UPSC Economics Quiz Notes PDF

15 Nov 2024 07:23

✔️ Key Differences Between FERA and FEMA

❤️ FERA
✔️FERA is an acronym for Foreign Exchange Regulation Act.
✔️It was passed by the Parliament of India in 1973. The act came into force on 1st January 1974.
✔️FERA Act was repealed by the Vajpayee government in 1998.
✔️It was enacted to regulate foreign exchange and payments in India. Its main objective was to conserve forex transactions.
✔️The rules and regulations of FERA on foreign exchange were conservative and restrictive.
✔️This act came into force when the forex position in the country was not good.
✔️Comparatively, FERA Act is lengthier as it has 81 sections.
✔️Under this act, the definition of the term ‘Authorized person’ was narrow.
✔️Under this act, the citizenship of an individual was the basis for determining his/her residential status.
✔️Under FERA, no provisions were made for IT.
✔️Violation of the provisions of FERA has been considered a criminal offence and the punishment for contravention was imprisonment.
✔️Violation of FERA was a non-compoundable offence i.e. the offence cannot be compromised. Moreover, the accused was not allowed any assistance from the lawyer.
✔️The appeals were sent to the Supreme Court.
✔️According to FERA, an individual should obtain permission from the RBI to carry out forex transactions.


❤️ FEMA
✔️FEMA is an acronym for Foreign Exchange Management Act.
✔️FEMA Act was passed by the Parliament of India in 1999 to replace the FERA. It came into force on 1st June 2000.
✔️FEMA is currently active in the country.
✔️It was enacted to remove the stringent regulations on foreign exchange and promote orderly management of foreign exchange and payments. Its main objective was to manage the forex transactions.
✔️The approach of FEMA Act toward foreign exchange is flexible.
✔️This act was introduced when the strict provisions of FERA were hampering the growth of the Indian economy.
✔️FEMA has 49 sections and is shorter than the FERA.
✔️Under this act, the definition of the term ‘Authorized person’ is broad and it has included the banks under it.
✔️Under this act, the basis for determining the residential status was that an individual should be residing in India for the past 6 months.
✔️Provisions on IT were introduced under the FEMA Act.
✔️Violation of the provisions of FEMA has been considered a civil offence and the punishment for contravention was a monetary penalty. If an individual fails to pay the penalty on time, he/she may be imprisoned.
✔️Violation of FEMA is a compoundable offence and the charges can be compromised or removed. FEMA provides the accused the right to obtain legal assistance from a lawyer.
✔️A special director and a special court were introduced under FEMA to address the appeals.
✔️Under FEMA, no such pre-approval or permission of RBI is required to carry out forex transactions.

UPSC Economics Quiz Notes PDF

08 Nov 2024 07:39

Classification of market on the basis of degree of competition

1. Perfect market: The perfect market is one where there are a large number of buyers and sellers having perfect knowledge of demand, supply and prices.

2. Imperfect market: The market in which the conditions of perfect competition are lacking are characterised as imperfect market. The following situations, each based on the degree of imperfections, may be identified.

a. Monopoly market: Monopoly is a market situation in which there is only one seller of a commodity. When there is only one buyer of a product, the market is termed as a monopsony market.

b. Duopoly market: A duopoly market is one which has only two sellers of a commodity. The market situation in which there are only two buyers of a commodity is known as duopsony market.

c.Oligopoly market: Market in which there are more than two but still a few sellers of a commodity is termed as an oligopoly market.
A market having a few (more than two buyers is known as oligopsony market.

d. Monopolistic competition: When a large number of sellers deal in heterogeneous and differentiated form of a commodity, the situation is called monopolistic competition.
Ex. Choice between various makes of insecticides, fertilizers and equipments.

UPSC Economics Quiz Notes PDF

06 Nov 2024 07:24

➡️ Aggregate Demand and its Components

Aggregate demand is the sum of all final goods and services, minus intermediate goods and services, that are available to final users within a country at a given point in time. This is the total dollar value of all purchases of both household and business spending and government spending. Aggregate demand can be generated by changes in income (factors affecting expenditure) or any combination of other factors that change how much people spend on various goods and services.

