Q3easyPartial Truth
As per the NSSO 70th Round "Situation Assessment Survey of Agricultural Households", consider the following statements :
1. Rajasthan has the highest percentage share of agricultural households among its rural households.
2. Out of the total agricultural households in the country, a little over 60 percent belong to OBCs.
3. In Kerala, a little over 60 percent of agricultural households reported to have received maximum income from sources other than agricultural activities.
Which of the statements given above is/are correct ?
(a) 2 and 3 only
(b) 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer: (c)
Trap: Partial Truth
Statement 2 is the trap: OBCs constitute about 45% of agricultural households, not 60%. The 60% figure sounds plausible given OBC population share, making it a convincing distractor.
Q6moderateSimilar Sounding
Which one of the following best describes the term "Merchant Discount Rate" sometimes seen in news ?
(a) The incentive given by a bank to a merchant for accepting payments through debit cards pertaining to that bank.
(b) The amount paid back by banks to their customers when they use debit cards for financial transactions for purchasing goods or services.
(c) The charge to a merchant by a bank for accepting payments from his customers through the bank's debit cards.
(d) The incentive given by the Government to merchants for promoting digital payments by their customers through Point of Sale (PoS) machines and debit cards.
Answer: (c)
Trap: Similar Sounding
Option (a) reverses the direction of payment -- MDR is a charge TO the merchant, not an incentive FOR the merchant. The word 'discount' in MDR misleads students into thinking it's a benefit/incentive rather than a fee.
Q8easyCommon Misconception
With reference to India's decision to levy an equalization tax of 6% on online advertisement services offered by non-resident entities, which of the following statements is/are correct ?
1. It is introduced as a part of the Income Tax Act.
2. Non-resident entities that offer advertisement services in India can claim a tax credit in their home country under the "Double Taxation Avoidance Agreements".
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
Answer: (d)
Trap: Common Misconception
Statement 1 is a trap: the equalization levy was introduced under the Finance Act 2016 as a separate chapter, NOT as part of the Income Tax Act. Since it's not an income tax, DTAA tax credits (Statement 2) cannot be claimed, making both statements wrong.
Q9easyPartial Truth
Consider the following statements :
1. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 60% for the general (combined) government by 2023, comprising 40% for the Central Government and 20% for the State Governments.
2. The Central Government has domestic liabilities of 21% of GDP as compared to that of 49% of GDP of the State Governments.
3. As per the Constitution of India, it is mandatory for a State to take the Central Government's consent for raising any loan if the former owes any outstanding liabilities to the latter.
Which of the statements given above is/are correct ?
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer: (c)
Trap: Partial Truth
Statement 2 reverses the figures -- the Central Government's domestic liabilities are around 49% of GDP while States' are around 21%. The numbers are real but swapped, making it a convincing distractor.
Q10moderateAbsolute Qualifier
Consider the following statements :
1. The quantity of imported edible oils is more than the domestic production of edible oils in the last five years.
2. The Government does not impose any customs duty on all the imported edible oils as a special case.
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
Answer: (a)
Trap: Absolute Qualifier
Statement 2 uses 'does not impose any customs duty on ALL imported edible oils' -- the word 'all' is the trap. India does impose customs duty on some edible oils (like olive oil, soybean oil) while some may have lower or zero duty. The absolute claim is false.
Q15moderateSimilar Sounding
Which one of the following links all the ATMs in India ?
(a) Indian Banks' Association
(b) National Securities Depository Limited
(c) National Payments Corporation of India
(d) Reserve Bank of India
Answer: (c)
Trap: Similar Sounding
RBI (option d) is the regulator of banking and seems like a natural answer for anything linking banks. IBA (option a) is an association of banks. But NPCI operates the National Financial Switch (NFS) that actually interconnects all ATMs.
Q16easyCommon Misconception
Consider the following statements :
1. Capital Adequacy Ratio (CAR) is the amount that banks have to maintain in the form of their own funds to offset any loss that banks incur if the account-holders fail to repay dues.
2. CAR is decided by each individual bank.
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
Answer: (a)
Trap: Common Misconception
Statement 2 is the trap: CAR norms are set by RBI (based on Basel norms), not by individual banks. Students who know CAR's definition but not who sets it may think banks decide their own ratio.
Q26easy
India enacted The Geographical Indications of Goods (Registration and Protection) Act, 1999 in order to comply with the obligations to
(a) ILO
(b) IMF
(c) UNCTAD
(d) WTO
Answer: (d)
Q34moderateCommon Misconception
Consider the following countries :
1. Australia
2. Canada
3. China
4. India
5. Japan
6. USA
Which of the above are among the 'free-trade partners' of ASEAN ?
(a) 1, 2, 4 and 5
(b) 3, 4, 5 and 6
(c) 1, 3, 4 and 5
(d) 2, 3, 4 and 6
Answer: (c)
Trap: Common Misconception
USA (option including 6) is a trap: despite being a major trading partner, the US does NOT have an FTA with ASEAN. Canada also lacks one. Students assume major economies automatically have FTAs with ASEAN. ASEAN has FTAs with Australia-NZ, China, India, Japan, and South Korea.
