ASKiIMAN™
NEXUS / 2021 / GS1
00:00:00 · 00 XXX 0000

UPSC 2021: Nexus 11—20

Unearthing the structural logic of the paper. [Set A]

Question 11

Monetary Economics

The money multiplier in an economy increases with which one of the following?

  • (a) Increase in the Cash Reserve Ratio in the banks
  • (b) Increase in the Statutory Liquidity Ratio in the banks
  • (c) Increase in the banking habit of the people
  • (d) Increase in the population of the country

Official Verdict: (c) Increase in the banking habit of the people

The Core Concept: The money multiplier works through fractional-reserve banking. When people deposit cash into banks rather than keeping it under their mattresses (an increase in banking habits), banks can lend out a fraction of those deposits. Those loans are spent and redeposited, creating a chain of credit creation. Increasing CRR or SLR (options a & b) forces banks to hold more reserves, which actually decreases the multiplier.

Tethered to: REALM 112: Money & Monetary System

BANK Credit Creation
PRICES Expansionary Policy Fiscal Stimulus Purchasing Power Demand pulling prices up

Question 12

Macroeconomics

With reference to Indian economy, demand-pull inflation can be caused/increased by which of the following?

  1. Expansionary policies
  2. Fiscal stimulus
  3. Inflation-indexing wages
  4. Higher purchasing power
  5. Rising interest rates

Select the correct answer using the code given below.

Official Verdict: (a) 1, 2 and 4 only

The Core Concept: Demand-pull inflation happens when "too much money chases too few goods". Expansionary monetary policies (1), government fiscal stimulus packages (2), and general increases in consumer purchasing power (4) all boost aggregate demand, pulling prices up. Rising interest rates (5) actually decrease demand by making borrowing expensive. Inflation-indexing wages (3) is a mechanism that adjusts wages to match existing inflation (a cost-push spiral driver), but it is not a root cause of an initial demand-pull shock.

Tethered to: REALM 214: Inflation & Price Stability

Question 13

Capital Markets

With reference to India, consider the following statements:

  1. Retail investors through demat account can invest in 'Treasury Bills' and 'Government of India Debt Bonds' in primary market.
  2. The 'Negotiated Dealing System-Order Matching' is a government securities trading platform of the Reserve Bank of India.
  3. The 'Central Depository Services Ltd.' is jointly promoted by the Reserve Bank of India and the Bombay Stock Exchange.

Which of the statements given above is/are correct?

Official Verdict: (b) 1 and 2

The Core Concept: Under the RBI Retail Direct Scheme, retail investors can easily open a Gilt account and buy T-Bills and G-Secs directly in the primary market (1 is true). The NDS-OM is indeed the RBI's specialized electronic, screen-based, anonymous trading platform for secondary market G-Sec trades (2 is true). However, CDSL (a depository) was promoted by the Bombay Stock Exchange (BSE) along with leading banks (like SBI, BoI), not the RBI. The RBI regulates banks, it does not promote stock depositories (3 is false).

Tethered to: REALM 122: Financial Markets

Retail NDS-OM RBI Platform CDSL BSE + Banks Not RBI
$ Microfinance for WASH WHO/World Bank Water.org

Question 14

Social Finance

With reference to 'WaterCredit', consider the following statements:

  1. It puts microfinance tools to work in the water and sanitation sector.
  2. It is a global initiative launched under the aegis of the World Health Organization and the World Bank.
  3. It aims to enable the poor people to meet their water needs without depending on subsidies.

Which of the statements given above are correct?

Official Verdict: (c) 1 and 3 only

The Core Concept: WaterCredit is an innovative financial initiative created by Water.org (an NGO founded by Gary White and actor Matt Damon), not the WHO or World Bank (making Statement 2 false). It uses microfinance to provide small, easily repayable loans to poor households so they can install water connections or toilets, empowering them to bypass massive upfront costs without waiting for slow government subsidies (Statements 1 and 3 are true).

Tethered to: REALM 51: Microfinance

Question 15

Central Banking

In India, the central bank's function as the 'lender of last resort' usually refers to which of the following?

  1. Lending to trade and industry bodies when they fail to borrow from other sources
  2. Providing liquidity to the banks having a temporary crisis
  3. Lending to governments to finance budgetary deficits

Select the correct answer using the code given below.

Official Verdict: (b) 2 only

The Core Concept: The term "Lender of Last Resort" has a very specific, historic definition in banking. It means the Central Bank (RBI) stands ready to lend emergency liquidity to commercial banks facing a sudden bank run or temporary insolvency crisis, preventing systemic collapse (Statement 2). The RBI does not lend directly to private trade/industry bodies (1), and lending to the government for deficits is known as "monetization of debt", not acting as a lender of last resort (3).

