Daily Mock Test – 31 July 2025 – Mumkin Hai IAS Coaching

🧠 Daily UPSC Mock Test – 31 July 2025

Welcome aspirants! This is your Daily Practice Quiz consisting of 30 high-quality questions to strengthen your UPSC Prelims preparation.

📘 Subjects: Polity, Economy, History, Environment, S&T, Current Affairs
⏱️ Time Limit: 30 Minutes
📝 Difficulty Level: UPSC Prelims Standard

💡 Tip: Read all options carefully, eliminate smartly, and revise your mistakes from the explanations.

👇 Start Your Test 👇

Results

HD Quiz powered by harmonic design

START

#1. With reference to the External Commercial Borrowings (ECBs), which are correct?

ECBs are always denominated in Indian Rupees

ECBs can be raised by Indian companies for expansion

ECBs are monitored under FEMA by RBI

All of the above

➡️ Correct Answer: 2

Explanation:
ECBs are usually denominated in foreign currency (not rupees). They are used by Indian companies for capital expansion and are regulated under FEMA and RBI guidelines. So, only 2 and 3 are correct, but the correct option is 2 only as per the original framing.

#2. Which of the following are revenue expenditure?

Grants-in-aid to states

Interest payments

Subsidies

All of the above

➡️ Correct Answer: 4

Explanation:
All three are classified as revenue expenditure because they do not create any physical asset.

Rising FDI inflows
Higher crude oil imports
Increase in interest rates by RBI

#3. Choose the correct answer:

1 and 2 only

1 and 3 only

2 and 3 only

All of the above

➡️ Correct Answer: 2

Explanation:
FDI inflows and higher interest rates attract foreign capital → stronger rupee. But oil imports increase forex demand, weakening rupee.

It includes net factor income from abroad
It is calculated at market prices
It excludes indirect taxes and includes subsidies

#4. Choose the correct answer:

1 and 2 only

1 and 3 only

2 and 3 only

1, 2, and 3

➡️ Correct Answer: 2

Explanation:
National Income = NNP at factor cost (not market prices). Hence, statement 2 is incorrect.

#5. The Phillips Curve illustrates the relationship between:

Inflation and unemployment

Interest rates and inflation

Money supply and GDP

Fiscal deficit and trade deficit

➡️ Correct Answer: 1

Explanation:
The Phillips Curve shows an inverse relationship between inflation and unemployment in the short run. As inflation rises, unemployment tends to fall, and vice versa—though this relationship may not hold in the long run.

#6. Which scheme is related to promotion of electric mobility in India?

PM-KUSUM

FAME II

UDAN

PM Gati Shakti

➡️ Correct Answer: 2

Explanation:
FAME II (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) is a central scheme aimed at promoting EV adoption and reducing dependence on fossil fuels.

#7. Which entity manages the National Monetisation Pipeline (NMP)?

Ministry of Finance

NITI Aayog

RBI

Department of Economic Affairs

➡️ Correct Answer: 2

Explanation:
The NITI Aayog in collaboration with the Ministry of Finance conceptualized the National Monetisation Pipeline, aimed at leasing public assets like highways, railways, and power lines to generate revenue.

#8. Which rating agency downgraded global growth forecast for 2024 citing inflation?

IMF

Fitch

Moody’s

Standard & Poor's

➡️ Correct Answer: 3

Explanation:
In early 2024, Moody’s revised global growth projections downward due to persistent inflation, geopolitical tensions, and tightening monetary conditions.

#9. Which country is India’s largest trading partner as of 2024?

China

USA

UAE

Germany

➡️ Correct Answer: 2

Explanation:
According to 2024 data from the Ministry of Commerce, the United States has continued to be India’s largest trading partner, overtaking China in recent years, due to increasing exports and strategic trade ties.

#10. Which organization releases the ‘World Economic Outlook’ report?

World Bank

IMF

WTO

OECD

➡️ Correct Answer: 2

Explanation:
The International Monetary Fund (IMF) publishes the World Economic Outlook (WEO) report, providing analysis of global economic trends and forecasts. It is a key source for UPSC current affairs.

#11. Correct statement about monetary policy in India?

Reverse repo rate is always higher than repo rate

Repo rate is the rate at which RBI accepts deposits

Increase in repo rate may reduce inflation

CRR is a part of capital account of the BoP

➡️ Correct Answer: 3

Explanation:
Higher repo rate → costly borrowing → reduced money supply → helps control inflation.

#12. Which is NOT a function of RBI?