Q46easy
Which one of the following statements correctly describes the meaning of legal tender money ?
(a) The money which is tendered in courts of law to defray the fee of legal cases
(b) The money which a creditor is under compulsion to accept in settlement of his claims
(c) The bank money in the form of cheques, drafts, bills of exchange, etc.
(d) The metallic money in circulation in a country
Answer: (b)
Q47easy
If a commodity is provided free to the public by the Government, then
(a) the opportunity cost is zero.
(b) the opportunity cost is ignored.
(c) the opportunity cost is transferred from the consumers of the product to the tax-paying public.
(d) the opportunity cost is transferred from the consumers of the product to the Government.
Answer: (c)
Q48easy
Increase in absolute and per capita real GNP do not connote a higher level of economic development, if
(a) industrial output fails to keep pace with agricultural output.
(b) agricultural output fails to keep pace with industrial output.
(c) poverty and unemployment increase.
(d) imports grow faster than exports.
Answer: (c)
Q49moderateAbsolute Qualifier
Consider the following statements :
Human capital formation as a concept is better explained in terms of a process which enables
1. individuals of a country to accumulate more capital.
2. increasing the knowledge, skill levels and capacities of the people of the country.
3. accumulation of tangible wealth.
4. accumulation of intangible wealth.
Which of the statements given above is/are correct ?
(a) 1 and 2
(b) 2 only
(c) 2 and 4
(d) 1, 3 and 4
Answer: (c)
Trap: Absolute Qualifier
Statement 1 uses 'capital' broadly, making students think human capital formation helps accumulate financial capital. But human capital is specifically about knowledge, skills (intangible), not physical/financial capital. Statement 3 about tangible wealth is also a distractor.
Q50moderateDistractor Pairing
Despite being a high saving economy, capital formation may not result in significant increase in output due to
(a) weak administrative machinery
(b) illiteracy
(c) high population density
(d) high capital-output ratio
Answer: (d)
Trap: Distractor Pairing
Options (a), (b), (c) are general development challenges but don't directly explain why high savings don't translate to high output. A high capital-output ratio means you need more capital per unit of output, so even with high savings, output growth is limited.
Q56moderatePartial Truth
Consider the following statements :
1. The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities.
2. Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments.
3. Treasury bills offer are issued at a discount from the par value.
Which of the statements given above is/are correct ?
(a) 1 and 2 only
(b) 3 only
(c) 2 and 3 only
(d) 1, 2 and 3
Answer: (c)
Trap: Partial Truth
Statement 1 is the trap: RBI manages BOTH Central and State Government securities. Students may think RBI only handles Central Government debt, but RBI also manages State Development Loans (SDLs).
Q93easyAbsolute Qualifier
Consider the following :
1. Areca nut
2. Barley
3. Coffee
4. Finger millet
5. Groundnut
6. Sesamum
7. Turmeric
The Cabinet Committee on Economic Affairs has announced the Minimum Support Price for which of the above ?
(a) 1, 2, 3 and 7 only
(b) 2, 4, 5 and 6 only
(c) 1, 3, 4, 5 and 6 only
(d) 1, 2, 3, 4, 5, 6 and 7
Answer: (b)
Trap: Absolute Qualifier
The trap is including areca nut (1), coffee (3), and turmeric (7) which are commercial/plantation crops NOT covered under MSP. MSP covers 23 crops: 7 cereals, 5 pulses, 7 oilseeds, and 4 commercial crops (copra, sugarcane, cotton, jute). Barley, finger millet, groundnut, and sesamum are in the MSP list.
Q96moderatePartial Truth
With reference to the governance of public sector banking in India, consider the following statements :
1. Capital infusion into public sector banks by the Government of India has steadily increased in the last decade.
2. To put the public sector banks in order, the merger of associate banks with the parent State Bank of India has been affected.
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
Answer: (b)
Trap: Partial Truth
Statement 1 is the trap: capital infusion has NOT 'steadily increased' over the decade. It fluctuated significantly -- sometimes increased, sometimes decreased depending on NPA situations and government fiscal constraints. The word 'steadily' makes it false.
Q97easyPartial Truth
Consider the following items :
1. Cereal grains hulled
2. Chicken eggs cooked
3. Fish processed and canned
4. Newspapers containing advertising material
Which of the above items is/are exempted under GST (Goods and Services Tax) ?
(a) 1 only
(b) 2 and 3 only
(c) 1, 2 and 4 only
(d) 1, 2, 3 and 4
Answer: (c)
Trap: Partial Truth
Item 3 (fish processed and canned) is the trap: while fresh fish is GST-exempt, PROCESSED and CANNED fish attracts GST. Students who know fresh food is exempt may incorrectly extend the exemption to processed/canned products.