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DAILY QUIZ- DEC 08

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1. Consider the following statements about Cooperative Societies:

1)     97th Constitutional Amendment Act authorizes the state legislative to establish relevant laws in the case of multi-state cooperative societies.

2)     Any cooperative society may, by a resolution passed by majority of not less than two-thirds of the members present and voting at a general meeting of state legislative, decide to merge into an existing multi-state co-operative society.

Which of the above statements is/are correct?

a)     1 only

b)     2 only

c)      Both 1 and 2

d)     Neither 1 nor 2

 

ANSWER: B

EXPLANATION:

Cooperative Societies:

·         A co-operative society is a voluntary association of individuals having common needs who join hands for the achievement of common economic interest.

·         Its aim is to serve the interest of the poorer sections of society through the principle of self-help and mutual help.

 97th Constitutional Amendment Act 2011:

·          It established the right to form cooperative societies as a fundamental right (Article 19).

·          It included a new Directive Principle of State Policy on the Promotion of Cooperative Societies (Article 43-B).

·          It added a new Part IX-B to the Constitution titled "The Co-operative Societies" (Articles 243-ZH to 243-ZT).

·          It authorizes the Parliament to establish relevant laws in the case of multi-state cooperative societies (MSCS) and state legislatures in the case of other cooperative societies.

Ministry of Cooperation

·         The Union Ministry of Cooperation was formed in 2021, its mandate was looked after by the Ministry of Agriculture before.

Multi-State Cooperative Societies (Amendment) Bill, 2022:

·         Any cooperative society may, by a resolution passed by majority of not less than two-thirds of the members present and voting at a general meeting of such society, decide to merge into an existing multi-state co-operative society.

 

2. Consider the following statements about Hawkish Monetary Policy?

1)     It supports the idea of low-interest rates since they believe that it encourages economic growth.

2)     In economy, borrowing from bank will become more attractive.

Which of the above statements is/are correct?

a)     1 only

b)     2 only

c)      Both 1 and 2

d)     Neither 1 nor 2

 

ANSWER: D

EXPLANATION:

Monetary Policy Stance

Meaning

Hawkish Monetary Policy Stance

 
  • In order to keep inflation in check, the Hawkish stance favours high-interest rates.
  • Because of the high interest rates, borrowing (taking loans from banks) will become less attractive.
  • Due to the dearth of money, consumers would not purchase or purchase less and also would stay away from taking credit (loans) from banks.
  • This would lead to low domestic demand for Goods & Services. As a result of low demand, prices of Goods & Services would tend to stabilise. This would prevent inflation. This is a complete circle.
  • Also, an increase in interest rates can cause a strengthening of the country’s currency.

Dovish Monetary Policy Stance
  • This monetary policy stance involves low interest rates.
  • Low-Interest Rates would entice consumers to take credit (loans) from Banks and other sources.
  • As the demand increases, the prices of Goods & Services would rise/increase.
  • Inflation will cause to balance Economic Growth.
  • Economists who recommend Dovish Monetary Policy Stance, typically believe that lower interest rates will lead to a hike in Employment and an increase in Economic Growth.
  • This stance might also lead to a possible weakening of the country’s currency.

Accommodative Monetary Policy Stance

 
  • This happens when a central bank (RBI) attempts to expand the overall money supply to boost the economy when the economic growth is slowing down. The major aim is to increase spending.
  • This is also known as “easy monetary policy”.
  • It does this by running a succession of decreases in the Interest rates, making the cost of borrowing cheaper.
  • Accommodative money policy is triggered to encourage more spending from consumers and businesses by making money less expensive to borrow through the lowering of short-term interest rates.

Neutral Monetary Policy Stance

 
  • The policy rates neither stimulates (speed up) nor restrains (slowdown) the economic growth by taxation and government spending. Economic conditions are just right.
  • The Key Policy Rates are neither increased nor decreased.
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