foreign products or that leads to quantitative restrictions, both of which violate basic WTO principles. A list of prohibited TRIMS, such as local content requirements, is part of the Agreement. The TRIMS Committee monitors the operation and implementation of the Agreement and allows members the opportunity to consult on any relevant matters. Therefore, statement 1 is correct.

The objectives of the Agreement, as defined in its preamble, include “the expansion and progressive liberalization of world trade and to facilitate investment across international frontiers so as to increase the economic growth of all trading partners, particularly developing country members, while ensuring free competition”.

The coverage of the Agreement is defined in Article 1, which states that the Agreement applies to investment measures related to trade in goods only. Thus, the TRIMs Agreement does not apply to services. Therefore, statement 2 is not correct.

As an agreement that is based on existing GATT disciplines on trade in goods, the Agreement is not concerned with the regulation of foreign investment. The disciplines of the TRIMs Agreement focus on investment measures that discriminate between imported and exported products and/or create import or export restrictions. Therefore, statement 3 is correct.

Year : 2020

Category : General Studies

6 .

If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do?

1. Cut and optimize the Statutory Liquidity Ratio

2. Increase the Marginal Standing Facility Rate

3. Cut the Bank Rate and Repo Rate

Select the correct answer using the code given below :

A)

1 and 2 only

B)

2 only

C)

1 and 3 only

D)

1, 2 and 3

Correct Answer : Option (B) - 2 only

Note :

Expansionary monetary policy involves cutting interest rates or increasing the money supply to boost economic activity. An increase in the SLR constricts the ability of the bank to inject money into the economy which affects growth. Thus, statement (1) is not correct.

The MSF or Marginal Standing Facility (MSF) Rate is the rate at which RBI lends funds overnight to scheduled banks, against government securities. RBI has introduced this borrowing scheme to regulate short-term asset liability mismatch in a more effective manner. MSF basically provides a greater liquidity cushion. Higher the MSF rate, more expensive is borrowing for banks, as well as corporate borrowers and individuals. It is used by RBI to control the money supply in the country’s financial system. Thus, statement (2) is correct.

The repo rate is the rate at which the Reserve Bank of India lends money to commercial banks in order to help these lenders meet their short-term liquidity needs. If the repo rate is low, banks are required to pay lower interest amount towards loans. This impacts the loans taken by customers, who can also avail loans at lower interest rates. This boosts economic activity.

The rate of interest charged by the central bank on the loans they have extended to commercial banks and other financial institutions is called “Bank Rate”. When Bank Rate is increased by RBI, bank’s borrowing costs increases which in return, reduces the supply of money in the market. Thus, statement (3) is not correct.

Year : 2020

Category : General Studies

7 .

With reference to the Indian economy after the 1991 economic liberalization, consider the following statements :

1. Worker productivity (Rupee per worker at 2004-05 prices) increased in urban areas while it decreased in rural areas.

2. The percentage share of rural areas in the workforce steadily increased.

3. In rural areas, the growth in non-farm economy increased.

4. The growth rate in rural employment decreased.

Which of the statements given above is/are correct?

A)

1 and 2 only

B)

3 and 4 only

C)

3 only

D)

1, 2 and 4 only

Correct Answer : Option (B) - 3 and 4 only

Note :

Traditionally, agriculture is the prime sector of rural economy and rural employment. The transition in composition of output and occupation from agriculture to more productive non-farm sectors is considered as an important source of economic growth and transformation in rural and total economy.

Higher rural workers’ productivity is mainly visible though higher agricultural wages in the 1990s as compared to the 1980s. However, the increase in wages and agricultural incomes had significant diversity across states. So, statement 1 is not correct.

Thus, statement 2 is not correct.

Workforce Different Sector

Thus, statement 3 is correct.

Thus, statement 4 is correct.

Year : 2020

Category : General Studies

8 .

In India, under cyber insurance for individuals, which of the following benefits are generally covered, in addition to payment for the loss of funds and other benefits?

