PYQP - Current Affairs - Economy - Best UPSC CSE coaching Institute

UPSC – CSE Prelims 2023

CURRENT AFFAIRS – ECONOMY

1. With reference to Central Bank digital currencies, consider the following statements:

It is possible to make payments in a digital currency without using the US dollar or SWIFT system.
A digital currency can be distributed with conditions programmed into it such as a time- frame for spending it.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

Answer: (c) Both 1 and 2

It is possible to make payments in a digital currency without using the US dollar or SWIFT system: This statement is correct. Central Bank Digital Currencies (CBDCs) can provide an alternative means of payment that is independent of traditional systems such as the US dollar or SWIFT (Society for Worldwide Interbank Financial Telecommunication). CBDCs are digital representations of a country’s fiat currency issued and regulated by the central bank. Payments can be made directly in CBDCs, reducing reliance on intermediaries and potentially bypassing systems like the US dollar or SWIFT.

A digital currency can be distributed with a condition programmed into it, such as a time-frame for spending it: This statement is also correct. CBDCs can be programmable currencies, allowing conditions to be attached to their use. For example, a central bank could program a CBDC with an expiration date or time frame for spending it, encouraging prompt circulation of the currency and stimulating economic activity.

UPSC – CSE Prelims 2022

CURRENT AFFAIRS – ECONOMY

1. “Rapid Financing Instrument” and “Rapid Credit Facility” are related to the provisions of lending by which one of the following?

(a) Asian development bank

(b) International Monetary fund

(d) World Bank

Ans. B

Rapid Financing Instrument (RFI) :

It provides rapid financial assistance, which is available to all member countries facing an urgent balance of payments need.
It was created as part of a broader reform to make the IMF’s financial support more flexible to address the diverse needs of member countries.
It replaced the IMF’s previous emergency assistance policy and can be used in a wide range of circumstances.

Rapid Credit Facility (RCF) :

It provides rapid concessional financial assistance to low-income countries (LICs) facing an urgent balance of payments (BoP) need with no ex-post conditionality where a full-fledged economic program is neither necessary nor feasible.
It was created under the Poverty Reduction and Growth Trust (PRGT) as part of a broader reform to make the Fund’s financial support more flexible and better tailored to the diverse needs of LICs, including in times of crisis.

There are three windows under RCF:

A regular window for urgent BoP needs to be caused by a wide range of sources including domestic instability, emergencies and fragility;
An exogenous shock window for urgent BoP needs to be caused by a sudden, exogenous shock; and
A large natural disaster window for urgent BoP needs arising from natural disasters where damage is assessed to be equivalent to or exceeding 20 percent of the member’s GDP.
Access under the RCF is subject to annual and cumulative limits, with higher access limits applying for the large natural disaster window.
For non-PRGT eligible countries, a similar Rapid Financing Instrument (RFI) is available for higher-income countries.Hence, Option 2 is correct.

CURRENT AFFAIRS – ECONOMY

2. Consider the following statements:

Tight monetary policy of US Federal Reserve could lead to capital flight.
Capital flight may increase the interest commercial Borrowings (ECBs)
Devaluation of domestic currency decreases the currency risk associated with ECBs.

Which of the statements given above are correct?

1 and 2 only
2 and 3 only
1 and 3 only
1, 2 and 3

Ans. D

Tight Monetary Policy

Tight monetary policy is an action undertaken by a central bank such as the Federal Reserve to slow down overheated economic growth. Central banks engage in tight monetary policy when an economy is accelerating too quickly or inflation—overall prices—is rising too fast.

In easy money policy, the interest rates are lower, therefore it is easier to borrow, thereby increasing money circulation in the economy. In the tight money policy, the interest rates are higher, therefore it is difficult to borrow and the money circulation will reduce in the economy.

Capital flight is a large-scale exodus of financial assets and capital from a nation due to events such as political or economic instability, currency devaluation or the imposition of capital controls.

CURRENT AFFAIRS – ECONOMY

3. Consider the following Statements:

In India, credit rating agencies are resulted by Reserve Bank of India.
The rating agency popularly known as ICRA is a public limited company.
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

(d) 1, 2 and 3

Ans. B

Context: Credit Rating Agencies in India

OCT 2021:

SEBI, India’s market regulator is about to take unprecedented penal action and revoke the license of credit rating agency (CRA) Brickwork Ratings,

CURRENT AFFAIRS – ECONOMY

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

The Governor of RBI is the Chairman of BBB.
BBB recommends for the selection of heads for Public Sector Banks.
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

(d) 1, 2 and 3

Ans. B

The government would soon finalise the restructuring of Banks Board Bureau (BBB) as its extended two-year term concluded.

BBB since April 2018, has been headed by former Secretary in the Department of Personnel and Training B P Sharma.

The government, in 2016, had approved the constitution of the BBB as a body of eminent professionals and officials to make recommendations for appointment of whole-time directors as well as non-executive chairpersons of public sector banks (PSBs) and state-owned financial institutions.