✅Components Of Aggregate Demand
There are four components in Aggregate Demand
➖Private Consumption Expenditure (C)
➖Investment Expenditure(I)
➖Government Expenditure(G)
➖Net Exports (X-M)

✅Aggregate Demand = C+I+G+(X-M)

➖Private consumption expenditure (C) or Household consumption expenditure
It refers to the expenditure on the final consumer’s goods and services by the households to satisfy their wants.

➖Investment expenditure (I)
It refers to the expenditure incurred on capital goods by private firms to increase their production capacity. These capital goods are in the form of machinery, building, land, etc.

➖Government expenditure (G) refers to the expenditure incurred by the government on the purchase of goods and services to meet the needs of the people in the economy.

➖Net Exports (X-M) It refers to the difference between exports and imports i.e., X-M
Where X stands for Exports and M stands for Imports.


✅Aggregate Demand In Two-Sector Model
In a two-sector model, it is assumed that Aggregate demand is a function of Consumption and Investment also.

Aggregate Demand In Two-Sector Model = C+ I

Where,
C= consumption expenditure
I = Investment


✅Important Concepts About Aggregate Demand
➖Aggregate demand is a function of Consumption and investment only.
➖The investment expenditure is assumed to be autonomous which means it will remain constant at all the levels of income.
➖The investment curve will be a straight line, parallel to the X-axis as it is not affected by the change in income level.
➖Consumption will be positive even at zero level of income as the minimum level of consumption is done for survival. This consumption is known as ‘Autonomous consumption’.
➖The slope of the consumption curve is positive which shows that when income increases consumption also increases.
➖The starting point of the AD curve is above zero as there is always a minimum level of consumption and investment in the economy.

UPSC Economics Quiz Notes PDF

06 Nov 2024 07:24

🔥📣 RBI Policy Rates

➡️ Policy Rates

📌 Repo rate: It is rate at which RBI lends to its clients generally against government securities.

📌 Reverse Repo Rate: It is rate at which banks lend funds to RBI.

📌 Marginal Standing Facility (MSF) Rate: It is rate at which scheduled banks can borrow funds overnight from RBI against government securities. It is very short term borrowing scheme for scheduled banks.

📌 Bank Rate: It is rate charged by central bank for lending funds to commercial banks. It influences lending rates of commercial banks. Higher bank rate will translate to higher lending rates by banks.

📌 Cash Reserve Ratio (CRR): It is amount of funds that banks have to keep with RBI. The RBI uses CRR to drain out excessive money from system.

📌 Statutory Liquidity Ratio (SLR): It is amount that banks have to maintain a stipulated proportion of their net demand and time liabilities (NDTL) in form of liquid assets like cash, gold and unencumbered securities, treasury bills, dated securities etc.

UPSC Economics Quiz Notes PDF

02 Nov 2024 08:19

📍 RECESSION

Major traits of recession can be summed up as follows:

💡 There is a general fall in demand as economic activities take a downturn.

💡 Inflation remains lower or/and shows further signs of falling down.

💡 Employment rate falls/ unemployment rate grows.

💡 Industries resort to ‘price cuts’ to sustain their business.

💡 In the financial year 1996–97, the Indian economy was taken up by the cycle of recession, due to a general downturn in domestic as well as foreign demands, initiated by the South East Asian Currency Crisis of mid-1990s. The whole plan of economic reforms in India was derailed and it was only by the end of 2001– 02 that the economy was able to recover.

UPSC Economics Quiz Notes PDF

02 Nov 2024 08:19

🔹Board for Financial Supervision(BFS)🔹

The Reserve Bank of India performs the supervisory function under the guidance of the Board for Financial Supervision (BFS). The Board was constituted in November 1994 as a committee of the Central Board of Directors of the Reserve Bank of India under the Reserve Bank of India (Board for Financial Supervision) Regulations, 1994.

➡️Objective
The primary objective of BFS is to undertake consolidated supervision of the financial sector comprising Scheduled Commercial and Co-operative Banks, All India Financial Institutions, Local Area Banks, Small Finance Banks, Payments Banks, Credit Information Companies, Non-Banking Finance Companies and Primary Dealers.

➡️Constitution
The Board is constituted by co-opting four Directors from the Central Board as Members and is chaired by the Governor. The Deputy Governors of the Reserve Bank are ex-officio members. One Deputy Governor, traditionally, the Deputy Governor in charge of supervision, is nominated as the Vice-Chairman of the Board.

