SFG 2025 | LEVEL 1 |Test 17 |

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Test Code: 221116

A
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 SFG 2025 | LEVEL 1 |Test 17 |

Q.1) Consider the following statement: exchange rates. In this context, the Bretton
Statement-I: India does not import apples Woods System can be most appropriately
from the United States of America. explained as which of the following?
Statement-II: In India, the law prohibits the It is a type of currency regime where:
import of Genetically Modified food without a) the central banks intervened to buy and sell
the approval of the competent authority. foreign currencies in order to manage the
Which one of the following is correct in exchange rates.
respect of the above statements? b) the exchange rate was determined by the
a) Both Statement-I and Statement-II are market forces.
correct and Statement-II explains c) the global financial institutions fixed the
Statement-I exchange rate at a particular level.
b) Both Statement-I and Statement-II are d) the currencies were pegged to the value of
correct, but Statement-II does not explain the US dollar.
Statement-I
c) Statement-I is correct, but Statement-II is Q.5) In the context of India, which of the
incorrect following factors is/are contributor/
d) Statement-I is incorrect, but Statement-II contributors to reducing the risk of a currency
is correct crisis?
1. The foreign currency earnings of India’s IT
Q.2) Which of the following statements most sector
appropriately describes the ‘above the line’ 2. Increasing the government expenditure
items in Balance of Payments (BoP)? 3. Remittances from Indians abroad
a) International economic transactions that Select the correct answer using the code given
are made independently of the state of the below.
Balance of Payments. a) 1 only
b) Financial transactions of value above 1 b) 1 and 3 only
Billion US Dollars. c) 2 only
c) Transactions made to cover or balance any d) 1, 2 and 3
deficit in the Balance of Payments.
d) Transactions where money is provided to Q.6) Which among the following is considered
an individual without receiving any goods as leakage to the circular flow of income?
or services in return. a) Exports
b) Imports
Q.3) Foreign Currency Assets constitute an c) Inventories
important part of India’s foreign exchange d) All the above
reserves. In this context consider the
following: Q.7) Consider the following statements:
1. SDR holdings of RBI which is included Statement-I: India’s share in global services
under SDR exports has surpassed 8 per cent in FY2023.
2. Investment in bonds by RBI issued by IIFC Statement-II: The ‘Make in India’ Scheme has
(UK) contributed to the growth of the services
3. Investment by RBI in foreign government sector in the last 10 years in India.
securities with maturity up to 10 years Which one of the following is correct in
4. Deposits of RBI with Bank for International respect of the above statements?
Settlement a) Both Statement-I and Statement-II are
Which of the above are part of Foreign correct and Statement-II is the correct
Currency Assets? explanation for Statement-I.
a) 1, 2 and 3 only b) Both Statement-I and Statement-II are
b) 3 and 4 only correct and Statement-II is not the correct
c) 1, 3 and 4 only explanation for Statement-I.
d) 1, 2, 3 and 4 c) Statement-I is correct but Statement-II is
incorrect.
Q.4) Various types of methods have been used d) Statement-I is incorrect but Statement-II is
by countries for determining their currency’s correct.

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 SFG 2025 | LEVEL 1 |Test 17 |

Q.8) Arrange the following countries in an c) Statement-l is correct but Statement-II is

