Q1easy
The total fertility rate in an economy is defined as:
(a) the number of children born per 1000 people in the population in a year.
(b) the number of children born to a couple in their lifetime in a given population.
(c) the birth rate minus death rate.
(d) the average number of live births a woman would have by the end of her child-bearing age.
Answer: (d)
Q2easyCommon Misconception
Consider the following statements :
1. In India, Non-Banking Financial Companies can access the Liquidity Adjustment Facility window of the Reserve Bank of India.
2. In India, Foreign Institutional Investors can hold the Government Securities (G-Secs).
3. In India, Stock Exchanges can offer separate trading platforms for debts.
Which of the statements given above is/are correct ?
(a) 1 and 2 only
(b) 3 only
(c) 1, 2 and 3
(d) 2 and 3 only
Answer: (c)
Trap: Common Misconception
Many aspirants believe LAF is only for scheduled commercial banks, not NBFCs. However, RBI expanded LAF access to certain NBFCs. This makes students reject statement 1 and pick (d). Statement 2 about FIIs holding G-Secs is also less commonly known, tempting students to drop it.
Q3moderateCommon Misconception
In India, which of the following can trade in Corporate Bonds and Government Securities ?
1. Insurance Companies
2. Pension Funds
3. Retail Investors
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
Answer: (d)
Trap: Common Misconception
Students often think retail investors cannot trade in corporate bonds or G-Secs, assuming these are institutional-only markets. RBI has actively promoted retail participation in G-Secs through RBI Retail Direct scheme. This makes (a) the most tempting wrong answer.
Q4easy
Consider the following :
1. Exchange-Traded Funds (ETF)
2. Motor vehicles
3. Currency swap
Which of the above is/are considered financial instruments ?
(a) 1 only
(b) 2 and 3 only
(c) 1, 2 and 3
(d) 1 and 3 only
Answer: (d)
Q5moderateAbsolute Qualifier
With reference to the sectors of the Indian economy, consider the following pairs :
Economic activity | Sector
1. Storage of agricultural produce | Secondary
2. Dairy farm | Primary
3. Mineral exploration | Tertiary
4. Weaving cloth | Secondary
How many of the pairs given above are correctly matched ?
(a) Only one
(b) Only two
(c) Only three
(d) All four
Answer: (b)
Trap: Absolute Qualifier
Storage of agricultural produce is a tertiary (service) activity, not secondary. Mineral exploration is also a tertiary/service activity (geological surveys), not mining itself which is primary. Students confuse 'exploration' with 'extraction'. Dairy farm (primary) and weaving cloth (secondary/manufacturing) are correct.
Q7easy
With reference to physical capital in Indian economy, consider the following pairs :
Items | Category
1. Farmer's plough | Working capital
2. Computer | Fixed capital
3. Yarn used by the weaver | Fixed capital
4. Petrol | Working capital
How many of the above pairs are correctly matched ?
(a) Only one
(b) Only two
(c) Only three
(d) All four
Answer: (b)
Q9easyCommon Misconception
With reference to the rule/rules imposed by the Reserve Bank of India while treating foreign banks, consider the following statements :
1. There is no minimum capital requirement for wholly owned banking subsidiaries in India.
2. For wholly owned banking subsidiaries in India, at least 50% of the board members should be Indian nationals.
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: (d)
Trap: Common Misconception
Statement 1 is wrong — RBI requires Rs 500 crore minimum capital for WOS. Statement 2 sounds reasonable (50% Indian nationals on board) but the actual requirement is that the majority of directors should be Indian nationals/residents, and the specific percentage threshold differs from 50%. Both statements contain plausible-sounding numbers that are factually incorrect.
Q10moderate
With reference to Corporate Social Responsibility (CSR) rules in India, consider the following statements :
1. CSR rules specify that expenditures that benefit the company directly or its employees will not be considered as CSR activities.