In April 2018, a Sub-committee of the Board for Financial Supervision was constituted, under Para 11 & 12 of the Reserve Bank of India (Board for Financial Supervision) Regulations, 1994. The Sub-committee performs the functions and exercises the powers of supervision and inspection under the Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949, in relation to Payments Banks, Small Finance Banks, Local Area Banks, small Foreign Banks, select scheduled Urban Co-operative Banks, select Non-Banking Financial Companies and Credit Information Companies. The Sub-committee is chaired by the Deputy Governor in charge of supervision and includes the three Deputy Governors and two Directors of the Central Board as Members.

➡️BFS Meetings
The Board is required to meet normally once every month. It deliberates on inspection reports, periodic reviews related to banking and non-banking sectors and policy matters arising out of or having relevance to the supervisory functions of the Reserve Bank.

The BFS oversees the functioning of Department of Banking Supervision (DBS), Department of Non-Banking Supervision (DNBS) and Department of Co-operative Bank Supervision (DCBS) and gives directions on regulatory and supervisory issues.

➡️Functions

➖Fine-tuning the supervisory processes adopted by the Bank for regulated entities;

➖Introduction of off-site surveillance system to complement the on-site supervision of regulated entities;

➖Strengthening the statutory audit processes of banks and enlarging the role of auditors in the supervisory process;

➖Strengthening the internal defences within supervised institutions such as corporate governance, internal control and audit functions, management information and risk control systems, review of housekeeping in banks;

➖Introduction of supervisory rating system for banks and financial institutions;

➖Supervision of overseas operations of Indian banks, consolidated supervision of banks;

➖Technical assistance programme for cooperative banks;

➖Introduction of scheme of Prompt Corrective Action Framework for weak banks;

➖Guidance regarding fraud risk management framework in banks;

➖Introduction of risk based supervision of banks;

➖Introduction of an enforcement framework in respect of banks;

➖Establishment of a credit registry in respect of large borrowers of supervised institutions; and

➖Setting up a subsidiary of RBI to take care of the IT requirements, including the cyber security needs of the Reserve Bank and its regulated entities, etc.

UPSC Economics Quiz Notes PDF

15 Oct 2024 05:32

Classification of market on the basis of degree of competition

1. Perfect market: The perfect market is one where there are a large number of buyers and sellers having perfect knowledge of demand, supply and prices.

2. Imperfect market: The market in which the conditions of perfect competition are lacking are characterised as imperfect market. The following situations, each based on the degree of imperfections, may be identified.

a. Monopoly market: Monopoly is a market situation in which there is only one seller of a commodity. When there is only one buyer of a product, the market is termed as a monopsony market.

b. Duopoly market: A duopoly market is one which has only two sellers of a commodity. The market situation in which there are only two buyers of a commodity is known as duopsony market.

c.Oligopoly market: Market in which there are more than two but still a few sellers of a commodity is termed as an oligopoly market.
A market having a few (more than two buyers is known as oligopsony market.

d. Monopolistic competition: When a large number of sellers deal in heterogeneous and differentiated form of a commodity, the situation is called monopolistic competition.
Ex. Choice between various makes of insecticides, fertilizers and equipments.

UPSC Economics Quiz Notes PDF

05 Oct 2024 05:03

📉Updated GDP List

Moody’s – 7.1% (CY24), 6.5% (CY25)
Moody Ratings – 2% (CY24), 6.6% (CY25)
ADB – 7% (FY24), 7.2%(FY25)
S&P – 6.8% (FY25), 6.9% (FY26), 7% (FY27)
World Bank – 7% (FY25)
Goldman Sachs – 6.7% (CY24), 6.4% (CY24)
SBI – 7%
Deloitte – 7 – 7.2% (FY25)
India Ratings – 7.5% (FY25)
FICCI – 7% (FY25)
IMF – 7% (FY25), 6.5% (FY26)

UPSC Economics Quiz Notes PDF

05 Oct 2024 04:44

📍 BANK BOARD BUREAU

💡 It is an autonomous body of the Government of India tasked to improve the governance of Public Sector Banks, recommend selection of chiefs of government-owned banks and financial institutions and to help banks in developing strategies and capital raising plans.