increasing order as per their share (in value incorrect.
terms) in India’s total exports during the year d) Statement-I is incorrect but Statement-II is
2023-24? correct.
1. USA
2. UAE Q.12) With reference to Indian economy
3. China consider the following statements:
4. Netherlands Statement-I: India was the largest recipient of
Select the correct answer using the code given remittances globally in the financial year 2023-
below: 2024.
a) 4-2-3-1 Statement-II: The rise in global oil prices
b) 3-4-2-1 generally positively impacts the remittances
c) 4-2-1-3 received by the country.
d) 1-3-2-4 Statement-III: India has the highest number of
emigrants in the world.
Q.9) The Hershman-Herfindahl index, recently Which one of the following is correct in
seen in news, provides information on which respect of the above statements?
one of the following? a) Both Statement-II and Statement-III are
a) Economic inequality between the correct and both of them explain
developing and developed countries Statement-I.
b) Openness of an economy in terms of tariff b) Both Statement-II and Statement-III are
and non-tariff barriers correct, but only one of them explains
c) Logistics efficiency in a country Statement-I.
d) Competitiveness within an industry or c) Only one of the Statements II and III is
sector. correct and that explains Statement-I.
d) Neither Statement-II nor Statement-III is
Q.10) Consider the following countries: correct.
1. Mauritius
2. Australia Q.13) Consider the following pairs:
3. United Arab Emirates (UAE) Report/Indices Released by
With how many of the above countries has 1. World Investment World Bank
India signed Free Trade Agreements (FTAs)? Report
a) Only one 2. Logistics World Economic
b) Only two Performance Index Forum (WEF)
c) All three (LPI)
d) None 3. World Migration The United
Report Nations High
Q.11) Consider the following statements: Commissioner for
Statement-I: Switzerland is one of the leading Refugees
exporters of gold in terms of value. (UNHCR)
Statement-II: Switzerland has the second How many of the pairs given above are
largest gold reserves in the world. correctly matched?
Which one of the following is correct in a) Only one
respect of the above statements? b) Only two
a) Both Statement-I and Statement-II are c) All three
correct and Statement-II is the correct d) None
explanation for Statement-I.
b) Both Statement-1 and Statement-II are
correct and Statement-II is not the correct
explanation for Statement-I.

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 SFG 2025 | LEVEL 1 |Test 17 |

Q.14) Foreign direct Investment (FDI) inflows in 3. Decrease in NEER indicates a decrease in
India can be categorized into physical FDI and the value of the domestic currency relative
digital FDI. In this context, consider the to a basket of foreign currencies.
following: Which of the above statements are correct?
1. Information and Broadcasting a) 1 and 2 only
2. Automobiles b) 2 and 3 only
3. Pharmaceuticals c) 1 and 3 only
4. Telecommunication d) 1, 2 and 3
Foreign Investment in how many of the above
sectors can be categorized as digital FDI? Q.18) In the context of financial markets, what
a) Only one does the term taper tantrum best refers to:
b) Only two a) a sudden increase in foreign investment in
c) Only three a country, leading to a significant decrease
d) All four in bond yields.
b) the government announcing large capital
Q.15) “Rapid Financing Instrument” and “Rapid expenditure on infrastructure, leading to a
Credit Facility” are related to the provisions of slight rise in bond yields due to increased
lending by which one of the following? borrowing.
a) Asian Development Bank c) a sudden increase in bond yields triggered
b) International Monetary Fund by a central bank announcement of
c) United Nations Environment Programme reducing the pace of its bond-buying
Finance Initiative program.
d) World Bank d) the central bank unexpectedly decreasing
the interest rates to combat recession,
Q.16) With reference to external sector of any leading to a significant decrease in bond
country’s economy, Balance of Payments (BOP) yields.
equilibrium refers to a situation where:
a) The current account deficit is financed Q.19) In the context of Indian economy,
entirely by foreign borrowing or asset sale consider the following statements:
without any Forex reserve movements. Statement I: An Indian resident can gift any
b) Both the current account and capital amount of cash to his/her relative living
account show surpluses simultaneously. outside India in foreign currency within a
c) The demand for foreign exchange is financial year.
balanced using the Forex reserves held by Statement II: India follows full current
the Central Bank. account convertibility.
d) The capital account surplus is larger than Which one of the following is correct in
the current account deficit. respect of the above statements?
a) Both Statement-I and Statement-II are
Q.17) With reference to the Nominal Effective correct and Statement-II explains
Exchange Rate (NEER), consider the following Statement-I
statements: b) Both Statement-I and Statement-II are
1. It is adjusted for inflation to reflect the real correct, but Statement-II does not explain
purchasing power of a currency. Statement-I
2. It is a measure of the value of a currency c) Statement-I is correct, but Statement-II is
against a weighted average of several incorrect
foreign currencies. d) Statement-I is incorrect, but Statement-II
is correct

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 SFG 2025 | LEVEL 1 |Test 17 |

