[Answerkey] CSAT-2014: Economy, Banking, Finance, Budget & Balance of Payment- 7 out 10 MCQs from Mrunal

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Neostencil IAS
  1. .vs CSAT 2013
  2. .vs other exams
  3. Difficulty level
  4. How to prepare Economy for CSAT 2015?
  5. Banking sector
    1. Q1: MSF and NDTL 
    2. Q2. Bank Saathi
    3. Q3: Reserve Requirements
    4. Q4: IF Interest rates decline
  6. Government related
    1. Q1: Non-plan Expenditure
    2. Q2: Sales tax
    3. Q3: FYP theme
  7. Finance / Capital market
  8. International Economics
    1. Q1: BoP components
    2. Q2: World Economic outlook
  9. The End of Answerkey

.vs CSAT 2013

CSAT Answerkey 2014 Economy with Bulla

Pralaynath Gendaswami (left) visiting his mentor cum “Free Market Economist without stupid paper degree” Bulla (centre)

Pattern Continued, Qs. decreased
CSAT 2013CSAT 2014
18 questionsdeclined to only 10
banking related topic formed major partsame
BoP classification questiontopic repeats
no questions on stupid schemesthankfully same
Overall easy.Easier.

.vs other exams

Exams moving in different directions
CDS, CAPFCSAT 2014
CDS(i)-2014: some questions quite difficult e.g. components under corporation tax, analysis of food inflation, books vs economist authorsThankfully, that lunacy is not repeated here.
CAPF-2014:

  • Difficult questions from micro-economics. Answers not available directly in NCERT class12.
  • trivial-GK-type e.g. MSP of wheat, effective revenue deficit
Same as above.

Difficulty level

 

Banking related
1.MSFInsult to intelligence.
2.Bank SaathiEasy through common sense.
3.SRREasy through elimination
4.interest rateTricky. Because by logic B and C both would sound right.

 

Government related
5.Non-planEasy, discussed under budget theory article.
6.Sale taxEasy, discussed under interim budget theory article and given in Laxmikanth
7.12th FYPEasy, clichéd fact.

 

Finance /capital market
8.Venture capitalEasy, discussed under interim budget as well as survey summary.
International trade and economics
9.Bop ComponentsEasy given in video, powerpoint and NCERT.
10.World economic outlook.Clichéd GK type, easy for those who can recall.

How to prepare Economy for CSAT 2015?

  1. NCERT Class 11
  2. Selective reading of NCERT Class 12 Micro and Macro-economics.
  3. Budget and economic survey.
  4. India yearbook chapters on commerce finance, industries, etc.
  5. M.Laxmikanth: Parliament: Budget, money bill-finance bill; Centre-State relations, Finance commission, Appendix-Union-state list (for taxes) etc.
  6. Indian express OR Hindu. (Only one, not both. and personally I find Indianexpress’s economy coverage better than Hindu’s)
  7. Finally, You know who’s website.

Banking sector

Q1: MSF and NDTL

The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’, sometimes appearing in news, are used in relation to

  1. banking operations
  2. communication networking
  3. military strategies
  4. supply and demand of agricultural products

Answer (A) because

Q2. Bank Saathi

What is/are the facility/facilities the beneficiaries can get from the services of Business Correspondent (Bank Saathi) in branchless areas?

  1. It enables the beneficiaries to draw their subsidies and social security benefits in their villages.
  2. It enables the beneficiaries in the rural areas to make deposits and withdrawals.

Select the correct answer using the code given below.

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Common sense suggest that both should be right. But for the sake of proof PIB Link:

Besides giving access to banking, it also enables government subsidies and social security benefits to be directly credited to the accounts of the beneficiaries, enabling them to draw the money from the bank saathi or business correspondents in their village itself.

Hence answer C both 1 and 2.

Q3: Reserve Requirements

In the context of Indian economy; which of the following is/are the purpose/purposes of ‘Statutory Reserve Requirements’?

  1. To enable the Central Bank to control the amount of advances the banks can create
  2. To make the people’s deposits with banks safe and liquid
  3. To prevent the commercial banks from making excessive profits
  4. To force the banks to have sufficient vault cash to meet their day-to-day requirements

Select the correct answer using the code given below.

  1. 1 only
  2. 1 and 2 only
  3. 2 and 3 only
  4. 1, 2, 3 and 4

To start off, 3 is definitely wrong.

  • Because Reserve requirements are designed as “precautionary measures” and not to stop banks from “excessive” profit. This eliminates C and D.
  • Now everything boils down to whether #2 is right or wrong.

NCERT class 12, chapter 3, page 39

“RBI requires commercial banks to keep reserves in order to ensure that banks have a safe cushion of assets to draw on when account holders want to be paid.”

