Static Quiz 22 July 2024 (Economy)

A leverage ratio is any one of several financial measurements that look at how much capital comes in the form of debt (loans) or assesses the ability of a company to meet its financial obligations The BCBS introduced a leverage ratio in Basel III.

CRAR in Banking
To guarantee that banks have sufficient protection against loss before they become bankrupt and lose depositor money, minimum capital ratios (CARs) are crucial.
• By lowering the risk of bank insolvency, CRARs promote the effectiveness and sustainability of a country’s financial system.
• A bank is widely seen as secure and much more likely to meet its financial commitments if it has a high Capital Adequacy Ratio.
• Account holders can lose their savings if a bank experiences a loss that surpasses the capital it has on hand since creditor funds are prioritized over the bank’s capital throughout the winding-up process.
• Consequently, the greater the depositors’ funds are safeguarded, the higher the bank’s Capital Adequacy Ratio.
• Credit risks also exist concerning off-balance sheet transactions like contracts for foreign exchange and guarantees.
• These risks are weighted similarly to on-balance sheet credit risks after being translated to their credit equivalent figures. The overall risk-weighted credit exposure is calculated using an off-sheet and on-balance sheet credit risk exposure.
• A bank with a high CRAR is considered solid and ready to fulfil its financial obligations in all contemplations.

Correct answer: A
Statement 2 is incorrect: Any loans taken from finance companies and non-banking financial companies will not fall under this system. Any loans taken from finance companies and non-banking financial companies will not fall under this system.

It allows a country to pass a rule on taxing certain products, items or services and deals and charge companies from a time behind the date on which the law is passed. Countries use this route to correct any anomalies in their taxation policies that have, in the past, allowed companies to take advantage of such loopholes. Hence Statement 1 is correct.
Retrospective Taxation hurts companies that had knowingly or unknowingly interpreted the tax rules differently. Apart from India, many countries including the USA, the UK, the Netherlands, Canada, Belgium, Australia and Italy have retrospectively taxed companies. Government of India has introduced The Taxation Laws (Amendment) Bill, 2021 in the Lok Sabha. The bill seeks to withdraw tax demands made using a 2012 retrospective legislation to tax the indirect transfer of Indian assets. Hence Statement 2 is correct.

Correct answer: D
Revenue expenditure is either used in running of a productive process or running a government.
Examples: Interest payments by the government, Salaries, Pensions and provident fund, Subsidies, Defence expenditures, Law and order expenditure, Expenditure on social services and general services (tax collection), Grants given by the government to Indian states and foreign countries.

The current daily status approach to measuring unemployment seeks to ascertain the activity status of an individual for each day of the reference week. It reports time disposition of an individual on each day of the reference week. This means that in addition to recording the activity being pursued, time intensity is also recorded in quantitative terms for each day of the reference week.
It measure both unemployment and under-employment. Hence Statement 1 is correct.
It is used widely because it is the broadest measure of unemployment. Hence Statement 2 is correct.