Banker to the Government

Controller of foreign exchange

Provider of long-term credit to agriculture

Issuer of currency

➡️ Correct Answer: 3

Explanation:
Long-term agri-credit is handled by NABARD, not RBI. RBI’s core functions include currency issuance, forex management, and monetary policy.

It is a 6-member committee
The RBI Governor is the ex-officio Chairperson
It decides the repo rate by consensus only

#13. Select the correct answer using the code below:

1 and 2 only

2 and 3 only

1 and 3 only

All of the above

➡️ Correct Answer: 1

Explanation:
MPC has 6 members; RBI Governor is Chair. Decisions are by majority, not consensus.

#14. Which is not a component of Aggregate Demand?

Household consumption

Government expenditure

Net exports

Treasury bills

➡️ Correct Answer: 4

Explanation:
Aggregate demand = C + I + G + NX. Treasury bills are financial instruments, not part of AD.

#15. What does ‘Core Inflation’ refer to?

Inflation excluding food and fuel items

Inflation in essential goods only

Wholesale Price Index inflation

CPI combined with fuel index

Correct Answer: 1

Explanation:
Core inflation = Headline inflation – volatile components (food & fuel). It shows underlying trends.

Twin Deficit – Fiscal + Current account deficit
Hot Money – Short-term speculative foreign capital
Primary Deficit – Fiscal Deficit – Interest payments

#16. Which pairs are correctly matched:

1 and 2 only

2 and 3 only

1 and 3 only

All of the above

Correct Answer: 4

Explanation:
All definitions are correct. These are standard macroeconomic concepts often asked in UPSC.

#17. The term ‘Fiscal Consolidation’ in India refers to:

Reducing fiscal deficit through revenue enhancement and expenditure control

Increasing capital expenditure in agriculture

Monetizing the deficit

Increasing government borrowings from RBI

➡️ Correct Answer: 1

Explanation:
Fiscal consolidation means reducing government deficits and debt accumulation through prudent fiscal management, such as controlling subsidies and enhancing tax revenue.

#18. What best explains the concept of ‘Effective Revenue Deficit’?

Revenue Deficit minus interest payments

Revenue Deficit minus capital receipts

Revenue Deficit minus grants given for asset creation

Revenue Deficit plus fiscal deficit

➡️ Correct Answer: 3

Explanation:
Effective Revenue Deficit = Revenue Deficit – Grants for capital asset creation. It was introduced to better reflect the actual revenue shortfall excluding productive capital grants.

#19. What is the revised fiscal deficit target for India in FY 2024-25?

5.1% of GDP

6.8% of GDP

5.8% of GDP

4.5% of GDP

➡️ Correct Answer: 1

Explanation:
The government set the fiscal deficit target at 5.1% of GDP for FY 2024–25, continuing its path toward fiscal consolidation, down from previous highs during the pandemic years.

#20. Which are components of M3 (Broad Money)?

Currency with public

Demand deposits with banks

Time deposits with banks

All of the above

➡️ Correct Answer: 4

Explanation:
M3 includes: Currency with the public + Demand deposits + Time deposits. It is the broadest measure of money supply used by RBI.

#21. Which statements are true about the GDP deflator?

It accounts for changes in prices of all goods and services

It is narrower than CPI

It reflects inflation for the entire economy

All of the above

Correct Answer: 3

Explanation:
GDP deflator reflects inflation for the entire economy (both goods and services). It’s broader than CPI. Statement 2 is wrong.

#22. In Union Budget 2024-25, which sector received the highest capital allocation?

Defence

Health

Transport

Education

➡️ Correct Answer: 3

Explanation:
The Transport sector, particularly infrastructure (highways, railways, logistics), received the highest capital expenditure in the 2024–25 Union Budget, aligning with the PM Gati Shakti plan and infra-led growth strategy.

#23. Which Indian initiative was launched to boost semiconductor manufacturing?

Digital India Mission

Production Linked Incentive (PLI) Scheme

Make in India 2.0

Startup India 3.0

➡️ Correct Answer: 2

Explanation:
The PLI Scheme has specific incentives for semiconductors and display manufacturing, attracting firms like Micron and Foxconn to invest in India.

#24. The concept of ‘Green GDP’ includes adjustment for which factor?

Inflation

Environmental degradation

FDI inflows

Fiscal deficit

➡️ Correct Answer: 2

Explanation:
Green GDP is GDP adjusted for environmental degradation and resource depletion. It gives a more sustainable picture of national progress, highlighting ecological costs of growth.

#25. Which of the following correctly describes ‘Fiscal Drag’?

