Explore topic-wise InterviewSolutions in Current Affairs.

1. Swami Vivekananda, a close disciple of Ramkrishna Paramhansa, founded the Ramkrishna Mission in 1897. 

2. The mission carried out social work like providing help to famine-stricken people, patients and gave medical help to the poor and worked for female education. 

3. It taught people service to humanity is a true religion and worked towards spiritual progress of the people.

1. With the spread of English education in India, there was spread of new ideas, new thoughts, new philosophy. 

2. Indians got introduced to western thoughts and culture. 

3. They wanted to create a society based on principles of Humanity, Equality and Fraternity. 

4. They realised that the flaws like superstitions, casteism, old customs, class system and lack of critical outlook is responsible for the backwardness of India. 

5. This association was responsible for social and religious reform in India.

(i) Swami Vivekananda

(ii) Sir Sayyad Ahmad Khan

(iii) Maharshi Vitthal Ramji Shinde

1. There was a custom of Keshavapan, i.e. shaving head of widows in India.

2. In order to oppose this unjust custom, Mahatma Phule conducted a strike of Barbers.

Rabindranath Tagore received Nobel in the field of literature and C. V. Raman for Science.

(b) Value of total imports was more than exports.

Swami Vivekananda.

Due to the Import replacement policy, emphasis was laid upon the production of goods like metals, machines and vehicles within the country, and due to higher cost of production, the competitive capacity of industries became weak.

Import replacement policy was implemented in 3 phases : 

1. Import replacement of consumption goods. 

2. Import replacement of capital goods. 

3. Import replacement of technology.

Import replacement policy means the replacement of foreign imports with domestic products, so that the country may not have to import them, and foreign currency can be saved, and this also promotes self-sufficiency.

Following are the schemes initiated for export promotion : 

1. Cash Compensatory Scheme : Cash compensatory scheme was designed to compensate the exporters for unrelated indirect taxes and to provide resources for product development. This was initiated in 1996. 

2. Duty Drawback Scheme : Manufacturers who are unable to avail any of these schemes can avail ‘duty drawback’. Under this, the excise duty and customs duty paid on inputs and service tax paid on input services is given back to the exporter of finished products by way of‘duty drawback’. 

3. Import Replenishment Scheme : This progamme is for easy availability of imports which are necessary for exports. Under this progamme, exporters are permitted imports of those items the import of which prohibited. Under this scheme, exporters can export those items which are not available in the country. 

4. Blanket Exchange Permit Scheme : This scheme was initiated in 1987. Large export organizations like export houses and all forms of trading houses are given the facility of blanket exchange permit, under which lumpsum foreign exchange is provided to meet expenses made abroad. 

5. Special Economic Zone : A Special Economic Zone (SEZ) is an area in which business and trade laws are different from the rest of the country. SEZs are located within a country’s national borders, and their aims include: increased trade, increased investment, job creation and effective administration. .

The objective of this policy was to double the exports of commodities and services by the year 2014. Among the short term objectives were-curb the tendency of decline in exports, provide additional assistance to export sectors affected by recession to re-establish export growth. The long term objectives of the policy wereincreasing India’s share in global trade by 100 per cent (from 1.64 per cent in 2008 to 3.28 per cent in 2020).

During the second five year plan, India began an extensive industrialization programme. For this, capital machinery and technology was to be imported. Foreign currency was limited. Hence, total import were classified into 3 categories in 1956- 57. In the first category, those items were included the import of which was prohibited. These items could not be imported. The second category included items whose import could only be done through government agencies. Third category included those items that could only be imported through Open General License.

To develop the feeling of nationalism and unity among the Marathas and to bring about an awakening in the people, Lokmanya Tilak started celebrating ‘Ganesh Chaturthi’ and ‘Shivaji Jayanti’.

Correct Answer is: (b) 5.7

This scheme was initiated in 1987. Large export organizations like export houses and all forms of trading houses are given the facility of blanker exchange permit, under which lumpsum foreign exchange is provided to meet expenses done abroad.

This progamme is a scheme for easy availability of imports which are necessary for exports. Under this progamme, exporters are permitted imports of those items whose import is prohibited. Under this scheme, exporters can export those items which are not available in the country.