Q.20) Consider the following factors: Q.23) Which of the following are the features
1. High consumption expenditure of of Special Economic Zones (SEZs) in India?
imported goods 1. They are deemed as foreign territory for
2. Increase in global fuel prices the purposes of trade operations in India.
3. Decline in export competitiveness 2. SEZ units receive 100% income tax
4. Increment in net remittances into the exemption on export income for the first
country five years of the establishment.
How many of the above factors may lead to 3. Hundred Percent Foreign Direct
Current Account Deficit of India? Investment (FDI) is allowed through the
a) Only one automatic route in all the sectors in SEZs.
b) Only two 4. A unit located in a SEZ requires an import
c) Only three license for importing goods from any entity.
d) All four Select the correct answer using the codes
given below:
Q.21) Consider the following statements: a) 1 and 2 only
Statement-I: If the United States of America b) 2 and 4 only
(USA) were to default on its debt, holders of US c) 1, 3 and 4 only
Treasury Bonds will not be able to exercise d) 1, 2, 3 and 4
their claims to receive payment.
Statement-II: The USA Government debt is Q.24) In the context of Balance of Payment
not backed by any hard assets, but only by the (BoP) of India, consider the following:
faith of the Government. 1. Services provided by a software engineer of
Which one of the following is correct in India to a company located outside India.
respect of the above statements? 2. Loans raised by the central government
a) Both Statement- I and Statement-II are from abroad.
correct, and Statement-II explains 3. Remittances sent by people working abroad
Statement -I. to their families in India.
b) Both statement-I and Statement II are 4. Foreign Direct Investment (FDI) made by a
correct but statement-II does not explain foreign investor into a company in India.
statement-I. How many of the above constitute a part of the
c) Statement-I is correct, but statement-II is Current Account of the Balance of Payment
incorrect (BoP) of India?
d) Statement-I is incorrect, but Statement II is a) Only one
correct. b) Only two
c) Only three
Q.22) Consider the following trade barriers: d) All four
1. Trade Embargo
2. Licenses Q.25) Which of the following best describes the
3. Quotas term ‘import cover’, sometimes seen in the
4. Countervailing Duty news?
5. Sanitary and Phytosanitary (SPS) measures a) It is the ratio of value of imports to the
6. Local Content Requirements Gross Domestic Product of a country.
How many of the above are classified as non- b) It is the total value of imports of a country
tariff barriers in trade? in a year.
a) Only two c) It is the ratio between the value of exports
b) Only three and that of imports between two countries.
c) Only four d) It is the number of months of imports that
d) Only five could be paid for by a country’s
international reserves.

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 SFG 2025 | LEVEL 1 |Test 17 |

Q.26) With reference to International Finance b) Only two

Corporation (IFC), consider the following c) All three
statements: d) None
1. It directly provides loans to the private
companies. Q.30) With reference to the International Bank
2. It provides interest free loans to all the for Reconstruction and Development (IBRD),
eligible borrowers. consider the following statements:
3. It is the most recent organ to be set up 1. It provides loans to governments at
among the World Bank Group. national and sub national level.
Which of the statements given above is/are 2. The major source of funds for IBRD is the
correct? contributions made by member countries.
a) 1 only 3. India is one of the founding members of
b) 1 and 2 only IBRD.
c) 3 only Which of the statements given above are
d) None correct?
a) 1 and 2 only
Q.27) Consider the following sectors in India: b) 2 and 3 only
1. Lottery business c) 1 and 3 only
2. Nuclear equipment manufacturing d) 1, 2 and 3
3. White Label ATM operations
4. Manufacturing of cigarettes Q.31) Consider the following statements:
In how many of the above sectors is Foreign The effect of devaluation of a currency is that
Direct Investment prohibited in India? it necessarily
a) Only one 1. Improves the competitiveness of the
b) Only two domestic export in the foreign markets
c) Only three 2. Increases the foreign value of domestic
d) All four currency
3. Improves the trade balance
Q.28) If a country has a negative Net Which of the above statements is/are correct?
International Investment Position (NIIP), then a) 1 only
it indicates that: b) 1 and 2
a) the outward foreign portfolio investments c) 3 only
(FPI) from that country is higher than the d) 2 and 3
inward foreign portfolio investments into
that country. Q.32) Consider the following International
b) the country is having a current account reports:
deficit (CAD). 1. Global Financial Stability Report
c) the non-residents own more financial 2. The Fiscal Monitor
assets in the country than residents of the 3. Global Competitiveness Report
country own abroad. How many of the above reports are released by
d) the country lends more to foreign countries the International Monetary Fund (IMF)?
than it borrows from other countries. a) Only one
b) Only two
Q.29) Consider the following factors: c) All three
1. Gross Domestic Product (GDP) d) None
2. Openness
3. International Reserves
How many of the above given factors are
considered for calculating a member country’s
quota in the International Monetary Fund
(IMF)?
a) Only one