💡 The Bureau is also engaging with the Public Sector Banks (PSBs) to help build capacity to attract, retain and nurture both talent and technology - the two key differentiators of business competencies in the days to come.

💡 In its endeavor, the Bureau is mindful of the need to have a fully empowered board in each and every PSB. While the Bureau is working towards attracting the best personages on the boards, it is these boards which should drive the overall strategy of a bank within its risk capacity and also act as custodians who should reconcile the diverse interests of various stakeholders.

UPSC Economics Quiz Notes PDF

05 Oct 2024 04:44

🔍❓ Tax and Non Tax revenue receipts

✔️ The receipts that do not create any liabilities and do not lead to a claim on the government are called revenue receipts.

✔️ These revenue receipts are non-redeemable and can be classified into two categories, namely: tax revenue and non-tax revenue.

✔️ Tax revenues are the vital components of revenue receipts like direct taxes, enterprises, and indirect taxes such as customs duties, excise taxes, and service tax.

✔️ Non-tax revenues, on the other hand, are the recurring income that is earned from sources other than taxes by the government.

🔴 Some of the major sources of non-tax revenue are mentioned below:

➡️ Interests

➡️ Power Supply Fees:  This includes fees received by the central power authority of any nation. In the case of India, this includes fees received by the Central Electricity Authority.

➡️ Fees: They are the charges that cover the cost of recurring services that are provided and imposed by the government.

➡️ Fines and Penalties

UPSC Economics Quiz Notes PDF

24 Sep 2024 05:12

📌Technical Recession

📌Main Points 👇

🔹1st:-

🔹2nd:-

🔹3rd:-

🔹4th:-

🔹5th:-

UPSC Economics Quiz Notes PDF

23 Sep 2024 08:12

Measures of Money Supply

RBI uses four measures of money supply denoted as M1, M2, M3, M4.

M1 = Currency notes and coins in circulation with public (but not those held by banks) + Net demand deposits with the commercial banks + Other deposits

M2 = M1 + Deposits with post-office savings banks

M3 = M1 + Fixed deposits with banks

M4 = M3 + All post-office savings bank deposits.

UPSC Economics Quiz Notes PDF

23 Sep 2024 08:09

📌Index of Industrial Production (IIP) 👇

✔️Main Points 👇

UPSC Economics Quiz Notes PDF

20 Sep 2024 05:57

📌Zero Liquid Discharge (ZLD)

✔️CPCB promotes Zero Liquid Discharge as a sustainable solution for industrial wastewater management. ZLD is implemented primarily in Distillaries, Textile, Pharmaceutical and other organo-chmecial industries.CPCB has also evolved guidelines for industries to adopt ZLD systems as part of their pollution control measures.

UPSC Economics Quiz Notes PDF

20 Sep 2024 05:57

🙂Special Drawing Rights (SDR)

✔️SDR is an international reserve asset created by the IMF to supplement the official reserves of its member countries.

✔️Note: SDR is not a currency.

✔️It is a potential claim on the freely usable currencies of IMF members.As such, SDRs can provide a country with liquidity.

✔️A basket of currencies defines the SDR: the US dollar, Euro, Chinese Yuan, Japanese Yen, and the British Pound.

UPSC Economics Quiz Notes PDF

08 Nov 2024 07:39

Capacity cost

🧤- Capacity Cost is associated with the capability to produce and deliver a certain level of output.

🧤- It is an expenditure or cost incurred by a company to expand its business operations.

🧤- These costs may include items such as lease agreements on larger facilities, purchase and depreciation of new equipment, as well as increased costs to operate and maintain those larger or newer assets.

🧤- For any business, it is difficult to avoid costs like insurance, rent payments, property taxes, depreciation on equipment, etc. These are examples of capacity costs.

Advantages

- This type of cost helps to ensure that the production costs are kept low while maximizing profits.
- Improves the quality of the product produced & enhances the efficiency of the processes.
- Helps reduce the amount of inventory held by a company, which can help to reduce overhead costs.