(d) All of the above

EPCG is a zero duty scheme which allows the import of capital goods such as machinery for preproduction, production and post production of export items. Under the export promotion capital goods programme, duty free capital goods imports were allowed for production of engineering goods, electronic products, basic chemicals, textiles, plastics, handicrafts and leather goods.

Import replacement policy means the replacement of foreign imports with the domestic products, so that we don’t have to import them and foreign currency can be saved, and this also promotes self-sufficiency.

Two suggestions for export promotion are : 

1. There is a need to improve the infrastructure such as roads, rail transport, water transport, power etc. 

2. Arrangement for better credit and import duty policy should be made for encouraging exports.

Export – 450200 (US Billion dollars). 

Import – 314405 (US Billion dollars). 

Trade Surplus – 135795 (US Million dollars).

The items of export of India during 2013-14 were :

1. Agricultural and allied products : Tea, coffee, food grains, spices, cashew, fruit and vegetables, seafood and cotton etc. 

2. Manufacturing goods : Leather and leather products, jewels and jewellery, medicine and chemicals, metal products, machinery and equipments, transportation equipment, electronic goods, handicrafts, ready-made garments etc.

Jute, tea, cotton clothes, mica, manganese and hide.

Two government agencies established for export promotion: 

1. State Trading Corporation. 

2. Mineral and Metal Trading Corporation.

Manufacturers who are unable to avail any of these schemes can avail ‘duty drawback’. Under this, the excise duty and customs duty paid on inputs and service tax paid on input services is given back to the exporter of finished products by the way of ‘duty drawback’.

1. To provide domestic manufacturing, the export compulsion was reduced by 25 per cent. 

2. Under Export Promotion Capital goods Scheme (EPCG), the export compulsion for domestic realization was reduced to 75 per cent. 

3. There would be an online process for digital signature. 

4. The valid period for export authorization was increased from 12 months to 24 months. 

5. Duty Credit Script will be freely transferable and it can be used to pay custom duty, excise duty and service tax.

Agricultural export zones were established in 2001 to promote agricultural exports. Under this, it was arranged to identify those agricultural products which could be exported and special attention was given on their production. The entire process from the initial stage of agricultural products to market distribution was integrated in the Agricultural Export Zone.

The current account includes receipts and payments on account of: 

1. export and import of goods and services 

2. tourism services 

3. foreign investment incomes and out payments 

4. private transfer payments 

5. inter-government transfer payments

In a system of flexible exchange rates (also known as floating exchange rates), the exchange rate is determined by the forces of market demand and supply.

Countries have had flexible exchange rate system ever since the breakdown of the Bretton Woods system in the early 1970s. Prior to that, most countries had fixed or what is called pegged exchange rate system, in which the exchange rate is pegged at a particular level. Sometimes, a distinction is made between the fixed and pegged exchange rates.

Under a fixed exchange rate system, such as the gold standard, adjustment to BOP surpluses or deficits cannot be brought about through changes in the exchange rate.

(1) True/ Correct

(2) False.

International trade means trade between two or more countries or internal trade is the trade within the boundaries of a country.

(3) True/Correct

1. Gold movement 

2. Reserve, Monetary gold & SDR

Balance of trade is the record of a country’s visible export and visible imports. It includes only visible trade and excludes invisible trade of services. However, balance of payment is a more comprehensive term which denoted a country’s total monetary transactions with the rest of the world. It includes both visible and invisible trade of goods and services.

The balance of payments (BOP) records the transactions in goods, services and assets between residents of a country with the rest of the world. There are two main accounts in the BOP – the current account and the capital account.
When the total receipt is larger than the payment the balance of payment is said to be surplus. On the other hand when payments are larger than receipts, balance of payments is said to be deficit.

Yes. I agree with this statement. Because, when there is deficit in balance of payment, the domestic currency is devalued. This will increase our exports and reduce imports. As a result of increased export and less imports, the deficit in balance of payment can be solved.

In a system of flexible exchange rates (also known as floating exchange rates), the exchange rate is determined by the forces of market demand and supply.

Countries have had flexible exchange rate system ever since the breakdown of the Bretton Woods system in the early 1970’s. Prior to that, most countries had fixed or what is called pegged exchange rate system, in which the exchange rate is pegged at a particular level. Sometimes, a distinction is made between the fixed and pegged exchange rates.