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 SFG 2025 | LEVEL 1 |Test 17 |

Q.33) Consider the following organizations: b) 2 only

1. International Cotton Advisory Committee c) Both 1 and 2
2. International Sugar Organisation d) Neither 1 nor 2
3. International Grains Council
India is a member of how many of the above Q.37) With reference to World Trade
organizations? Organization, consider the following pairs:
a) Only one Terms related to Description
b) Only two WTO
c) All three 1. Peace clause Temporary immunity
d) None for developing
countries breaching
Q.34) With reference to Basel Committee on food subsidy limits
Banking Supervision (BCBS), consider the under the Agreement
following statements: on Agriculture.
1. It was established in 1999 as a response to 2. Compulsory Provision under
Asian financial crisis licensing Trade-Related
2. It is the highest decision-making body of Aspects of
the Bank for International Settlements. Intellectual Property
Which of the statements given above is/are Rights (TRIPS)
correct? allowing countries to
a) 1 only produce a patented
b) 2 only product with the
c) Both 1 and 2 consent of the patent
d) Neither 1 nor 2 holder.
3. Most Favoured Requires countries to
Q.35) Consider the following statements: Nation clause offer the same trade
The Stability and Growth Pact of the European terms to all its
Union is a treaty that trading partners,
1. limits the levels of the budgetary deficit of with notable
the countries of the European Union. exceptions under
2. makes the countries of the European Union WTO rules.
to share their infrastructure facilities. How many of the pairs given above are
3. enables the countries of the European correctly matched?
Union to share their technologies. a) Only one
How many of the above statements are b) Only two
correct? c) All three
a) Only one d) None
b) Only two
c) All three Q.38) With reference to the Financial Action
d) None Task Force, which of the following statements
is incorrect?
Q.36) With reference to Agreement on Trade a) It is an intergovernmental organization that
Related investment measures (TRIMS), examines and develops measures to combat
consider the following statements: money laundering and terrorist financing.
1. It is an agreement under the World Trade b) Its Secretariat is located at the
Organization for regulation of foreign Organisation for Economic Co-operation
investment. and Development (OECD) headquarters.
2. It is applied to investment measures related c) It revises the countries on the Blacklist and
to trade in goods but not in services. Grey list three times a year.
Which of the statements given above is/are d) It has a separate investigation arm which
correct? investigates cases related to money
a) 1 only laundering.

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 SFG 2025 | LEVEL 1 |Test 17 |

