Flash-Cards-for-IAS-Prelims-2018-Revision-Day-60
70 Days WAR Plan

Day#60 Static Flash Cards Revision [70 Days WAR Plan]

Stagflation; Contractionary Monetary Policy; Air Pressure distribution; Production tax; Subtropical jet stream; Open Economy; Conditions for the formation of Air masses; Cold Front; Warm Front; Occluded Front; Stationary Front; Different types of clouds; Currency Deposit Ratio;
By IT's Core Team
May 20, 2019

 

 

 

An increase in cash deposit ratio leads to a increase in money multiplier or decrease in money multiplier?

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e in money multiplier or decrease in money multiplier?

Answer:

An increase in cash deposit ratio leads to a decrease in money multiplier.

Enrich Your Learning:

Currency Deposit Ratio

  • The currency deposit ratio shows the amount of currency that people hold as a proportion of aggregate deposits.
  • An increase in deposit rates will induce depositors to deposit more, thereby leading to a decrease in Cash to Aggregate Deposit ratio.
  • This will in turn lead to a rise in Money Multiplier. 
  • It reflects people’s preference for liquidity.
  • It is a purely behavioral parameter which depends, among other things, on the seasonal pattern of expenditure.
  • For example, CDR increases during the festive season as people convert deposits to cash balance for meeting extra expenditure during such periods.

 

 

 

What are the different types of clouds?

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Answer & Enrich Your Learning:

Different types of clouds:

Sometimes, the clouds are so low that they seem to touch the ground. Nimbus clouds are shapeless masses of thick vapour.

A combination of these four basic types can give rise to the following types of clouds:

  • High clouds – cirrus, cirrostratus, cirrocumulus;
  • Middle clouds – altostratus and altocumulus;
  • Low clouds – stratocumulus and nimbostratus and
  • Clouds with extensive vertical development – cumulus and cumulonimbus.

 

 

 

Stagflation is a condition of high economic growth and relatively high employment. Right or Wrong?

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Answer:

Stagflation is a condition of slow economic growth and relatively high unemployment, or economic stagnation, accompanied by rising prices, or inflation.

Enrich Your Learning:

Stagflation:

  • It can also be defined as inflation and a decline in gross domestic product (GDP).
  • Stagflation is an economic problem defined in equal parts by its rarity and by the lack of consensus among academics on how exactly it comes to pass.
  • Stagflation can prove to be a particularly tough problem for governments to deal with due to the fact that most policies designed to lower inflation tend to make it tougher for the unemployed, and policies designed to ease unemployment raise inflation.
  • Usually, when unemployment is high, spending declines, as do the prices of goods.
  • Stagflation occurs when the prices of goods rise while unemployment increases and spending declines.
  • Stagflation is also considered an unnatural phenomenon since inflation shouldn’t happen when an economy is weak.
  • In most cases, weak or slower economic growth should prevent inflation from happening.

 

 

 

In context of weather front, elucidate the i) Cold Front ii) Warm Front iii) Occluded Front and iv) Stationary Front

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Answer & Enrich Your Learning:

  • When two air masses with different physical properties (temperature, humidity, density etc.) meet, due to the effect of the converging atmospheric circulation, they do not merge readily.
  • The transition zone or the layer of discontinuity so formed between two air masses is a three- dimensional surface and is called a front.

Classification of Fronts:

Based on the mechanism of frontogenesis and the associated weather, the fronts can be studied under the following types:

Cold Front:

  • Such a front is formed when a cold air mass replaces a warm air mass by advancing into it, and lifting it up, or when the pressure gradient is such that the warm air mass retreats and cold air mass advances. In such a situation, the transition zone between the two is a cold front.
  • The weather along such a front depends on vertical structure of the uplifted air mass, but is generally associated with a narrow band of cloudiness and precipitation.
  • The approach of a cold front is marked by increased wind activity in warm sector and the appearance of cirrus clouds, followed by lower, denser alto-cumulous and altostratus.
  • At actual front, dark nimbus clouds cause heavy showers. A cold front passes off rapidly, but the weather along it is violent.

Warm Front:

  • This is actually a sloping frontal surface, with a slope gradient between 1:100 and 1:200, along which active movement of warm air over cold air takes place.
  • As the warm air moves up the slope, it condenses and causes precipitation but, unlike a cold front, the temperature and wind direction changes are gradual. With the approach, the hierarchy of clouds is—cirrus, stratus and nimbus.
  • Cirrostratus clouds ahead of the warm front create a halo around sun and moon. Such, fronts cause moderate to gentle precipitation over a large area, over several hours. The passage of warm front is marked by rise in temperature, pressure and change in weather.

