Daily Static Quiz (Economy) Nov 7, 2025
Daily Static Quiz (Economy) Nov 7, 2025
Q1. Consider the following statements regarding the Securities and Exchange Board of India (SEBI):
SEBI was established as a statutory body under the SEBI Act, 1992 following the Harshad Mehta scam.
SEBI has the power equivalent to that of a civil court under the Code of Civil Procedure, 1908.
SEBI can suspend trading of any security and impound proceeds related to transactions under investigation.
The composition of SEBI includes members from the Union Ministry of Finance and Reserve Bank of India.
Which of the statements given above are correct?
(a) 1, 2 and 3 only
(b) 2, 3 and 4 only
(c) 1, 3 and 4 only
(d) 1, 2, 3 and 4
Q2. With reference to the Insurance Regulatory and Development Authority of India (IRDAI), consider the following statements:
IRDAI was established under the IRDA Act, 1999 as an autonomous statutory body.
It monitors the solvency margins of insurance companies to ensure their ability to meet policyholder claims.
The authority has the power to impose fines but cannot suspend or cancel the registration of insurance companies.
IRDAI mandates all insurance companies to settle claims within timelines prescribed by the authority.
Which of the statements given above are correct?
(a) 1, 2 and 3 only
(b) 1, 2 and 4 only
(c) 2, 3 and 4 only
(d) 1, 3 and 4 only
Q3. The Export-Import Bank of India (EXIM Bank) performs various functions to promote India’s international trade. Which of the following are among its key functions?
Providing Lines of Credit to foreign governments and entities to promote Indian exports.
Offering export credit insurance to protect Indian exporters against non-payment risks.
Financing overseas investments by Indian companies to expand their global presence.
Regulating foreign exchange reserves and determining the exchange rate of Indian rupee.
Select the correct answer using the code given below:
(a) 1, 2 and 3 only
(b) 2, 3 and 4 only
(c) 1, 3 and 4 only
(d) 1, 2, 3 and 4
Q4. Consider the following statements about bond markets in India:
Government securities carry sovereign guarantee and are considered virtually free from default risk.
Corporate bonds generally offer higher yields than government bonds to compensate for credit risk.
Convertible bonds can be converted into shares of the issuing company at maturity or during a specified period.
Municipal bonds in India can only be issued as General Obligation Bonds and not as Revenue Bonds.
Which of the statements given above are correct?
(a) 1, 2 and 3 only
(b) 1, 2 and 4 only
(c) 2, 3 and 4 only
(d) 1, 3 and 4 only
Q5. With reference to the World Trade Organization (WTO), consider the following statements:
India has been a member of WTO since January 1995 and was also a member of GATT since July 1948.
The Dispute Settlement Body (DSB) of WTO can establish dispute panels and authorize suspension of concessions in case of non-compliance.
Under WTO rules, a country cannot take action against companies if they pose a threat to national security.
The Appellate Body of WTO has been non-functional since 2019 due to opposition from the United States.
Which of the statements given above are correct?
(a) 1, 2 and 3 only
(b) 1, 2 and 4 only
(c) 2, 3 and 4 only
(d) 1, 3 and 4 only
Q6. Consider the following statements regarding different types of inflation:
Demand-pull inflation occurs when aggregate demand exceeds aggregate supply at full employment level.
In cost-push inflation, prices rise due to increases in the costs of factors of production while aggregate demand remains constant.
Structural inflation arises from long-term imbalances such as inadequate infrastructure and supply constraints.
Stagflation is characterized by high inflation accompanied by robust economic growth and low unemployment.
Which of the statements given above are correct?
(a) 1, 2 and 3 only
(b) 1, 2 and 4 only
(c) 2, 3 and 4 only
(d) 1, 3 and 4 only
Q7. With reference to inflation measurement in India, consider the following statements:
Headline inflation includes price changes in all commodities including food and fuel.
Core inflation excludes volatile items like food and fuel from the calculation.
India shifted from WPI to CPI as the key measure of inflation for monetary policy decisions following the Urjit Patel Committee recommendations in 2014.
Wholesale Price Index (WPI) includes services in its basket of commodities.
Which of the statements given above are correct?
(a) 1, 2 and 3 only
(b) 1, 2 and 4 only
(c) 2, 3 and 4 only
(d) 1, 3 and 4 only
Q8. Consider the following statements about unconventional economic conditions:
Stagflation is characterized by simultaneous occurrence of high inflation, high unemployment, and stagnant economic growth.
Hyperinflation refers to extremely high and accelerating inflation that leads to rapid loss of currency value.
Reflation involves government policies aimed at expanding output to combat deflation without triggering excessive inflation.
Disinflation refers to a situation where the general price level is falling.
Which of the statements given above are correct?
(a) 1, 2 and 3 only
(b) 1, 2 and 4 only
(c) 2, 3 and 4 only
(d) 1, 3 and 4 only
Q9. The Sarvodaya Plan was an important blueprint for India’s economic planning. Consider the following statements regarding this plan:
It was formulated by Jayaprakash Narayan and published in January 1950.
The plan was inspired by the Gandhian Plan and the Sarvodaya concept of Vinoba Bhave.
It emphasized rapid industrialization through large-scale heavy industries and foreign technology.
The plan advocated decentralized participatory planning and gave priority to agriculture and village industries.
Which of the statements given above are correct?
