Statement 1 is incorrect. Personal Disposable Income (PDI) = Personal Income - Personal tax payments - Non-tax payments.

Statement 2 and 4 is incorrect and 3 is correct. Personal Income = National Income - Undistributed profits - Net interest payments made by households - corporate tax + transfer payments to households from government and firms.

In order to measure price changes in an economy and compare them with changes in actual production, one can use the following tools:

1) Nominal GDP - It is the value of GDP at current prevailing prices. Comparing GDP of two years, it is possible that only prices of all goods and services have doubled between two years whereas production has remained constant.

2) GDP Deflator - It is a well-known index of prices. It is the ratio of nominal GDP to Real GDP.

3) CPI - Another way to measure change in price is through CPI. It is an index of prices of a given basket of commodities which are brought by the representative consumer.

4) WPI - There are many commodities having two sets of prices. One is the retail price which the consumer actually pays. The other is the wholesale price, the price at which goods are traded in bulk. The index for
wholesale prices is knowns as WPI.

Real GDP on the other hand is calculated in a way such that goods and services are evaluated at some constant set of prices (or constant prices). Therefore, it measures change in production rather than change in prices.

Statement 1 is correct. Both are the forms of investment made in a foreign country. FDI is made to acquire controlling ownership in an enterprise but FII tends to invest in the foreign financial market.

Statement 2 is correct and 3 is incorrect. Since 2014, any investment beyond 10% in a company is termed as FDI. Further, any investment in an unlisted entity, even if it is only one or two percent of the paid up capital will also be treated as FDI. An FPI is not allowed to invest in the equity of unlisted companies, while they can invest in the listed companies or to-be listed companies (i.e., at the time of IPO) through the stock exchange.

The value of the currency notes and coins is derived from the guarantee provided by the issuing authority of these items. RBI is responsible for giving a person purchasing power equal to the value printed on the note. The same is true of coins. Currency notes and coins are therefore called fiat money. They do not have intrinsic value like a gold or silver coin. They are also called legal tenders as they cannot be refused by any citizen of the country for settlement of any kind of transaction.

The Financial Literacy Week is an initiative of RBI to promote awareness on key topics every year through a focused campaign. Financial Literacy Week 2019 was observed from June 3-7 on the theme of Farmers and how they benefit by being a part of the formal banking system.

Statement 1 is correct. At the simplest level, we would say that economic inequality exists in a society if there are significant differences in wealth, property or income between individuals or classes. One way of measuring the degree of economic inequality in a society would be to measure the relative difference between the richest and poorest groups.

Statement 2 is correct: Another way could be to estimate the number of people who live below the poverty line. Most democracies today try to make equal opportunities available to people in the belief that this would at least give those who have talent and determination the chance to improve their condition.

- Statement 1 is incorrect: Such a deficit does not exist.

- Statement 2 is incorrect: Such a deficit is called Revenue deficit, which is excess of governments expenditure revenue expenditure over revenue receipts.

- Statement 3 is correct: Budgetary deficit is an important indicator of the financial health of the country. When the government spends more than it collects by way of revenue, it incurs a budget deficit.

- Statement 4 is incorrect: This signifies Primary deficit. Borrowing requirement of the government includes interest obligations on accumulated debt. Thus, primary deficit is simply the fiscal deficit minus interest payments.

Statement 1 is correct: The second five-year plan emphasized upon the development of the public sector enterprises and rapid industrialization. It was based on the Mahalanobis model. This model lay emphasis on heavy industries, which could lead the Indian economy to a long-term growth path. However, this plan also laid the foundation of license raj which would create hindrance for economic development in the coming decades.

Statement 2 is incorrect: Prevailing crisis in agriculture and serious food shortage necessitated the emphasis on agriculture during the Annual Plans. The third five-year plan, stressed on agriculture and improvement in the production of food grains with long term development. It involved wide-spread distribution of high-yielding varieties of seeds, extensive use of fertilizers, exploitation of irrigation potential and soil conservation

Statement 1 is correct: When the government cannot meet its expenses, it can borrow money from the RBI by selling T-bills or Government Securities to RBI and borrowing money in return (By Printing). This is known as Deficit financing through Central Bank Borrowing.

- Statement 2 is correct: The government can finance its fiscal deficit by either directly borrowing from the public through small savings scheme or indirectly from commercial banks through SLR.

- Statement 3 is correct: The government can also finance its fiscal deficit by borrowing from abroad which includes soft loans from International lending institutions like the World Bank and IMF.

Statement 1 is correct. One of the primary functions of the RBI is to control the supply of money as well as the cost of credit. CRR and SLR are two such ratios used by RBI for the above-mentioned function. Under CRR a certain percentage of the total bank deposits has to be kept in the current account with RBI which means banks do not have access to that much amount for any economic activity or commercial activity. Banks cant lend money to corporations or individual borrowers; banks cant use that money for investment purposes.

Statement 2 is correct. SLR is the amount of money that is invested in certain specified securities predominantly central government and state government securities. This is a percentage of the total bank deposits available as far as the particular bank is concerned. The SLR deposits goes into investment predominantly in the central government securities which means the banks earn some amount of interest on SLR investment as against CRR where it earns zero.