2. CSR rules do not specify minimum spending on CSR activities.
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)
Q20moderateCommon Misconception
With reference to the Indian economy, "Collateral Borrowing and Lending Obligations" are the instruments of :
(a) Bond market
(b) Forex market
(c) Money market
(d) Stock market
Answer: (c)
Trap: Common Misconception
CBLO sounds like it could be a bond market instrument because 'obligations' suggests bonds. However, CBLOs are short-term money market instruments (originally developed by CCIL) used for overnight/short-term borrowing against collateral of government securities. The 'collateral' aspect further confuses students into thinking bonds.
Q21easyCommon Misconception
Consider the following airports :
1. Donyi Polo Airport
2. Kushinagar International Airport
3. Vijayawada International Airport
In the recent past, which of the above have been constructed as Greenfield projects ?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer: (a)
Trap: Common Misconception
Vijayawada International Airport (Gannavaram) is a brownfield expansion of an existing airport, not a greenfield project. Students may assume all newly inaugurated/renamed airports are greenfield. Donyi Polo Airport (Itanagar, Arunachal Pradesh) and Kushinagar International Airport (UP) were indeed built as new greenfield projects.
Q44easyCommon Misconception
Consider the following statements regarding World Toilet Organization :
1. It is one of the agencies of the United Nations.
2. World Toilet Summit, World Toilet Day and World Toilet College are the initiatives of this organization, to inspire action to tackle the global sanitation crisis.
3. The main focus of its function is to grant funds to the least developed countries and developing countries to achieve the end of open defecation.
Which of the statements given above is/are correct ?
(a) 2 only
(b) 3 only
(c) 1 and 2
(d) 2 and 3
Answer: (a)
Trap: Common Misconception
Statement 1 is the main trap — the World Toilet Organization is a Singapore-based NGO, NOT a UN agency. Students confuse it with the UN's observance of World Toilet Day. Statement 3 is also wrong — WTO focuses on advocacy and education, not directly granting funds. Only statement 2 about its three initiatives is correct.
Q52moderateCommon Misconception
Consider the following statements :
Statement-I :
India does not import apples from the United States of America.
Statement-II :
In India, the law prohibits the import of Genetically Modified food without the approval of the competent authority.
Which one of the following is correct in respect of the above statements ?
(a) Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
(b) Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
(c) Statement-I is correct, but Statement-II is incorrect
(d) Statement-I is incorrect, but Statement-II is correct
Answer: (d)
Trap: Common Misconception
Students may assume India doesn't import US apples due to GM food concerns or protectionist policies. However, India DOES import apples from the US (Washington apples are widely available in Indian markets). Statement-I is factually incorrect. Statement-II about GM food regulation is correct — FSSAI regulates GM food imports.
Q56moderateOutdated Info
Consider the following statements :
Statement-I :
The European Parliament approved The Net-Zero Industry Act recently.
Statement-II :
The European Union intends to achieve carbon neutrality by 2040 and therefore aims to develop all of its own clean technology by that time.
Which one of the following is correct in respect of the above statements ?
(a) Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
(b) Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
(c) Statement-I is correct, but Statement-II is incorrect
(d) Statement-I is incorrect, but Statement-II is correct
Answer: (c)
Trap: Outdated Info
Statement-II has two errors: the EU target is carbon neutrality by 2050 (not 2040), and the Act aims to boost domestic manufacturing of clean tech (not 'all of its own' — it doesn't aim for complete self-sufficiency). Students who remember '2050' can immediately identify the error, but those uncertain about the exact year may accept it.
Q57easy
Consider the following statements :
Statement-I :
Recently, Venezuela has achieved a rapid recovery from its economic crisis and succeeded in preventing its people from fleeing/emigrating to other countries.
Statement-II :
Venezuela has the world's largest oil reserves.
Which one of the following is correct in respect of the above statements ?
(a) Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
(b) Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
(c) Statement-I is correct, but Statement-II is incorrect
(d) Statement-I is incorrect, but Statement-II is correct
Answer: (d)
Q60easyPartial Truth
With reference to the Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM) Yojana, consider the following statements :
1. The entry age group for enrolment in the scheme is 21 to 40 years.
2. Age specific contribution shall be made by the beneficiary.
3. Each subscriber under the scheme shall receive a minimum pension of Rs. 3,000 per month after attaining the age of 60 years.
