Previous Year Questions General Awareness for CDS & CAPF: 23rd October


Previous year questions must be prepared when it comes to the preparation of CDS & CAPF examinations. Defenceadda is providing you with the previous year questions of General Awareness
Section.

Q1. Statement I; Deficit financing does not lead to inflation if adopted in small doses. 
Statement II; Deficit financing is an often used tool for financing budgetary deficits. 
Codes: 
(a) Both the Statements are individually true and Statement II is the correct explanation of Statement  
(b) Both the Statements are individually true, but Statement II is not the correct explanation of Statement I 
(c) Statement I is true, but Statement II is False 
(d) Statement I is false, but Statement II is true 

Q2. Fiscal Policy in India is formulated by 
(a) the Reserve Bank of India 
(b) the Planning Commission 
(c) the Finance Ministry 
(d) the Securities and Exchange Board of India 

Q3. Which of the following statements is/are correct? 
1. If a country is experiencing increase in its per capita GDP, its GDP must necessarily be growing. 
2. If a country is experiencing negative inflation its GDP decreasing. 
Select the correct answer using the codes given below 
(a) Only 1 
(b) Only 2 
(c) Both 1 and 2 
(d) Neither 1 nor 2 

Q4. National income ignores 
(a) sales of a firm 
(b) salary of employees 
(c) exports of the IT sector 
(d) sale of land 

Q5. When the productive capacity of the economic systems of a state is inadequate to create sufficient number of jobs, it is called 
(a) seasonal unemployment 
(b) structural unemployment 
(c) disguised unemployment 
(d) cyclical unemployment 

Q6. Which of the following statements is/are correct? 
(a) Only 1 
(b) Only 2  
(c) Only 3 
(d) 1 and 3 

Q7. Which of the following measures should be taken when an economy is going through in inflationary pressures? 
1. The direct taxes should be increased. 
2. The interest rate should be reduced. 
3. The public spending should be increased. 
Select the correct answer using the codes given below 
(a) Only 1  
(b) Only 2 
(c) 2 and 3 
(d) 1 and 2 

Q8. Consider the following statements 
1. High growth will lead to inflation. 
2. High growth will lead to deflation. 
Which of the statements given above is/are correct? 
(a) Only 1 
(b) Only 2  
(c) Both 1 and 2 
(d) Neither 1 nor 2 

Q9. Which of the fallowing are responsible for the decrease of per capita holding of cultivated land in India? 
1. Low per capita income. 
2. Rapid rate of increase of population. 
3. Practice of dividing land equally among the heirs. 
4. Use of traditional techniques of ploughing. 
Select the correct answer using the codes given below 
(a) 1 and 2 
(b) 2 and 3 
(c) 1 and 4 
(d) 2, 3 and 4 

Q10. In the parlance of financial investment, the term bear denotes 
(a) an investor, who feels that the price of a particular security is going to fall 
(b) an investor, who expects the price of a particular share to rise 
(c) a shareholder, who has an interest in a company, financially or otherwise
(d) any lender, whether by making a loan or buying a bond 


SOLUTIONS
S1. Ans.(b)
Sol. Deficit Financing is an expansionist device of currency machine and is accompanied by inflation and has many adverse effects on the economy. It has also been compared to a drug market in red ‘Poison’ which is prescribed for a certain purpose and has to be administered in small regulated dose. When the outlay of a government exceeds its tax revenues, the government budget is said to be in deficit; government spending in excess of tax receipts is known as deficit spending. Governments usually issue bonds to match their deficit. 

S2. Ans.(c)
Sol. The Department of Economic Affairs (DEA) under Ministry of Finance is the nodal agency of the Union Government to formulate and monitor country’s economic policies and programmes having a bearing on domestic and international aspects of economic management. 

S3. Ans.(c)
Sol. Negative inflation is decrease in price level and economic growth is defined as GDP. A decrease in inflation means the prices has fallen. So, there is increase in purchasing power of money. It increases consumption, therefore GDP increases. 

S4. Ans.(d)
Sol. National Income ignores sale of land. 

S5. Ans.(b)
Sol. Cyclical unemployment is unemployment that results when the overall demand for goods and services in an economy cannot support full employment. It occurs during periods of slow economic growth or during periods of economic contraction. 

S6. Ans.(d)
Sol. NIFTY is an Index computed from performance of top stocks from different sectors listed on NSE (National stock exchange). NIFTY consists of 50 companies from 24 different sectors. Indian Capital Markets are regulated and monitored by the Ministry of Finance, The Securities and Exchange Board of India and The Reserve Bank of India. It does not trade in mutual funds. 

S7. Ans.(a)
Sol. Cost-push inflation occurs when business respond to rising costs, by increasing their prices to protect profit margins. There are many reasons why costs might rise: Component costs, Rising labour costs and higher indirect taxes imposed by the government. So, the direct taxes should be increased when an economy is going through in inflationary pressures. 

S8. Ans.(a)
Sol. Typically, higher inflation is caused by strong economic growth. If Aggregate demand in an economy expanded faster than aggregate supply, we would expect to see a higher inflation rate. If demand is rising faster than supply, then this suggests that economic growth is higher than the long run sustainable rate of growth. 
Note: A sustained rise in prices is known as inflation. A large rise in prices is often caused by economic growth. 

S9. Ans.(b)
Sol. Rapid rate of increase of population and practice of dividing land equally among the heirs are responsible for the decrease of per capita holding of cultivated land in India. 

S10. Ans.(a)
Sol. The term bear denotes an investor who believes that a particular security or market is headed downward. Bears attempt to profit from a decline in prices. Bears are generally pessimistic about the state of a given market. Bearish sentiment can be applied to all types of markets including commodity markets, stock markets and the bond market. 

No comments