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Q1. With reference to the economic implications of a weakening domestic currency, consider the following statements:
i) A depreciation of the domestic currency can make a country's exports relatively cheaper in foreign-currency terms, other things remaining equal.
ii) A weakening currency necessarily improves the current account balance because exports become more competitive.
iii) If a country is substantially dependent on imported crude oil, currency depreciation can increase the domestic-currency cost of crude oil even when its international dollar price remains unchanged.
iv) Currency depreciation can increase the domestic burden of foreign-currency-denominated debt.
Which of the statements given above are correct?
- Statement 1 — Correct. Suppose an Indian exporter sells a product for US$100. If the rupee weakens against the dollar, the exporter receives more rupees for the same dollar revenue, assuming the foreign-currency price remains unchanged. This can improve export competitiveness, although the actual effect depends on factors such as imported inputs, foreign demand and the pricing behaviour of exporters. Statement 2 — Incorrect. Currency depreciation does not necessarily improve the current account. The current-account outcome depends on the responsiveness of exports and imports to exchange-rate changes. If imports are essential—for example, crude oil, electronics or certain industrial inputs—higher import costs may offset gains from exports. Statement 3 — Correct. If crude oil is priced internationally in US dollars, a weaker rupee means India needs more rupees to purchase the same dollar-denominated quantity of crude. Statement 4 — Correct. Suppose an Indian entity owes US$1 million. If the exchange rate changes from ₹80/$ to ₹90/$, the rupee value of the liability rises from ₹8 crore to ₹9 crore, even though the dollar-denominated debt has not changed. Therefore, depreciation can increase the domestic-currency burden of unhedged foreign-currency liabilities.
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Q2. With reference to global sea-level rise, consider the following statements:
i) Thermal expansion of seawater contributes to sea-level rise because warmer water occupies greater volume.
ii) Melting of glaciers and ice sheets located on land adds water to the oceans and therefore raises global mean sea level.
Which of the statements given above are correct?
- Statement 1 — Correct. The oceans absorb a large proportion of the additional heat associated with global warming. As seawater warms, its volume increases. This phenomenon is called thermal expansion and is one of the principal contributors to global sea-level rise. Statement 2 — Correct. Glaciers and ice sheets on land contain water that is not currently part of the ocean. When they lose mass and the resulting meltwater reaches the ocean, the quantity of ocean water increases.
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Q3. With reference to the Logistics Ease Across Different States (LEADS) Index, consider the following statements:
i) LEADS is an annual assessment associated with the Department for Promotion of Industry and Internal Trade.
ii) LEADS was designed as a replica of the World Bank's Logistics Performance Index and relies exclusively on perception-based responses.
Which of the statements given above are correct?
- Statement 1 — Correct. LEADS stands for Logistics Ease Across Different States and is an annual logistics-performance assessment associated with DPIIT, Ministry of Commerce and Industry. Statement 2 — Incorrect. There are two traps here. First, LEADS was conceived on the lines of the World Bank's Logistics Performance Index; it is not simply a replica. Second, LEADS does not rely exclusively on perception-based information. The methodology has incorporated both perception-oriented inputs and objective indicators. The government has specifically highlighted this distinction from the World Bank LPI.
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Q4. With reference to the election of the Vice-President of India, consider the following statements:
i) The electoral college for the election of the Vice-President consists of members of both Houses of Parliament.
ii) Nominated members of the Rajya Sabha can participate in the election of the Vice-President.
iii) Elected members of State Legislative Assemblies form part of the electoral college for the Vice-Presidential election.
iv) The election is conducted through proportional representation by means of the single transferable vote and voting is by secret ballot.
Which of the statements given above are correct?
- Statement 1 — Correct. Article 66 provides that the Vice-President is elected by an electoral college consisting of members of both Houses of Parliament. Statement 2 — Correct. Nominated members of Parliament are included in the Vice-Presidential electoral college. This makes the Vice-Presidential election different from the Presidential election, where nominated members do not vote. The Election Commission's material explicitly includes nominated members of both Houses in the Vice-Presidential electoral college. Statement 3 — Incorrect. Members of State Legislative Assemblies do not participate in the election of the Vice-President. This is one of the most frequently testable differences between the Presidential and Vice-Presidential elections. Statement 4 — Correct. The Vice-President is elected through: Proportional representation → Single Transferable Vote → Secret ballot
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Q5. With reference to Decentralised Finance (DeFi), consider the following statements:
i) DeFi refers to financial applications that use technologies such as blockchain and smart contracts to provide financial services with limited reliance on conventional central intermediaries.
ii) Smart contracts can automatically execute specified transactions when predetermined conditions encoded in the software are satisfied.
Which of the statements given above are correct?
- Statement 1 — Correct. DeFi refers broadly to financial services built using blockchain-based infrastructure, crypto-assets and smart contracts, with limited or no dependence on conventional centralised intermediaries such as banks, brokers or custodians. Statement 2 — Correct. A smart contract is software deployed on a blockchain or distributed ledger that executes programmed actions when specified conditions are met. For example, a smart contract could be programmed to release collateral once a predefined contractual condition is satisfied.