Which one of the following assists a country through 'Extended Fund Facility', often talked about in news?
- A.International Fund for Agricultural Development
- B.International Monetary Fund
- C.International Bank for Reconstruction and Development
- D.United Nations Development Programme
Correct answer
Explanation
The correct answer is B, International Monetary Fund. The Extended Fund Facility is a lending arrangement of the International Monetary Fund for countries with serious balance of payments problems.
The IMF created the Extended Fund Facility in 1974 for members whose payment difficulties come from deep structural weaknesses and cannot be fixed quickly. Compared with an ordinary Stand-By Arrangement it runs longer, usually three to four years, and is repaid over a longer period of about four and a half to ten years. In return the borrowing country agrees to a programme of reforms, which is why the facility often appears in news about countries in economic crisis.
A is wrong because IFAD, based in Rome, finances farming and rural development projects. C is wrong because the IBRD is the main lending arm of the World Bank, which funds development projects rather than balance of payments support. D is wrong because the UNDP gives grants and advice for development and does not lend money to countries.
Exam tip: IMF lends for the balance of payments (Stand-By Arrangement, Extended Fund Facility); the World Bank lends for development projects.
Practice Questions
View allThe Fourteenth Finance Commission assigned different weights to the following parameters for distribution of tax proceeds to the States :
1. Income distance
2. Population
3. Demographic changes
4. Area
Arrange the aforesaid parameters in descending order in terms of their weights.
- A.1-2-3-4
- B.1-2-4-3
- C.1-3-2-4
- D.4-3-2-1
Show answer
Income distance had the highest weight, followed by population, area and demographic change. The Fourteenth Finance Commission, chaired by Y.V.
Read the full explanation →Which one of the following statements for a firm's equilibrium in Perfect Competition is not correct ?
- A.The market price must be greater or equal to average variable cost in the short run.
- B.The market price must be equal to marginal cost.
- C.The market price must be equal to average cost in the long run.
- D.The marginal cost decreases at the equilibrium output.
Show answer
This statement is not correct, because at the equilibrium of a competitive firm marginal cost must be rising. A firm in perfect competition is a price taker, so the price it gets equals its marginal revenue.
Read the full explanation →Plan allocation in agriculture and irrigation as percentage of total plan outlay was highest in :
- A.Seventh Five-Year Plan
- B.Third Five-Year Plan
- C.First Five-Year Plan
- D.Second Five-Year Plan
Show answer
The First Plan (1951 to 1956) gave agriculture, community development and irrigation about a third of its outlay, the highest share in any Indian plan.
Read the full explanation →Which of the following is not included in the Capital Account of the Balance of Payments of a country?
- A.Foreign Direct Investment
- B.Commercial Borrowing
- C.Invisibles
- D.External Assistance
Show answer
Invisibles are part of the current account of the balance of payments, not the capital account. The balance of payments records all of a country's transactions with the rest of the world and has two main parts.
Read the full explanation →Which one among the following was the focus of the Twelfth Five-Year Plan?
- A.Sustainable and Inclusive Growth
- B.Social Justice and Equality
- C.Food, Work and Productivity
- D.Attainment of Self-reliance
Show answer
The Twelfth Five-Year Plan (2012-17) had the theme "Faster, More Inclusive and Sustainable Growth". It continued the inclusive-growth idea of the Eleventh Plan (2007-12), whose theme was "Towards Faster and More Inclusive Growth", and added sustainability as a stated goal.
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