1. Cost of restoration of the computer system in case of malware disrupting access to one’s computer

2. Cost of a new computer if some miscreant wilfully damages it, if proved so

3. Cost of hiring a specialized consultant to minimize the loss in case of cyber extortion

4. Cost of defence in the Court of Law if any third party files a suit

Select the correct answer using the code given below :

A)

1, 2 and 4 only

B)

1, 3 and 4 only

C)

2 and 3 only

D)

1, 2, 3 and 4

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

Note :

Cyber insurance for individuals policies are designed to cover expenses related to post factor actions of a cyber-attack. Such as, the cost incurred during the prosecution process and defense costs are paid by the insurance company relating to the types of cyber risks mentioned in the documentation of the policy. Other costs such as financial losses, online loss of money suffered by the policyholder due to cyber-attacks are also covered in the policy up to the sum assured as mentioned in the policy. Expenses incurred for counseling treatments post a cyber-attack is also paid for including damages against third party liabilities and restoration costs. It also takes care of consultant fees, court expenses, and legal fees concerning the cyber-attack. So (1), (3), and (4) are covered.

What is not covered?

If the attack was intentionally and deliberately done, the policy will not pay any claim. Insurers do not cover any fraudulent, dishonest or malicious act. These policies do not provide any cover for any prior actions of the attack that the policyholder has faced before buying the policy; nor do they cover for personal data or lost pictures in the policy. The insurers also take measures to avoid any cyber-attack to their customers by prompting for backing up their data, updating anti-virus and having a proper set of passwords. If such measures are not taken properly, in case of a cyber-attack, your claim can be jeopardized.

Year : 2020

Category : General Studies

9 .

In India, which of the following can be considered as public investment in agriculture?

1. Fixing Minimum Support Price for agricultural produce of all crops

2. Computerization of Primary Agricultural Credit Societies

3. Social Capital development

4. Free electricity supply to farmers

5. Waiver of agricultural loans by the banking system

6. Setting up of cold storage facilities by the governments

Select the correct answer using the code given below :

A)

1, 2 and 5 only

B)

1, 3, 4 and 5 only

C)

2, 3 and 6 only

D)

1, 2 3, 4, 5 and 6

Correct Answer : Option (C) - 2, 3 and 6 only

Note :

• Public investment in Agriculture constitutes investments made by government to create capital or social assets to improve agricultural productivity. Fixing MSP gives farmers the remunerative price without creating any durable infrastructure. So, (1) is not correct.

• Computerization Agri credit societies improves their productivity by digitising their functioning. Social capital development like agri education improves the knowledge base of farmers paving the way for improved productivity. So, (2) and (3) are correct.

• While free electricity and waiver of agri loans creates government liabilities without creating any durable assets on ground. So, (4) and (5) are not correct.

• Cold chain infra also helps reduce post-harvest losses creating durable assets. So, (6) is correct.

Year : 2020

Category : General Studies

10 .

What is the importance of the term “Interest Coverage Ratio” of a firm in India?

1. It helps in understanding the present risk of a firm that a bank is going to give loan to.

2. It helps in evaluating the emerging risk of a firm that a bank is going to give loan to.

3. The higher a borrowing firm’s level of Interest Coverage Ratio, the worse is its ability to service its debt.

Select the correct answer using the code given below :

A)

1 and 2 only

B)

2 only

C)

1 and 3 only

D)

1, 2 and 3

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

Note :

One of the significant and most crucial liquidity ratios is the Interest Coverage Ratio, which indicates the level of a company's ability to afford the interest that is to be paid by the company for raising debt. It does not measure the ability to make principal payments on the debt; instead it depicts how much the company can afford to pay the interests on the debt promptly.

• The interest coverage ratio is used to see how well a firm can pay the interest on outstanding debt. So, statement 1 is correct.

• Also called the times-interest-earned ratio, this ratio is used by creditors and prospective lenders to assess the risk of lending capital to a firm. So, statement 2 is correct.

• A higher coverage ratio is better, although the ideal ratio may vary by industry. So, statement 3 is not correct.

Year : 2020

Category : General Studies