Q.39) With reference to the New Development d) Neither Balance of Payments nor Balance of
Bank (NDB), consider the following statements: Trade.
1. The agreement to establish the bank was
signed during the 6th BRICS summit in Q.42) The visit by foreigners to witness the
Fortaleza. 2026 T20 Cricket Word cup in India would be
2. Currently, each of the founding members of amounted to:
the NDB have equal voting power. a) Exports
3. One of its mandates is to mobilize b) Imports
resources for infrastructure and c) Production
sustainable development projects only for d) Consumption
its member countries.
Which of the statements given above are Q.43) With reference to the Asian
correct? Development Bank (ADB), consider the
a) 1 and 2 only following statements:
b) 2 and 3 only 1. India is a founding member of the Asian
c) 1 and 3 only Development Bank (ADB).
d) 1, 2 and 3 2. Only the countries from Asia can become
its members.
Q.40) With reference to International Centre 3. Voting power of a member is determined
for Settlement of Investment Disputes (ICSID), based on the number of shares of the
one of the organization under the World Bank capital stock of ADB held by that member.
group, consider the following statements: Which of the statements given above are
Statement-I: India is not a signatory to the correct?
convention. a) 1 and 3 only
Statement-II: None of the SAARC member b) 1 and 2 only
States are signatory to the convention. c) 2 and 3 only
Statement-III: Ratification of convention d) 1, 2 and 3
requires changes in the labour and patent laws
of the country. Q.44) Consider the following statements
Which one of the following is correct in regarding India’s current account balance
respect of the above statements? trends in the last five years:
a) Both Statement-II and Statement-III are Statement-I: There has been a consistent
correct and both of them explain current Account deficit in the last five years.
Statement-I. Statement-II: India has consistently
b) Both Statement-II and Statement-III are experienced a merchandise trade deficit over
correct, but only one of them explains the last five years.
Statement-I. Which one of the following is correct in
c) Only one of the Statements II and III is respect of the above statements?
correct and that explains Statement-I. a) Both Statement-I and Statement-II are
d) Neither Statement-II nor Statement-III is correct and Statement-II explains
correct. Statement-I.
b) Both Statement-I and Statement-II are
Q.41) An Indian businessperson buys shares in correct but Statement-II does not explain
a British car company. This transaction will be Statement-I.
reflected in: c) Statement-I is correct but Statement-II is
a) Balance of Trade, but not in Balance of incorrect.
Payments. d) Statement-I is incorrect but Statement-II is
b) Balance of Payments, but not in Balance of correct.
Trade.
c) Both Balance of Payments and Balance of
Trade.

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 SFG 2025 | LEVEL 1 |Test 17 |

Q.45) The problem of international liquidity is Q.48) Which one of the following would be
related to the non-availability of: considered as Foreign Direct Investment?
a) goods and services a) A foreign company buying shares in stock
b) gold and silver exchanges in India
c) dollars and other hard currencies b) A foreign country pension fund investing in
d) exportable surplus Indian stock markets
c) A foreign merchant banker buying shares
Q.46) With reference to the managed floating from Indian stock markets
exchange rate regime, consider the following d) A foreign entity setting up an educational
statements: institution in India
Statement I: In this regime, the official reserve
transactions are not equal to zero. Q.49) Which one of the following statements
Statement II: In this regime, the central banks best describes the ‘Global Capability Centres’?
buy and sell forex reserves to control a) Offshore units set up by Multinational
exchange rates within certain limits. Corporations (MNCs) to handle various
Which one of the following is correct in business processes and services in
respect of the statements given above? countries like India.
a) Both statement -I and statement -II are b) Export oriented manufacturing units set up
correct and statement -II is the correct in the National Investment Manufacturing
explanation for statement -I. Zones.
b) Both statement -I and statement -II are c) Institutions set up by the World Bank to
correct but statement -II is not the correct promote human capacity development in
explanation for statement -I. developing nations.
c) Statement -I is correct but statement -II is d) Finance and technology hubs set up by the
incorrect. state governments to foster foreign
d) Statement -I is incorrect and statement -II investments in their states.
is correct.
Q.50) Consider the following statements:
Q.47) Special Drawing Right (SDR) is an Forex reserves of a country-
interest-bearing international reserve asset 1. help the government in paying its external
created by the International Monetary Fund debt obligations.
(IMF). Its value is based on a basket of 2. assist the Central bank in earning interest
international currencies. In this context on its holdings.
consider the following currencies: 3. provide a cushion to protect against a
1. U.S. Dollar Balance of Payment crisis.
2. Indian Rupee (INR) 4. help the Central bank in managing
3. Russian Rubel exchange rates within limits.
4. Chinese Renminbi Which of the above statements are correct?
5. Pound Sterling a) 1 and 2 only
6. Japanese Yen b) 2 and 3 only
How many of the above international c) 1, 3 and 4 only
currencies are part of the basket of d) 1, 2, 3 and 4
international currency that determine the
value of SDR?
a) Only three
b) Only four
c) Only five
d) All six

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