CARE 2nd July 2024 Current Affairs

Current Affairs Reverse Engineering – CARE (02-07-2024)

News at a Glance
Environment: Govt brings out checklist of 1.04 lakh animal species
Disaster management: About Hurricane Beryl
Science and Technology: Mars under daily fire from space rocks, shows study on new class of quakes on Red Planet
Polity and Governance: Agenda for the 16th Finance Commission
Economy: Record upturn in job creation drives India’s manufacturing PMI to 58.3 in June

Govt brings out checklist of 1.04 lakh animal species

Source: Indian Express

https://indianexpress.com/article/india/animal-species-checklist-bhupendra-yadav-zsi-foundation-day-9425134/

UPSC Syllabus Relevance: GS 3 (Environment- Energy)

Context: 109th foundation day of the Zoological Survey of India (ZSI) in Kolkata

Why in News 

  • The central government, represented by Union Minister Bhupender Yadav, released the first comprehensive fauna checklist 

109th foundation day of Zoological Survey of India in Kolkata

  • During 2019-2020, these researchers examined the concentration of methane in the atmosphere and how it changed with time. 
  • Until the 1990s, the concentration increased, then stabilised for a bit, and then started to increase again around 2007. 
  • According to recent estimates, the atmospheric concentration of methane today is three-times what it was 300 years ago.
  • Over a century, methane has a global warming potential 28-times greater than CO2, and even higher over shorter periods like two decades.
  • At the U.N. climate talks in 2021, member countries launched the ‘Global Methane Pledge’ to cut the gas’s emissions and slow the planet’s warming. Yet our understanding of methane also continues to evolve.

Fauna Checklist Details

  • The newly released fauna checklist encompasses a staggering 1,04,561 species across various taxa, compiled into 121 checklists spanning 36 phyla. 
  • It includes endemic, threatened, and scheduled species, making it a crucial resource for taxonomists, researchers, academicians, conservation managers, and policymakers.

Avian Species Breakdown

  • Among the highlights, the avian species checklist details 1,358 bird species categorized under 26 orders and 114 families. 
  • Globally, there are 11,888 bird species grouped into 36 orders and 247 families, underscoring India’s rich avian biodiversity.

Launch of Portal 

  • During the event, Minister Yadav also launched a dedicated portal for the comprehensive fauna checklist, facilitating easy access and utilization of this valuable database.

Publications Released

  • Animal Discoveries– 2023: A publication by ZSI featuring 641 newly discovered animal species and new records from India.
  • Plant Discoveries– 2023: A publication by the Botanical Survey of India (BSI) showcasing 339 newly identified plant species and new research findings.

Commendation and Acknowledgments 

  • Minister Yadav commended ZSI for its 109 years of dedicated service in studying and conserving India’s faunal biodiversity. 
  • The event was attended by officials, scientists, researchers from ZSI, vice-chancellors of various universities, and representatives from Indian and overseas institutions.

Zoological Survey of India (ZSI) 

  • The Zoological Survey of India (ZSI), founded on 1 July 1916 by the Ministry of Environment, Forest and Climate Change of the Government of India.
  • It is a premier Indian organisation in zoological research and studies to promote the survey, exploration and research of the fauna in the country.
  • The annals of Zoological Survey of India (ZSI) reflect an eventful beginning for the Survey even before its formal birth and growth.

Fauna of India Checklist 

  • The central government, represented by Union Minister Bhupender Yadav, released the first comprehensive fauna checklist during the 109th foundation day of the Zoological Survey of India (ZSI) in Kolkata. 
  • This checklist is a monumental compilation covering 1,04,561 species of animals found in India.
  • The fauna checklist comprises 121 checklists encompassing all known taxa across 36 phyla. 
  • It includes endemic, threatened, and scheduled species, providing a valuable resource for taxonomists, researchers, academicians, conservation managers, and policymakers alike.
  • Associated Publications
    • Animal Discoveries– 2023: ZSI’s publication featuring 641 newly discovered animal species and new records from India.
    • Plant Discoveries– 2023: BSI’s publication showcasing 339 newly identified plant species and research findings.
CARE MCQ UPSC PYQ
Q1. Which of the following statements are correct about the fauna checklist released by the Indian government?

  1. The checklist includes 1,04,561 species of animals covering 121 checklists across 36 phyla.
  2. It primarily focuses on documenting 11,888 species of avian animals globally.
  3. The checklist excludes endemic and threatened species. 

Select the correct answer using the code given below.