4. Family pension is applicable to the spouse and unmarried daughters.
Which of the statements given above is/are correct ?
(a) 1, 3 and 4
(b) 2 and 3 only
(c) 2 only
(d) 1, 2 and 4
Answer: (b)
Trap: Partial Truth
Statement 1 is wrong — the entry age is 18-40 years, not 21-40. This is a deliberate number change. Statement 4 is wrong — family pension is applicable only to the spouse (50% of pension), not unmarried daughters. Students who vaguely remember the scheme details may accept the wrong age range or the expanded family pension eligibility.
Q67moderate
Consider the following pairs :
Country | Reason for being in the news
1. Argentina | Worst economic crisis
2. Sudan | War between the country's regular army and paramilitary forces
3. Turkey | Rescinded its membership of NATO
How many of the pairs given above are correctly matched ?
(a) Only one pair
(b) Only two pairs
(c) All three pairs
(d) None of the pairs
Answer: (b)
Q81moderatePartial Truth
Consider the following statements :
Statement-I :
If the United States of America (USA) were to default on its debt, holders of US Treasury Bonds will not be able to exercise their claims to receive payment.
Statement-II :
The USA Government debt is not backed by any hard assets, but only by the faith of the Government.
Which one of the following is correct in respect of the above statements ?
(a) Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
(b) Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
(c) Statement-I is correct, but Statement-II is incorrect
(d) Statement-I is incorrect, but Statement-II is correct
Answer: (a)
Trap: Partial Truth
Students might doubt Statement-II thinking US debt is backed by the US economy or gold reserves. However, US Treasuries are backed purely by 'full faith and credit' of the US government — no collateral or hard assets. This is what makes sovereign bonds different from secured corporate bonds. If the US defaults, there's no asset to seize, directly explaining Statement-I.
Q82moderatePartial Truth
Consider the following statements :
Statement-I :
Syndicated lending spreads the risk of borrower default across multiple lenders.
Statement-II :
The syndicated loan can be a fixed amount/lump sum of funds, but cannot be a credit line.
Which one of the following is correct in respect of the above statements ?
(a) Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
(b) Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
(c) Statement-I is correct, but Statement-II is incorrect
(d) Statement-I is incorrect, but Statement-II is correct
Answer: (x)
Trap: Partial Truth
This question was dropped by UPSC (answer 'x'). Statement-I is correct — syndicated lending by definition involves multiple lenders sharing risk. Statement-II is incorrect — syndicated loans CAN be structured as credit lines (revolving credit facilities are common in syndicated lending). The expected answer would be (c), but the question was dropped, possibly due to ambiguity in Statement-II's wording.
Q83moderateCommon Misconception
Consider the following statements in respect of the digital rupee :
1. It is a sovereign currency issued by the Reserve Bank of India (RBI) in alignment with its monetary policy.
2. It appears as a liability on the RBI's balance sheet.
3. It is insured against inflation by its very design.
4. It is freely convertible against commercial bank money and cash.
Which of the statements given above are correct ?
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 4 only
(d) 1, 2 and 4
Answer: (d)
Trap: Common Misconception
Statement 3 is the trap — the digital rupee is NOT insured against inflation. It has the same purchasing power as physical rupee and is subject to the same inflationary pressures. Students might confuse digital rupee with cryptocurrency designs that claim inflation protection through supply caps. The digital rupee is simply a digital form of fiat currency.
Q89moderateAbsolute Qualifier
Consider the following statements :
1. India is a member of the International Grains Council.
2. A country needs to be a member of the International Grains Council for exporting or importing rice and wheat.
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 is wrong — IGC membership is NOT required for grain trade. Non-member countries freely export and import rice and wheat through bilateral agreements and WTO frameworks. The IGC is primarily an information-sharing and market transparency body, not a trade prerequisite. Students might assume membership is required, similar to how WTO membership facilitates trade.