DAY 28 (14-10-23)

Q1. Consider the following statements :

1. Marginal standing facility is a window for banks to borrow from the Reserve Bank of India in an emergency situation when inter-bank liquidity dries up completely.
2. Open market operations are the sale and purchase of G-Secs to and from market by the RBI.
3. Base rate is the minimum rate set by the RBI below which banks are not allowed to lend to its customers.

How many of the above statements are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Answer: (c)

Explanation:

Statement 1 is correct: Marginal standing facility (MSF) is a window for banks to borrow from the Reserve Bank of India in an emergency situation when inter-bank liquidity dries up completely. This provides a safety valve against unanticipated liquidity shocks to the banking system. Under MSF, banks can borrow funds up to one percentage of their net demand and time liabilities (NDTL).

Statement 2 is correct: Open Market Operations are conducted by RBI by sale and purchase of G-Secs to and from market with an objective to adjust the rupee liquidity conditions in the market. Open market operations allow the central bank to prevent price inflation or deflation without directly interfering in the market economy.

Statement 3 is correct: Base rate is the minimum rate set by the Reserve Bank of India below which banks are not allowed to lend to its customers.

 

Q2. Which one of the following correctly describes the concept of Disinflation?

(a) It is a decrease in the rate of inflation.

(b) It is a sustained decrease in the overall price level.

(c) It is a rise in the prices of most goods and services of daily or common use.

(d) It is an increase in prices after a contraction in the economy.

Answer: (a)

Explanation:

Disinflation refers to a decrease in the rate of inflation, which means that prices are still rising but at a slower pace than before. Deflation is sustained decrease in the overall price level. Disinflation is considered the opposite of reflation, which occurs when a government stimulates an economy by increasing the money supply. The rise in the prices of most goods and services of daily or common use, such as food, clothing, housing, recreation, transport, consumer staples, etc. is known as Inflation. Hence option (a) is a correct answer.

 

Q3. Which one of the following statements is correct?

(a) Rights are claims of the State against the citizens.

(b) Rights are privileges which are incorporated in the Constitution of a State.

(c) Rights are claims of the citizens against the State.

(c) Rights are privileges of a few citizens against the many.

Answer: (c)

Explanation:

In most cases, the claimed rights are directed towards the state. That is, through these rights people make demands upon the state. When a citizen asserts his right to education, he calls upon the state to make provisions for his basic education. Thus, rights place an obligation upon the state to act in certain kinds of ways. So, combining the above two characteristics of Rights, it can be concluded that Rights are claims of the citizens against the State. Hence, option (c) is the correct answer.

 

Q4. Consider the following statements :

1. Sun’s inner core is the place where fission occurs.
2. The core is the second hottest part of the sun.
3. Radiative zone of the sun emits radiation.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 and 3 only

(c) 3 only

(d) 1, 2 and 3

Answer: (c)

Explanation:

Statement 1 is incorrect: In the core of the Sun hydrogen is being converted into helium. This is called nuclear fusion. It takes four hydrogen atoms to fuse into each helium atom. During the process some of the mass is converted into energy.

Statement 2 is incorrect: The hottest part of the Sun is its core, where temperatures top 27 million degrees Fahrenheit (15 million degrees Celsius).

Statement 3 is correct: The radiation zone is the site where energy transport occurs. This zone can be characterized as the place where the photons, bounce around facilitating the ability for energy to be transported to the outer surface of the Sun. The temperature at the radiation zone ranges from 2 to 7 million degrees Celsius.

 

Q5. Consider the following statements :

1. Sub-tropical jet-streams occurs at the tropopause.
2. Sub-tropical jet streams are product of rotation of earth and its spherical shape.

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: (c)

Explanation:

Statement 1 is correct: Sub-tropical jet-streams streams occurs at the tropopause, just above the subtropical high pressure cells. They prevail over the lower latitudes of westerlies.

Statement 2 is correct: It is produced by the rotation of earth and its spherical shape. The air over equator has the highest velocity (Coriolis effect). As it rises and moves towards north, it has a higher velocity than the air at lower altitude prevailing at same latitude. So, it begins to flow from west to east around 30º latitude.