A situation where public debt reduces economic activity

A rise in tax revenues due to inflation pushing taxpayers into higher slabs

A lag in fiscal stimulus transmission

Reduction in fiscal deficit due to decreased expenditure

Correct Answer: 2

Explanation:
Fiscal drag happens when inflation increases people’s nominal income, pushing them into higher tax brackets, even if their real income hasn’t changed. As a result, tax revenues rise without a corresponding increase in purchasing power, reducing aggregate demand.

#26. Which of the following items are included in the Capital Account of BoP?

Foreign Direct Investment (FDI)

External Commercial Borrowings (ECBs)

Exports and imports of goods

All of the above

➡️ Correct Answer: 1

Explanation:
FDI and ECBs are part of the Capital Account, while exports and imports belong to the Current Account of Balance of Payments (BoP).

#27. Which of the following can be used to manage inflation?

Increasing CRR

Decreasing fiscal deficit

Purchasing government securities in the open market

All of the above

Correct Answer: 1

Explanation:
To control inflation, RBI may increase CRR, reducing money supply. Decreasing fiscal deficit is also deflationary. But purchasing securities increases liquidity — not an inflation-control measure.

#28. Which of the following sectors is NOT covered under the PLI Scheme?

Pharmaceuticals

Telecom

Leather

Automobiles

➡️ Correct Answer: 3

Explanation:
Leather is not among the key sectors selected for PLI. The scheme focuses on high-potential sectors like pharma, telecom, electronics, textiles, and auto components.

#29. Consider the following about ‘Repo Rate’:

It is the rate at which RBI lends money to commercial banks

An increase in repo rate generally reduces money supply

Repo rate is determined by SEBI

Both 1 and 2

➡️ Correct Answer: 4

Explanation:
Statements 1 and 2 are correct: repo rate is set by RBI and impacts liquidity. Statement 3 is incorrect — SEBI is not involved in setting monetary policy.

#30. What is meant by ‘Open Market Operations’?

Selling of equities by SEBI

Purchase and sale of government securities by RBI

Raising of capital via IPOs

Government borrowing from the World Bank

➡️ Correct Answer: 2

Explanation:
Open Market Operations (OMO) refer to RBI buying/selling government securities to regulate money supply and liquidity.

Finish

🧠 Daily UPSC Mock Test – 31 July 2025

Results

#1. With reference to the External Commercial Borrowings (ECBs), which are correct?

#2. Which of the following are revenue expenditure?

Which of the following can lead to an appreciation of Indian Rupee?

Rising FDI inflows

Higher crude oil imports

Increase in interest rates by RBI

#3. Choose the correct answer:

Consider the following regarding ‘National Income’:

It includes net factor income from abroad

It is calculated at market prices

It excludes indirect taxes and includes subsidies

#4. Choose the correct answer:

#5. The Phillips Curve illustrates the relationship between:

#6. Which scheme is related to promotion of electric mobility in India?

#7. Which entity manages the National Monetisation Pipeline (NMP)?

#8. Which rating agency downgraded global growth forecast for 2024 citing inflation?

#9. Which country is India’s largest trading partner as of 2024?

#10. Which organization releases the ‘World Economic Outlook’ report?

#11. Correct statement about monetary policy in India?

#12. Which is NOT a function of RBI?

With reference to ‘Monetary Policy Committee (MPC)’, consider the following:

It is a 6-member committee

The RBI Governor is the ex-officio Chairperson

It decides the repo rate by consensus only

#13. Select the correct answer using the code below:

#14. Which is not a component of Aggregate Demand?

#15. What does ‘Core Inflation’ refer to?

Twin Deficit – Fiscal + Current account deficit

Hot Money – Short-term speculative foreign capital

Primary Deficit – Fiscal Deficit – Interest payments

#16. Which pairs are correctly matched:

#17. The term ‘Fiscal Consolidation’ in India refers to:

#18. What best explains the concept of ‘Effective Revenue Deficit’?

#19. What is the revised fiscal deficit target for India in FY 2024-25?

#20. Which are components of M3 (Broad Money)?

#21. Which statements are true about the GDP deflator?

#22. In Union Budget 2024-25, which sector received the highest capital allocation?

#23. Which Indian initiative was launched to boost semiconductor manufacturing?

#24. The concept of ‘Green GDP’ includes adjustment for which factor?

#25. Which of the following correctly describes ‘Fiscal Drag’?

#26. Which of the following items are included in the Capital Account of BoP?

#27. Which of the following can be used to manage inflation?

#28. Which of the following sectors is NOT covered under the PLI Scheme?

#29. Consider the following about ‘Repo Rate’:

#30. What is meant by ‘Open Market Operations’?