Hence number 2 is right, Thus final answer is (b) 1 and 2 only

Q4: IF Interest rates decline

If the interest rate is decreased in an economy, it will

  1. decrease the consumption expenditure in the economy
  2. increase the tax collection of the Government
  3. increase the investment expenditure in the economy
  4. increase the total savings in the economy

Robert hall, Macroeconomics, Page406

The relationship between interest rate and investment Expenditure is illustrated by the investment curve of the economy. The curve has downward slope, indicating that a drop in interest rate, causes the investment-spending to rise.

Therefore, answer C.

Government related

Q1: Non-plan Expenditure

1. With reference to Union Budget, which of the following, is/are covered under Non-Plan Expenditure?

  1. Defense -expenditure
  2. Interest payments
  3. Salaries and pensions
  4. Subsidies

Select the correct answer using the code given below.

  1. 1 only
  2. 2 and 3 only
  3. 1, 2, 3 and 4
  4. None

Answer C because Mrunal’s article on budget plan vs non-plan Expenditure.

Counterview: Table says “Defenses services”. But question says “defense Expenditure”

Mrunal:

  • Although defense “capital” Expenditure falls under plan Expenditure, But even if we assume #1 is wrong, there is no option saying “only 2,3 and 4”. Hence answer C: 1,2,3 and 4.

Q2: Sales tax

The sales tax you pay while purchasing a toothpaste is a

  1. tax imposed by the Central Government.
  2. tax imposed by the Central Government but collected by the State Government
  3. tax imposed by the State Government but collected by the Central Government
  4. tax imposed and collected by the State Government

Answer D because

  1. Laxmikanth, Chapter on Central-state relations, page 14.9, Sale tax is a tax levied and collected by the State.
  2. Mrunal’s interim budget article: subtopic direct vs Indirect taxes.

Q3: FYP theme

The main objective of the 12th Five-Year Plan is

  1. inclusive growth and poverty reductions
  2. inclusive and sustainable growth
  3. sustainable and inclusive growth to reduce unemployment
  4. Faster, sustainable and more inclusive growth.

Answer (D). Mrunal’s Last year’s economic survey

Finance / Capital market

What does venture capital mean?

  1. A short-term capital provided to industries
  2. A long-term start-up capital provided to new entrepreneurs
  3. Funds provided to industries at times of incurring losses
  4. Funds provided for replacement and renovation of industries

Answer B: startup capital because Mrunal’s economic survey summary ch9 on MSME.

International Economics

Q1: BoP components

With reference to Balance of Payments, which of the following constitutes/constitute the Current Account?

  1. Balance of trade
  2. Foreign assets
  3. Balance of invisibles
  4. Special Drawing Right

Select the correct answer using the code given below.

  1. 1 only
  2. 2 and 3
  3. 1 and 3
  4. 1, 2 and 4

Balance of Trade (1) and Balance of invisibles are part of “Current Account”. There is only one option where 1 and 3 are together, hence answer C.

Ref:

  • My lecture video and PowerPoints on economic survey chapter 6-7.
  • NCERT class12 macroeconomics, page 77, topic 6.1
  • Original Economic Survey page108, table 6.2

Q2: World Economic outlook

Which of the following organizations brings out the publication known as ‘World Economic Outlook’?

  1. The International Monetary Fund
  2. The United Nations Development Programme
  3. The World Economic Forum
  4. The World Bank

Answer is A, because World Economic Outlook is released by IMF.

  1. Mrunal economic survey summary, ch4. table heading under “trend in international market”.
  2. Original Economic Survey page79.

The End of Answerkey

This article marks “the end” of CSAT paper 1 answerkey. all segments and 100 MCQS finished. you can find the other parts under Mrunal.org/answerkeys

Q. What about answerkeys of CSAT paper 2 and CAPF?

  • I had plans to cover that but I’m overstretched between multiple projects with limited manpower. So postponing them till mains is over.
  • Besides, remaining part of this year, is jampacked with so many exams- one mains, two SSCs, two IBPS, two SBI (GD and Asso.), CAT and state services to name a few.
  • so, it’s about time we get over this answerkey and cut-off mania and back to some other exams.

Anyways, taking a break from writing for a few days to fix lot of things with site and life. And when I return, I’ll resume with economic survey and [Current] series.