Occluded Front:

  • Such a front is formed when a cold air mass overtakes a warm air mass and goes underneath it. The warm sector diminishes and the cold air mass completely undertakes the warm sector on ground.
  • Thus, a long and backward swinging occluded front is formed which could be a warm front type or cold front type occlusion.
  • Weather along an occluded front is complex—a mixture of cold front type and warm front type weather. Such fronts are common in west Europe.

Stationary Front:

  • When the surface position of a front does not change, a stationary front is formed.
  • In this case, the wind motion on both sides of the front is parallel to the front.
  • Overrunning of warm air, along such a front causes frontal precipitation.

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In the context of physical geography, what are Air masses?

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Answer:

The air with distinctive characteristics in terms of temperature and humidity is called an air mass. It is defined as a large body of air having little horizontal variation in temperature and moisture.

 

Enrich Your Learning:

Air masses are horizontal large bodies of air which have uniform temperatures and moisture contents.

Conditions for the formation of Air masses:

  • When the air remains over a homogenous area for a sufficiently longer time, it acquires the characteristics of the area.
  • The homogenous regions can be the vast ocean surface or vast plains.
  • The air with distinctive characteristics in terms of temperature and humidity is called an air mass.
  • It is defined as a large body of air having little horizontal variation in temperature and moisture.
  • The homogenous surfaces, over which air masses form, are called the source regions.
  • The air masses are classified according to the source regions.

There are five major source regions. These are:

  • Warm tropical and subtropical oceans;
  • The subtropical hot deserts;
  • The relatively cold high latitude oceans;
  • The very cold snow covered continents in high latitudes;
  • Permanently ice covered continents in the Arctic and Antarctica.

Following types of air masses are recognised:

  • Maritime tropical (mT);
  • Continental tropical (cT);
  • Maritime polar (mP);
  • Continental polar (cP);
  • Continental arctic (cA).

 

 

 

What is Open Economy?

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Answer:

An open economy is one that trades with other nations in goods and services and, most often, also in financial assets.

Enrich Your Learning:

Interaction with other economies of the world widens choice in three broad ways

  • Consumers and firms have the opportunity to choose between domestic and foreign goods. This is the product market linkage which occurs through international trade.
  • Investors have the opportunity to choose between domestic and foreign assets. This constitutes the financial market linkage.
  • Firms can choose where to locate production and workers to choose where to work. This is the factor market linkage. Labour market linkages have been relatively less due to various restrictions on the movement of people through immigration laws. Movement of goods has traditionally been seen as a substitute for the movement of labour.

Open Economy:

  • Indians, for instance, enjoy using products produced around the world and some of our production is exported to foreign countries.
  • Foreign trade, therefore, influences Indian aggregate demand in two ways.
  • First, when Indians buy foreign goods, this spending escapes as a leakage from the circular flow of income decreasing aggregate demand.
  • Second, our exports to foreigners enter as an injection into the circular flow, increasing aggregate demand for domestically produced goods. Total foreign trade (exports + imports) as a proportion of GDP is a common measure of the degree of openness of an economy.
  • In 2013-14, this was 44.1 per cent for the Indian Economy. There are several countries whose foreign trade proportions are above 50 per cent of GDP.

 

 

 

What is Subtropical jet stream?

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Answer:

Subtropical jet stream is a belt of strong upper-level winds lying above regions of subtropical high pressure.

Enrich Your Learning:

Subtropical jet stream:

  • Subtropical jet stream, a belt of strong upper-level winds lying above regions of subtropical high pressure.
  • Unlike the polar front jet stream, it travels in lower latitudes and at slightly higher elevations, owing to the increase in height of the tropopause at lower latitudes.
  • The associated horizontal temperature gradients of this jet stream do not extend to the surface, so a surface front is not evident.
  • In the tropics an easterly jet is sometimes found at upper levels, especially when a landmass is located poleward of an ocean, so the temperature increases with latitude.

Jet Stream:

  • Jet stream are a narrow belt of high altitude (above 12,000 m) westerly winds in the troposphere. Their speed varies from about 110 km/h in summer to about 184 km/h in winter.
  • A number of separate jet streams have been identified. The most constant are the mid-latitude and the sub-tropical jet stream.

 

 

 

What are Production taxes?

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What are Production taxes?

Answer:

Production taxes or production subsidies are paid or received with relation to production and are independent of the volume of actual production.

Enrich Your Learning:

Production tax:

  • Some examples of production taxes are land revenues, stamps and registration fees and tax on profession.
  • Some production subsidies include subsidies to Railways, input subsidies to farmers, subsidies to village and small industries, administrative subsidies to corporations or cooperatives, etc.
  • Product taxes or subsidies are paid or received on per unit of product. Some examples of product taxes are excise tax, sales tax, service tax and import and export duties.
  • Product subsidies include food, petroleum and fertilizer subsidies, interest subsidies given to farmers, households, etc. through banks.