    1. 1 and 2 only
    2. 2 and 3 only
    3. 1 and 3 only
  • 1, 2 and 3
Q. Consider the following statements in respect of Trade Related Analysis of Fauna and Flora in Commerce (TRAFFIC): (2017)

  1. TRAFFIC is a bureau under United Nations Environment Programme (UNEP)
  2. The mission of TRAFFIC is to ensure that trade in wild animals is not a threat to the conservation of nature

Which of the given statements is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Answer: (b)

Answer 1- A

Explanation

    • The fauna checklist released covers 1,04,561 species of animals and includes 121 checklists across 36 phyla. Hence, statement 1 is Correct.
    • The checklist also documents 11,888 species of avian animals globally. Hence, statement 2 is Correct.
  • It includes endemic, threatened, and scheduled species, providing a valuable resource for taxonomists, researchers, academicians, conservation managers, and policymakers alike. Hence, statement 3 is incorrect.
  • Therefore, option A is the Correct answer. 

About Hurricane Beryl

Source: Indian Express

https://indianexpress.com/article/explained/explained-climate/team-india-hurricane-beryl-9426550/

UPSC Relevance: GS1- Geography, GS 3– Disaster Management

Context: Hurricane Beryl

Why in News 

  • Hurricane Beryl has intensified into a “potentially catastrophic” Category 5 storm, the United States’s National Hurricane Center (NHC) said.

What do we know about Hurricane Beryl?

  • Hurricane Beryl is the earliest category 4 storm – sustaining winds of at least 130 miles per hour (209 kilometres per hour) – to mark the beginning of the Atlantic hurricane season this year.
  • It is currently surging through the Windward Islands, the southern part of the Lesser Antilles, which form part of the West Indies and comprise Barbados, Grenada and Trinidad and Tobago.
  • A landfall is not likely to occur but the nearest islands are expected to be heavily affected, with island communities facing the prospects of violent winds and flash flooding. 
  • The National Hurricane Centre’s advisory has forecasted life-threatening winds and storm surge in the Windfall Islands.
  • Hurricane warnings have been issued for Barbados, St. Lucia, St. Vincent and the Grenadine Islands, Grenada and Tobago, while a tropical storm watch has been issued for Dominica, Trinidad, and parts of the Dominican Republic and Haiti.
  • Beryl is the strongest storm to impact the Windward Islands since Hurricane Ivan in September 2004.

What are hurricanes and how do they form?

  • Tropical cyclones or hurricanes use warm, moist air as fuel, and therefore form over warm ocean waters near the equator. 
  • As NASA describes it, when the warm, moist air rises upward from the surface of the ocean, it creates an area of low air pressure below. 
  • Air from the surrounding areas rushes to fill this place, eventually rising when it becomes warm and moist too.
  • When the warm air rises and cools off, the moisture forms clouds. 
  • This system of clouds and winds continues to grow and spin, fuelled by the ocean’s heat and the water that evaporates from its surface.
  • As such storm systems rotate faster and faster, an eye forms in the centre. 
  • Storms that form towards the north of the equator rotate counterclockwise, while those that form to the south spin clockwise because of the rotation of the Earth.

Are hurricanes becoming more severe now?

  • As hurricanes make landfall, they weaken, since they are cut off from the fuelling moisture provided by the oceans. 
  • In a study published in the journal Nature on November 11, researchers noted that a warming world may be responsible for the increasingly slow decay of hurricanes.
  • In the study, the researchers claim that warmer sea surface temperatures induce a slower decay by increasing the stock of moisture that a hurricane carries with it as it hits the land.
  • The NHC noted that subtropical storm Theta, in the Northeast Atlantic, became the 29th named storm of the 2020 Atlantic Hurricane season. 
  • This beats the record for the most named storms previously held by the 2005 hurricane season.

What is the difference between a hurricane and a tropical storm?

  • There is no difference. Depending on where they occur, hurricanes may be called typhoons or cyclones. 
  • As per NASA, the scientific name for all these kinds of storms is tropical cyclones.
  • The tropical cyclones that form over the Atlantic Ocean or the eastern Pacific Ocean are called hurricanes and the ones that form in the Northwest Pacific are called typhoons.
  • Tropical storms that form in the Bay of Bengal or the Arabian Sea are called cyclones.

How do people protect themselves during a hurricane?

  • During a hurricane, storm surge (abnormal rise of water generated by a storm) and inland flooding are the two main reasons that can cause loss of life.
  • NHC has advised that the “safest place” to be during a major landfalling hurricane is in a reinforced interior room away from windows. 
  • Use mattresses, blankets or pillows to cover your head and body. 
  • Remain in place through the passage of these life-threatening conditions
CARE MCQ UPSC PYQ
Q2 Which of the following statements is/are correct regarding Hurricane Beryl (2024) and tropical cyclones?

  1. Hurricane Beryl (2024) was the earliest recorded hurricane in the Atlantic hurricane season.
  2. Tropical cyclones in the Northern Hemisphere rotate counterclockwise.
  3. The primary energy source for tropical cyclones is the latent heat released from condensing moisture.