Disadvantages
- High cost of energy and infrastructure
- Limited access to capital
- Lack of reliable transportation networks

UPSC Economics Quiz Notes PDF

06 Nov 2024 07:29

⬆️ 🚩🚩🚩🚩🚩🚩 🚩🚩 🚩🚩🚩🚩🚩

📣 Money Supply – Meaning
According to the modern economy, money incorporates cash and bank deposits. Depending on what sort of bank deposits are being incorporated, there are many measures of money. These are founded and created by a structure, including two types of establishments which are known as central banks and commercial banks. Let’s know more about them in the following lines.

🎤 Central bank
A central bank is a significant establishment in the modern economy. Almost every nation has a central bank. India’s central bank, the Reserve Bank of India (RBI), was founded in 1935. The central bank has various significant operations.

It supplies and issues the currency of the nation and regulates the money supply of the country through various methodologies like bank rate, open market operations, and differences in reserve ratios. It functions as a banker to the government and as a custodian or guardian to the foreign exchange reserves of the economy. It also functions as an overseer to the nation’s banking structure.

🔥 Commercial bank
A commercial bank is that sort of establishment which is the money-generating part of the economy. In the following segment, we will understand the commercial banking system in detail. It accepts deposits from the public and lends parts of these funds to those who want to borrow.

The rate of interest paid by the banks to the depositors is less than the rate levied from the borrowers. This difference between these two types of interest rates is known as the spread, which is the profit earmarked by the bank.

UPSC Economics Quiz Notes PDF

06 Nov 2024 07:24

🚩 Difference between banks and NBFCs 🚩

📌 NBFCs business activities are akin to that of banks as they can lend & make investments

📌 NBFCs cannot accept demand deposits

📌 They cannot issue cheques as they do not form part of the payment & settlement system.

📌 Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks

UPSC Economics Quiz Notes PDF

02 Nov 2024 08:19

📍 BUDGET DEFICIT

💡 A budgetary deficit is referred to as the situation in which the spending is more than the income. Although it is mostly used for governments, this can also be broadly applied to individuals and businesses.

💡 In other words, a budgetary deficit is said to have taken place when the individual, government, or business budgets have more spending than the income that they can generate as revenue.


📍 GENDER BUDGETING

💡 GB is concerned with gender sensitive formulation of legislation, programmes and schemes; allocation of resources; implementation and execution; audit and impact assessment of programmes and schemes; and follow-up corrective action to address gender disparities.

💡 A powerful tool for achieving gender mainstreaming so as to ensure that benefits of development reach women as much as men.

💡 Does not seek to create a separate budget but seeks affirmative action to address specific needs of women.

💡 Monitors expenditure and public service delivery from a gender perspective.

💡 Entails dissection of the Government budgets to establish its gender differential impacts and to ensure that gender commitments are translated in to budgetary commitments.


📍 WHAT IS A FISCAL DEFICIT ?

💡 The fiscal deficit is the difference between the government’s total expenditure and its total receipts (excluding borrowing). A fiscal deficit occurs when this expenditure exceeds the revenue generated.

▪︎ Fiscal deficit is when a government’s total expenditures exceed the revenue that it generates (excluding money from borrowings).

▪︎ The deficit does not mean debt, which is an addition of annual deficits.

UPSC Economics Quiz Notes PDF

02 Nov 2024 08:19

📍MEANS OF DEFICIT FINANCING

#Publicfinance

➡️ PRINTING CURRENCY

💡  is the last resort for the government in managing its deficit. But it has the biggest handicap that with it the government cannot go for the expenditures which are to be made in the foreign currency.

💡 printing fresh currencies does have other damaging effects on the economy:

○ It increases inflation proportionally. (India regularly went for it since the early 1970s and usually had to bear double digit inflations.)

○ It brings in regular pressure and obligation on the government for upward revision in wages and salaries of government employees—ultimately increasing the government expenditures necessitating further printing of currency and further inflation—a vicious cycle into which economies entangle themselves.

UPSC Economics Quiz Notes PDF

15 Oct 2024 05:32

📍MONEY MULTIPLIER

💡 It is the ratio of broad money (M3) divided by Reserve Money (M0)

💡 Therefore, Broad money (M3) = Reserve Money (M0) x money multiplier

💡 In other words, when Reserve money increases, Broad money will also increase. Monetary Aggregates.

💡 The New Monetary Aggregates are as given below:

1. Reserve Money (M0) = Currency in circulation + Bankers’ Deposits with the RBI + ‘Other’ deposits with the RBI.

2. Narrow Money (M1) = Currency with the Public + Demand Deposits with the Banking System + ‘Other’ deposits with the RBI.