(a) 1, 2 and 3 only
(b) 1, 2 and 4 only
(c) 2, 3 and 4 only
(d) 1, 3 and 4 only
Q10. Consider the following statements about early economic planning proposals in India:
The FICCI proposal of 1934 called for the establishment of a National Planning Commission to coordinate planning.
The Bombay Plan of 1944-45 was formulated by leading industrialists and emphasized state intervention in strategic sectors.
The Visvesvaraya Plan focused exclusively on agricultural development and opposed industrialization.
The Gandhian Plan of 1944 emphasized decentralized economic structure with self-contained villages.
Which of the statements given above are correct?
(a) 1, 2 and 3 only
(b) 1, 2 and 4 only
(c) 2, 3 and 4 only
(d) 1, 3 and 4 only
ANSWER KEY WITH DETAILED EXPLANATIONS
Q1. Answer: (d) 1, 2, 3 and 4
Explanation: All four statements are correct. SEBI was granted statutory powers through the SEBI Act, 1992 following the Harshad Mehta scam. It possesses powers equivalent to a civil court under the Code of Civil Procedure, 1908, including discovery and production of documents, summoning individuals, and inspection powers. SEBI can suspend trading, restrain market access, and impound proceeds during investigations. Its composition includes two members from the Union Ministry of Finance, one from RBI, and five government-nominated members.
Q2. Answer: (b) 1, 2 and 4 only
Explanation: Statement 3 is incorrect. IRDAI was established under the IRDA Act, 1999 as an autonomous body. It monitors solvency margins to ensure insurers can meet claims obligations. Contrary to statement 3, IRDAI has comprehensive powers to grant, renew, modify, withdraw, suspend, or cancel registrations of insurance companies. It mandates strict timelines for claim settlements to protect policyholders.
Q3. Answer: (a) 1, 2 and 3 only
Explanation: Statement 4 is incorrect. EXIM Bank extends Lines of Credit to foreign governments and entities to promote Indian exports. It provides export credit insurance against non-payment risks. The bank finances overseas investments by Indian companies for global expansion. However, regulating foreign exchange reserves and determining exchange rates is the function of RBI, not EXIM Bank.
Q4. Answer: (a) 1, 2 and 3 only
Explanation: Statement 4 is incorrect. Government securities carry sovereign guarantee and are virtually default-risk free. Corporate bonds offer higher yields (9-14%) compared to government bonds (6-8%) to compensate for credit risk. Convertible bonds can be converted into shares at maturity or during specified periods. Municipal bonds in India can be issued as both General Obligation Bonds and Revenue Bonds (with maturity up to 30 years).
Q5. Answer: (b) 1, 2 and 4 only
Explanation: Statement 3 is incorrect. India has been a WTO member since January 1995 and was a GATT member since July 1948. The DSB can establish dispute panels and authorize suspension of concessions for non-compliance. Contrary to statement 3, WTO rules allow countries to take action for national security reasons, as demonstrated by India’s ban on Chinese apps. The Appellate Body has been non-functional since 2019 due to US opposition to judge appointments.
Q6. Answer: (a) 1, 2 and 3 only
Explanation: Statement 4 is incorrect. Demand-pull inflation occurs when aggregate demand exceeds supply at full employment, described as “too much money chasing too few goods”. Cost-push inflation results from increased production costs while demand remains constant. Structural inflation arises from long-term imbalances like inadequate infrastructure and supply constraints. Stagflation is characterized by high inflation with slow growth and high unemployment, NOT robust growth and low unemployment.
Q7. Answer: (a) 1, 2 and 3 only
Explanation: Statement 4 is incorrect. Headline inflation includes all commodities including food and fuel. Core inflation excludes volatile food and fuel items to measure underlying inflation trends. Following the Urjit Patel Committee recommendations in 2014, RBI shifted from WPI to CPI for monetary policy decisions. WPI comprises 676 items but does NOT include services, only covering goods.
Q8. Answer: (a) 1, 2 and 3 only
Explanation: Statement 4 is incorrect. Stagflation involves simultaneous high inflation, high unemployment, and stagnant growth, coined by Iain Macleod in 1965. Hyperinflation refers to extremely high, accelerating inflation causing rapid currency value loss, as in Germany (1920s) and Zimbabwe (2008). Reflation involves policies to expand output and combat deflation without excessive inflation. Disinflation is the process of reducing the rate of inflation, NOT falling prices; falling prices indicate deflation.
Q9. Answer: (b) 1, 2 and 4 only
Explanation: Statement 3 is incorrect. The Sarvodaya Plan was formulated by Jayaprakash Narayan and published in January 1950. It was inspired by the Gandhian Plan and Vinoba Bhave’s Sarvodaya concept. The plan OPPOSED large-scale industrialization and foreign technology, instead advocating a Luddite approach and freedom from foreign technologies. It emphasized decentralized planning, agriculture, and small-scale cottage industries.
Q10. Answer: (b) 1, 2 and 4 only
Explanation: Statement 3 is incorrect. The FICCI proposal of 1934 called for a National Planning Commission under President N.R. Sarkar. The Bombay Plan (1944-45) by Tata, Birla, and other industrialists emphasized state intervention in strategic sectors and industrial growth. The Visvesvaraya Plan (1934) did NOT focus exclusively on agriculture; it emphasized industrialization and shifting workers from agriculture to industry. The Gandhian Plan (1944) by Shriman Narayan Agarwal emphasized decentralized structure with self-contained villages.