Tethered to: REALM 129: Reserve Bank of India

BANK RBI Liquidity Industry Bodies Govt Deficits
R2 Responsible Recycling

Question 16

Environmental Standards

'R2 Code of Practices' constitutes a tool available for promoting the adoption of

  • (a) environmentally responsible practices in electronics recycling industry
  • (b) ecological management of 'Wetlands of International Importance'...
  • (c) sustainable practices in the cultivation of agricultural crops...
  • (d) 'Environmental Impact Assessment' in the exploitation of natural resources

Official Verdict: (a)

The Core Concept: The "R2" stands directly for Responsible Recycling. It is a premier global standard specifically created for the electronics recycling industry (e-waste). Facilities certified under the R2 standard adhere to strict environmental, worker health, and security practices to ensure toxic materials (like lead or cadmium from old computers) are not illegally dumped in developing nations.

Tethered to: REALM 146: E-Waste

Question 17

Industrial Pollution

Why is there a concern about copper smelting plants?

  1. They may release lethal quantities of carbon monoxide into environment.
  2. The copper slag can cause the leaching of some heavy metals into environment.
  3. They may release sulphur dioxide as a pollutant.

Select the correct answer using the code given below.

Official Verdict: (b) 2 and 3 only

The Core Concept: Copper ores are overwhelmingly sulfur-based (like Chalcopyrite). When roasted/smelted, they inevitably release massive amounts of Sulfur Dioxide (SO2), a severe respiratory irritant and cause of acid rain (Statement 3 is true). The remaining waste, "copper slag", contains concentrated heavy metals (arsenic, lead) which can leach into groundwater (Statement 2 is true). While combustion produces *some* CO, copper smelters are not specifically flagged for "lethal" CO environmental releases compared to their massive SO2 output.

Tethered to: REALM 152: Air Pollution

SO₂ SLAG Heavy Metal Leaching
Petrol Diesel BOILER SOx

Question 18

Industrial Fuels

With reference to furnace oil, consider the following statements:

  1. It is a product of oil refineries.
  2. Some industries use it to generate power.
  3. Its use causes sulphur emissions into environment.

Which of the statements given above are correct?

Official Verdict: (d) 1, 2 and 3

The Core Concept: Furnace oil (also known as fuel oil or petcoke's liquid cousin) is the thick, dark, heavy residual product left over at the absolute bottom of the fractional distillation column in oil refineries (1). Because it is cheap and energy-dense, it is burned in massive industrial boilers and marine engines to generate power (2). However, as a bottom-of-the-barrel residue, it is packed with impurities, and burning it releases enormous quantities of sulfur oxides (SOx) and particulate matter (3).

Tethered to: REALM 96: Petroleum Refining Industry

Question 19

Climate Ecology

What is blue carbon?

  • (a) Carbon captured by oceans and coastal ecosystems
  • (b) Carbon sequestered in forest biomass and agricultural soils
  • (c) Carbon contained in petroleum and natural gas
  • (d) Carbon present in atmosphere

Official Verdict: (a)

The Core Concept: Color-coding carbon is a common ecological shorthand. Green Carbon is terrestrial (stored in land forests and soils). Black/Brown Carbon refers to soot and fossil fuel emissions. Blue Carbon specifically designates the incredible carbon-sequestering power of marine and coastal ecosystems—principally mangroves, tidal salt marshes, and seagrass meadows, which trap carbon in their underwater root systems and soils at rates much faster than terrestrial forests.

Tethered to: REALM 174: Coastal Biodiversity & Blue Carbon

CO₂ Stored in sediment Blue Carbon Sink
BARE ROCK Lichen / Moss ✅ Fern ❌ (Needs Soil)

Question 20

Ecological Succession

In the nature, which of the following is/are most likely to be found surviving on a surface without soil?

  1. Fern
  2. Lichen
  3. Moss
  4. Mushroom

Select the correct answer using the code given below.

Official Verdict: (c) 2 and 3

The Core Concept: This is about Primary Succession. When an environment is totally barren of soil (like a newly cooled lava flow or a scraped boulder), "pioneer species" move in. Lichens (a symbiosis of fungi and algae) secrete acids that physically break down the bare rock. Mosses follow, anchoring into the microscopic cracks. Together, their decay slowly builds the very first layer of soil. Ferns and Mushrooms (which feed on decaying organic matter) absolutely require existing soil/organic substrate to survive.

Tethered to: REALM 11: Ecological Succession