3. M2 = M1 + Savings Deposits of Post-office Savings Banks.

4. Broad Money (M3) = M1 + Time Deposits with the Banking System.

5. M4 = M3 + All deposits with Post Office Savings Banks (excluding National Savings Certificates).

UPSC Economics Quiz Notes PDF

06 Oct 2024 04:05

📌White Revolution 2.0👇

✔️Mains Points 👇

UPSC Economics Quiz Notes PDF

05 Oct 2024 04:44

💰GST Collection of Previous Months
🔸January 2024 – 1.72 lakh crore
🔸February 2024 – 1.68 lakh crore
🔸March 2024 – 78 lakh crore
🔸April 2024 – 10 lakh crore
🔸May 2024 –73 lakh crore
🔸June 2024 –74 lakh crore
🔸July 2024 –82 lakh crore
🔸August 2024 – 1.75 lakh crore
🔸September 2024 – 1.73 lakh crore

UPSC Economics Quiz Notes PDF

05 Oct 2024 04:44

Money laundering:

"Money laundering is the illegal process of concealing the origins of money obtained illegally by passing it through a complex sequence of banking transfers or commercial transactions."

Money laundering typically includes three stages: placement, layering and integration stage.

✏️Placement is the first step of money laundering which is the process of moving the money into the legitimate source via financial institutions, casinos, financial instruments etc. and at the same time, hiding its source.

✏️The second stage is “layering”, also referred as “structuring stage”. It breaks the funds into small transactions and makes it difficult to detect and find out about the laundering activity. It usually entails international money movement, so the law enforcement agencies won’t be able to track the financial gains from illegal proceedings so easily.

✏️The third stage is Integration stage, In this stage, money is now returned to the criminals legitimately after it has been placed in the financial system, often breaking it into different multiple smaller financial transactions. Criminals can now retrieve their illicit funds in a legal way after fully integrating them into a legitimate source, and are able to use them for any purpose.

"Anti-money laundering (AML) refers to the laws, regulations and procedures intended to prevent criminals from disguising illegally obtained funds as legitimate income."

⏺Prevention of Money Laundering Act (PMLA), 2002 is an Act of the Parliament of India enacted by the government to prevent money-laundering and to provide for confiscation of property derived from money-laundering. PMLA and the Rules notified there under came into force with effect from July 1, 2005.

UPSC Economics Quiz Notes PDF

24 Sep 2024 05:12

📌NeoBanks

📌Main Points 👇

UPSC Economics Quiz Notes PDF

24 Sep 2024 05:12

📌Civil Registration System (CRS)

📌Main Points👇

🔹1st:-

🔹2nd:-

🔹3rd:-

🔹4th:-

🔹5th:-

UPSC Economics Quiz Notes PDF

23 Sep 2024 08:09

📌Centre for Rural Enterprise Acceleration through Technology (CREATE)👇

✔️Main Points 👇

UPSC Economics Quiz Notes PDF

23 Sep 2024 08:09

📌PMJDY Empowered Women Financially 👇

📌Main Points 👇

UPSC Economics Quiz Notes PDF

20 Sep 2024 05:57

📌World Economic Forum ( WEF )

✔️The World Economic Forum is the International Organization for Public-Private Cooperation.
✔️Established in 1971
✔️Not-for-profit foundation
✔️Headquartered in Geneva, Switzerland.

Major Reports

✔️Energy Transition Index.
✔️Global Competitiveness Report.
✔️Global IT Report
✔️WEF along with INSEAD, and Cornell University publishes this report.
✔️Global Gender Gap Report
✔️Global Risk Report
✔️Global Travel and Tourism Report

UPSC Economics Quiz Notes PDF

20 Sep 2024 05:57

✅Open Market Operations(OMOs)

OMOs is one of the quantitative monetary policy tools which is employed by the central bank of a country to control the money supply in the economy.

It is a part of the Market Stabilization Scheme (MSS) by the RBI.

OMOs are conducted by the RBI by way of sale or purchase of government securities (g-secs) to adjust money supply conditions.

The central bank sells g-secs to remove liquidity from the system and buys back g-secs to infuse liquidity into the system.