 

 

 

In context of Air Pressure distribution, describe briefly about: (1) Vertical Distribution and (2) Horizontal Distribution

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Answer & Enrich Your Learning:

Distribution of air pressure:

  • Distribution of atmospheric pressure on the surface of the earth is not uniform. It varies both vertically and horizontally.

Vertical Distribution:

  • Air is a mixture of various gases. It is highly compressible.As it compresses, its density increases. The higher the density of air, the greater is the air pressure and vice versa.
  • The mass of air above in the column of air compresses the air under it hence its lower layers are denser than the upper layers; As a result, the lower layers of the atmosphere have higher density, hence, exert more pressure.
  • Conversely, the higher layers are less compressed and, hence, they have low density and low pressure. The columnar distribution of atmospheric pressure is known as vertical distribution of pressure.
  • Air pressure decreases with increase in altitude but it does not always decrease at the same rate. Dense components of atmosphere are found in its lowest parts near the mean sea level.
  • Temperature of the air, amount of water vapour present in the air and gravitational pull of the earth determine the air pressure of a given place and at a given time.
  • Since these factors are variable with change in height, there is a variation in the rate of decrease in air pressure with increase in altitude.
  • The normal rate of decrease in air pressure is 34 milli bars per every 300 metres increase in altitude.
  • The effects of low pressure are more clearly experienced by the people living in the hilly areas as compared to those who live in plains.
  • In high mountainous areas rice takes more time to cook because low pressure reduces the boiling point of water.
  • Breathing problem such as faintness and nose bleedings are also faced by many trekkers from outside in such areas because of low pressure conditions in which the air is thin and it has low amount of oxygen content.

Horizontal Distribution:

  • The distribution of atmospheric pressure over the globe is known as horizontal distribution of pressure.
  • It is shown on maps with the help of isobars. An isobar is a line connecting points that have equal values of pressure.
  • Isobars are analogous to the contour lines on a relief map.
  • The spacing of isobars expresses the rate and direction of change in air pressure.
  • This charge in air pressure is referred to pressure gradient.
  • Pressure gradient is the ratio between pressure difference and the actual horizontal distance between two points.
  • Close spacing of isobars expresses steep pressure gradient while wide spacing indicates gentle pressure gradient.
  • The horizontal distribution of atmospheric pressure is not uniform in the world.
  • It varies from time to time at a given place; it varies from place to place over short distances.

The factors responsible for variation in the horizontal distribution of pressure are as follows:

  • Air temperature
  • The earth’s rotation
  • Presence of water vapour

 

 

 

What steps can be taken to check inflation in economy?

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Answer:

Enrich Your Learning:

Steps can be taken to check inflation in economy

  • Inflation is considered to be a complex situation for an economy. If inflation goes beyond a moderate rate, it can create disastrous situations for an economy; therefore is should be under control.
  • The main aim of every measure is to reduce the inflow of cash in the economy or reduce the liquidity in the market.

Contractionary Monetary Policy:

  • The goal of a contractionary policy is to reduce the money supply within an economy by decreasing bond prices and increasing interest rates.
  • This helps reduce spending because when there is less money to go around, those who have money want to keep it and save it, instead of spending it.
  • It also means that there is less available credit, which can also reduces spending.
  • Reducing spending is important during inflation, because it helps halt economic growth and, in turn, the rate of inflation.

There are three main tools to carry out a contractionary policy.

  • The first is to increase interest rates through the central bank, in the case of the U.S., that’s the Federal Reserve.
  • The Fed Funds Rate is the rate at which banks borrow money from the government, but, in order to make money, they must lend it at higher rates.
  • So, when the Federal Reserve increases its interest rate, banks have no choice but to increase their rates as well.
  • When banks increase their rates, fewer people want to borrow money because it costs more to do so while that money accrues at a higher interest. So, spending drops, prices drop and inflation slows.

Reserve Requirements

  • The second tool is to increase reserve requirements on the amount of money banks are legally required to keep on hand to cover withdrawals.
  • The more money banks are required to hold back, the less they have to lend to consumers.
  • If they have less to lend, consumers will borrow less, which will decrease spending.

Reducing the Money Supply

  • The third method is to directly or indirectly reduce the money supply by enacting policies that encourage reduction of the money supply.
  • Two examples of this include calling in debts that are owed to the government and increasing the interest paid on bonds so that more investors will buy them.
  • The latter policy raises the exchange rate of the currency due to higher demand and, in turn, increases imports and decreases exports.
  • Both of these policies will reduce the amount of money in circulation because the money will be going from banks, companies and investors pockets and into the government’s pocket where it can control what happens to it.
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