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Prelims-IAS –ECONOMICS MCQ-27

1..Both Foreign Direct Investment (FDI) and Foreign Institutional Investor (FII) are related to investment in a country. Which one of the following statements best represents an important difference between the two?

(a)  FII helps bring better management skills and technology, while FDI only brings in capital.
(b)  FII helps in increasing capital availability in general, while FDI only targets specific sectors.

(c)  FDI flows only into the secondary market, while FII targets primary market.

(d)  FII is considered to be more stable than FDI.


2..Consider the following statements:

  1. Poverty Reduction and Growth Facility (PRGF) has been established by the International Development Association (IDA) to provide further assistance to low-income countries facing high level of indebtedness.
  2. Singapore Regional Training Institute (STI) is one of the institutes that provides training in macroeconomic analysis and policy, and related subjects as a part of programme of the IMF Institute.

Select the correct answer using the code given below.
(a) 1 only
(b) 2 only

(c) Both 1 and 2
(d) Neither 1 nor 2

3..In relation to Foreign Direct Investment (FDI),consider the following statements:

  1. FDI increases access to market in domestic country and also reduces cost of production if the labor market is cheaper.
  2. FDI offers a source of external capital and increased revenue.
  3. FDI exposes local governments and businesses to new technologies and management practices.
  4. Remittances received from NRIs constitute one of the important source of FDI in India

Which of the statements given above is/are correct?

(a)  2 and 3 only

(b)  1, 2 and 3 only

(c)  2, 3 and 4 only

(d)  1, 2, 3 and 4


4..Consider the following statements regarding disguised unemployment:

  1. In India, the problem persists because productivity of workers is low
  2. Informal nature of work increases the prevalence of disguised unemployment.
  3. Construction sector has the worst load of disguised unemployment

Which of the statements given above is/are incorrect?

(a)  1 and 2 only
(b)  3 only

(c)  2 and 3 only

(d)  1, 2 and 3


5..With reference to assessment of labour market condition, consider the following statements:

  1. Labour Force Participation Rate is the ratio of the number of persons in the labour force to the working age population.
  2. Unemployment Rate is the ratio of the number of unemployed persons to the total population.

Which of the above statements is/are correct?
(a) 1 only
(b) 2 only

(c) Both 1 and 2
(d) Neither 1 nor 2


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