Under a fixed exchange rate system, such as the gold standard, adjustment to BOP surpluses or deficits cannot be brought about through changes in the exchange rate.

The price of one currency in terms of the other is . known as the exchange rate. Nominal exchange rates are bilateral in the sense that they are exchange rates for one currency against another and they are nominal because they quote the exchange rate in money terms, i.e. so many rupees per dollar or per pound. However, the real exchange rate is the ratio of foreign to domestic prices, measured in the same currency. It is defined as Real exchange rate = eP_f / P where P and P_f are the price levels here and abroad, respectively, and e is the rupee price of foreign exchange (the nominal exchange rate).

The real exchange rate is often taken as a measure of a country’s international competitiveness. Therefore, real exchange rate is considered to be more relevant.

Balance of trade is the record of a country’s visible export and visible imports. It includes only visible trade and excludes invisible trade of services. However, balance of payment is a more comprehensive term which denoted a country’s total monetary transactions with the rest of the world. It includes both visible and invisible trade of goods and, services.

The balance of payments (BoP) records the transactions in goods, services and assets between residents of a country with the rest of the world. There are two main accounts in the BoP the current account and the capital account.

1. Closed economy multiplier

\(\frac{1}{1-c}\) = \(\frac{1}{1-0.8}\) = \(\frac{1}{0.2} = 5\)

Open economy multiplier

\(\frac{1}{0.5} = \frac{1}{1-0.8+0.3} = \frac{1}{1-0.5} = \frac{1}{0.5}\) = 2

2. If domestic autonomous demand increases by 100, in a closed economy output increases by 500 whereas it increases by only 200 in an open economy.

Yes, I do agree with this statement. The open economy multiplier is smaller than that in a closed economy because a part of domestic demand falls on foreign goods. An increase in autonomous demand thus leads to a smaller increase in output compared to a closed economy. It also results in a deterioration of the trade balance

(i) (e) X-M

(ii) (c) G-T

When there is inflation, the domestic currency of country A’ will depreciate. Depreciation of domestic currency will lead to increase in export and decrease in import. But this will depend on the elasticity of export and import. If the sum of export and import elasticities is greater than T, there will be positive effect on trade balance. However, in short run the elasticities are supposed to be less than T and therefore there may be negative effect on trade balance. The ultimate effect depends on the composition of trade items.

National income identity for an open economy

In a closed economy, there are three sources of demand for domestic goods – Consumption (C), government spending (G), and domestic investment (I).

We can write Y =C+ l + G

In an open economy, exports (X) constitute an additional source of demand for domestic goods and services that comes from abroad and therefore must be added to aggregate demand. Imports (M) supplement supplies in domestic markets and constitute that part of domestic demand that falls on foreign goods and services. Therefore, the national income identity for an open economy is 

Y + M = C + I + G + X

Rearranging, we get

Y = C + I + G + X - M or

Y = C + I + G + NX

where, NX is net exports (exports – imports). A positive NX (with exports greater than imports) implies a trade surplus and a negative NX (with imports exceeding exports) implies a trade deficit.

(a) Y = C + I + G + X - M

(b) Closed economy multiplier = \(\frac{1}{1-MPC}\) here \(\frac{1}{1-0.5}\) = \(\frac{1}{0.5}\)

Open economy multiplier = 2

Open economy multiplier = \(\frac{1}{1-MPC \,+\,MP Import}\)

Open economy multiplier = 1.25

the multiplier in closed economy is 2 and open economy is 1.25.

1. Diagram A is Flexible Exchange Rate System and Diagram B is Fixed Exchange Rate System

2. In a system of flexible exchange rates (also known as floating exchange rates), the exchange rate is determined by the forces of market demand and supply. Countries have had flexible exchange rate system ever since the breakdown of the Bretton Woods system in the early 1970s.

Prior to that, most countries had fixed or what is called pegged exchange rate system, in which the exchange rate is pegged at a particular level. Sometimes, a distinction is made between fixed and pegged exchange rates. Under a fixed exchange rate system, such as the gold standard, adjustment to BoP surpluses or deficits cannot be brought about through changes in the exchange rate.

Correct option: (c) Pakistan

Correct option: (c) China

1. Depreciation 

2. Appreciation

Mithali Raj is the highest run scorer in women’s international cricket.

Saina Nehwal is known as the ‘Golden Girl of Indian Badminton’.