CURRENT AFFAIRS – ECONOMY

5. Consider the following:

Asian Infrastructure Investment Bank
Missile Technology Control Regime
Shanghai Cooperation Organisation

India is a member of which of the above?

(a) 1 and 2 only

(b) 3 only

(d) 1, 2 and 3

Ans. D

Asian Infrastructure Investment Bank
- It is a multilateral development bank with a mission to improve social and economic outcomes in Asia.
- It aims to connect people, services and markets that over time will impact the lives of billions and build a better future by investing in sustainable infrastructure and other productive sectors.
- It is established by the AIIB Articles of Agreement (entered into force in December 2015) which is a multilateral treaty.
- It is headquartered in Beijing (China) and began its operations in January 2016.
- 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. Hence, Option 1 is correct.
Missile Technology Control Regime (MTCR)
- It is a group of 35 nations that control the export of missile technology, including drones and UAVs.
- Setup in 1987 by the G7 countries
- Aims to limit the proliferation of missiles and other unmanned delivery systems that could be used for chemical or nuclear attacks.
- It is an informal and voluntary partnership between 35 countries which urge each other to restrict their missile export and technologies capable of carrying a 500-kilogram payload a minimum of 300 kilometres.
- The decisions are taken by the consensus of all the members.
- India has become the 35th member of MTCR in June 2016. Hence, Option 2 is correct.
Shanghai Cooperation Organisation
- It is a permanent intergovernmental international organisation.
- It’s a Eurasian political, economic and military organisation aiming to maintain peace, security and stability in the region.
- It was created in 2001.
- The SCO Charter was signed in 2002 and entered into force in 2003.
- It is a statutory document which outlines the organisation’s goals and principles, as well as its structure and core activities.
- The SCO’s official languages are Russian and Chinese.
- The SCO currently comprises eight Member States (China, India, Kazakhstan, Kyrgyzstan, Russia, Pakistan, Tajikistan and Uzbekistan). Hence, Option 3 is correct.
Hence, Option 4 is correct.

CURRENT AFFAIRS – ECONOMY

6. Consider the following statements:

Vietnam has been one of the fastest growing economies in the world in the recent years.
Vietnam is led by a multi-party political system.
Vietnam’s economic growth is linked to its integration with global supply chains and focus on exports.
For a long time Vietnam’s low labour costs and stable exchange rates have attracted global manufactures.
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

(d) 1 and 2

Ans. C

Vietnam

It is a country occupying the eastern portion of mainland Southeast Asia.
Vietnam’s greatest economic resource is its literate and energetic population.
Its long coastline provides excellent harbours, access to marine resources, and many attractive beaches and areas of scenic beauty that are well suited to the development of tourism.
Since the late 1990s, the country’s economy has been on a vigorous upswing.
Tourism has expanded, manufacturing and export earnings have increased, and the per capita gross domestic product (GDP) has grown rapidly.
GDP growth statistics report states that Vietnam is the fastest growing world economy with a growth rate of 7.31% in 2019. Hence, Statement 1 is correct.
It is a single-party socialist republic state. Hence, Statement 2 is not correct.
It has surpassed the growth rate of other Asian economies including India and China, which stand at 4.5% and 6% CAGR respectively.
Unfortunately, their e-service sector isn’t that productive. Hence, Statement 5 is not correct.
Vietnam’s economic growth is linked to its integration with global supply chains and its focus on exports. Hence, Statement 3 is correct.
Vietnam has low labour costs and stable exchange rates which attract global investments. Hence, Statement 4 is correct.

CURRENT AFFAIRS – ECONOMY

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

They enable the digital representation of physical assets.
They are unique cryptographic tokens the exist on a blockchain.
They can be traded or exchanged at equivalency and therefore can be used as a medium of commercial transactions.

(a) 1 and 2 only

(b) 2 and 3 only

(d) 1, 2 and 3

Ans. D

Context: Non-Fungible Tokens (NFT)

Non-fungible tokens (NFTs) are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other. Unlike cryptocurrencies, they cannot be traded or exchanged at equivalency.

CURRENT AFFAIRS – ECONOMY

8. Consider the following statements:

The India Sanitation Coalition is a platform to promote sustainable sanitation and is funded by the Government of India and the world Health Organization.
The National Institute of Urban Affairs is an apex body of the Ministry of Housing and Urban Affairs in Government of India and provides innovative solution to address the challenges of Urban India.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

Ans. D

Context: Environmental Organisation

India Sanitation Coalition (ISC), launched in June 2015, at Federation of Indian Chamber Commerce and Industry (FICCI), enables and supports safe and sustainable sanitation by bringing multiple organizations on a common platform through a range of catalytic actions. These include supporting the unlocking of WASH (WAter Sanitation Hygiene) financing with focus on the private sector,

The National Institute of Urban Affairs (NIUA) is India’s leading national think tank on urban planning and development.