Mrunal recommends

  1. (free) NCERT, NIOS, TN-Books 4 History,Geo,Sci
  2. Indian Polity M.Laxmikanth (Hindi | English)
  3. Spectrum: Modern History (Hindi | English)
  4. Maths: Quantam CAT Sarvesh Kumar
  5. Objective General English SP Bakshi
  6. Word Power made Easy -Norman Lowe
  7. Topic wise Solved Paperset by Disha

172 Comments on “[Answerkey] CSAT-2014: Economy, Banking, Finance, Budget & Balance of Payment- 7 out 10 MCQs from Mrunal”

  1. HI FRND SUBBARAO BOOK ON ETHICS,INTEGRITY IS THE BOOK U MENTIONED

  2. Dear Friends and Mrunal Brother , I scored in PT only 178 …and now i know that i can not write mains exams this time.. I request you all to suggest me about further study plan… i lose confidence now …what should i follow now ? please help me to make an strategy for furthure preparation .. … thanks

  3. Results of CSAT 2014 – kab ayega?

  4. results of CSAT 2014?

  5. If the interest rate is decreased in an economy, it will

    decrease the consumption expenditure in the economy

    increase the investment expenditure in the economy
    increase the total savings in the economy

    Ramesh singh told in class ans- increase the tax collection of the Government though my ans was c. only

    1. If the interest rate is decreased in an economy => more cash flow=>inflation=> increase in consumption expenditure in the economy
      means,
      decrease in the investment expenditure in the economy

      though ideally it’s recommended to save when rate is low, but i repeat it’s ideally said!

  6. transcendence in fact……really owesome work…how do you manage to write so much, sir?

  7. I have been religiously following this blog for my preparation and information on various topic and approach for different subject…all of sudden i am not able to find the previous study plan where each every thing were explained systematically….cant figure out how to proceed further …

  8. yes previous study plan was more systematic covering syllabus topic wise plz sir upload previous study plan also

  9. sir which are chapter to be read from ncert 12 microeconomic and macroeconomic and what abut economy by ramesh singh

  10. Sir,
    Indian yearbook 2015 kab aayegi?

  11. Help me plz… could not follow Mrunal sir’s site for a few months. What happened to the old strategy for cracking economy ( ncert- ramesh-lakshmikanth)?? The new one does not mention ramesh singh’s text. Please tell me what i missed

  12. And there comes the saviour of all CS aspirants.. His name is Mrunal!!

  13. Please mention some useful website to study general study.previously u had mentioned as how internate help to prepare upsc.

  14. Sir plz tell me what to read in microeconomics n macroeconomics

  15. sir i am a new aspirant from lucknow…will your lectures on youtube on economics will help me in my UPSC preparation

  16. please tell me whether the content given by Mrunal sir under the tab economy is for economy optionals only OR is it for PRE+ Mains. plz reply quick

  17. Sir please tell ..wats selective need to be read in micro n macro economics??

  18. Dear sir
    Good to see the stuff available by you. I am a new player in market (as you say). Please clarify that if I go through your lectures, NCERT as you said and some topics from Ramesh Singh’s book, will that be enough for the preparation of prelims and mains. Please do reply as my only source of preparation is your website and the books suggested by you since I am currently working in a Bank so time doesn’t permits me any tution classes. Will be waiting for your reply meanwhile will be going through your video lectures of economics.
    Thanks

  19. lots of important study materials are available here, nice blog.

  20. How to subscribe your page?

  21. hi sir how are you, i am get ready but how to prepaid is ias exam and give the scanner

  22. .Q3. on this page relating to RESERVE REQUIREMENTS. the anwer key by upsc gives option a- 1only as correct answer.
    why inconsistent with ncert statement quoted in explanation//

  23. Sir you had told in starting of economics ppt lecture that you will have to read selected topic from Indian Economy by Ramesh singh.
    but i cant find that topic list on your site.
    kindly Help sir to find there topic.
    i’ve found 11 & 12 ncert topic but cant find Indian Economy book’s topic.

  24. Thank you for helping.

  25. As I am reading economics from videos by Mrunal Sir and m preparing for 2016 exam .My doubt is like videos related to topics which changes every year like budget and all will be uploaded again for year 2016 or not ?? as currently the videos cover it on the basis of 2015.Anyone who is aware please reply as we depend so much on this website…
    Regards
    Aastha

  26. plz sir i want the list of books for upsc.

  27. Sirji kripiya karke kya Hindi mai question answer nahi ho sakta

  28. Plz sir give to me optional subject geography book writter name

  29. mrunal sir , i am preparing for civil service examination . i need the current affairs please sent to my gmail

  30. mrunal sir , i am preparing for civil service examination . i need the preparation for civil service

  31. Sir what are the things to be studied from indian economy book by ramesh singh for the upcoming upsc exam2016 Plz guide me.

  32. Sir which are the chpts that one should go thru in ncert micro and macro economics…

  33. SIR UR HELP TO ASPIRANTS IS REALLYHELP FULL AND PLEASING THANK U

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