Select the correct answer using the code given below:

  1. 1 and 2 only
  2. 2 and 3 only
  3. 1 and 3 only
  4. 1, 2, and 3
Q. In the South Atlantic and South-Eastern Pacific regions in tropical latitudes, cyclones do not originate. What is the reason? (2015)

(a) Sea surface temperatures are low

(b) Inter-Tropical Convergence Zone seldom occurs

(c) Coriolis force is too weak

(d) Absence of land in those regions

Ans: (b)

Answer 2– B

Explanation – 

    • Statement 1 is Incorrect: While Hurricane Beryl (2024) was significant, it was not the earliest recorded hurricane in the Atlantic hurricane season. The earliest recorded hurricane varies by year and would need to be confirmed with specific records from the relevant authorities.
    • Statement 2 is Correct: Due to the Coriolis effect, tropical cyclones in the Northern Hemisphere rotate counterclockwise.
    • Statement 3 is Correct: Tropical cyclones derive their energy from the latent heat released when moist air rises and condenses into clouds and rain. This heat release fuels the cyclone’s development and intensification.
  • Therefore, option B is the correct answer. 

Mars under daily fire from space rocks, shows study on new class of quakes on Red Planet

Source: Down-to-earth

https://www.downtoearth.org.in/science-technology/mars-under-daily-fire-from-space-rocks-shows-study-on-new-class-of-quakes-on-red-planet

UPSC Relevance: GS 3- Science and Technology 

Context: Mars experiences frequent meteorite impacts

Why in News

  • New research reveals that Mars experiences frequent meteorite impacts, impacting its surface and generating seismic waves detected by the InSight mission’s seismometer.

Meteorite Impact Frequency 

  • According to the study published in Nature Astronomy, Mars is struck by a space rock nearly every day, resulting in seismic activity. 
  • Additionally, the planet experiences larger impacts monthly, creating craters up to 30 meters wide.

Importance of Seismology 

  • Seismological data from NASA’s InSight mission provided insights into Mars’ daily and monthly impact rates. 
  • The seismometer detected seismic waves from impacts, distinguishing them from tectonic marsquakes.

Differences in Impact Types

  • Meteorite impacts generate shorter seismic signals compared to tectonic earthquakes, aiding in their identification and differentiation using InSight’s sensitive equipment.

Findings and Implications 

  • The study estimated Mars is struck by 280 to 360 meteorites annually, significantly higher than previous orbital imaging estimates. 
  • This data enhances understanding of Martian geological history and surface evolution.

Future Prospects

  • Researchers advocate for future missions to Mars equipped with affordable seismometers to further study impact rates and the planet’s interior structure, aiding in broader scientific understanding of Mars and other planets in the Solar System.

Impact Rates and Surface Changes

  • By counting craters around the InSight lander over a year and extrapolating the data, researchers estimated that Mars is struck by 280 to 360 meteorites annually.
  • This impact rate is about five times higher than previous estimates based solely on orbital imagery.
  • Orbital imagery has limitations due to regular sandstorms on Mars, which obscure and erode craters, making them difficult to detect.

Implications for Mars’ Geological History 

  • Understanding the frequency and impact of meteorites on Mars provides valuable insights into the planet’s geological history and surface evolution.
  • Seismic data from these impacts serve as a “cosmic clock,” helping scientists to date Martian surfaces and piece together a timeline of the planet’s geological history.
  • This data can also offer clues about the broader history of the Solar System.

Meteorites

  • A meteorite is a solid piece of debris originating from an object, such as a comet, asteroid, or meteoroid, that originates in outer space and survives its passage through the atmosphere to reach the surface of a planet or moon
  • Origin: Most meteorites are believed to originate in the asteroid belt between Mars and Jupiter, and were formed early in the history of the Solar System ~4.56 billion years ago.
  • Types:  Meteorites are divided into groups according to their structure, chemical and isotopic composition and mineralogy.
  • Stony meteorites: They are rocks, mainly composed of silicate minerals
  • Iron meteorites: They are largely composed of metallic iron-nickel
  • Stony -iron meteorites: It contains large amounts of both metallic and rocky material.

Difference between a Meteor, Meteorite and Meteoroid 

  • Meteoroids: These rocks are still in space. Meteoroids range in size from dust grains to small asteroids.
  • Meteors: When meteoroids enter the atmosphere of a planet, like Earth or Mars at high speed and burn up, the fireballs or “shooting stars” are called meteors.
  • Meteor Shower: An estimate of about 48.5 tons or 44,000 kilograms of meteoritic material falls on Earth each day. Almost all the material is vaporized in Earth’s atmosphere, leaving a bright trail fondly called “shooting stars”.
  • Meteorites: When a meteoroid survives a trip through the atmosphere and hits the ground, it’s called a meteorite.
CARE MCQ UPSC PYQ
Q3. Which of the following statements about meteorites is correct?

A) Meteorites are pieces of comets that have entered Earth’s atmosphere.

B) Meteorites are fragments of asteroids that have collided with Earth.

C) Meteorites are man-made objects sent into space for scientific research.

D) Meteorites are formed by volcanic activity on other planets.

Q. What is the difference between asteroids and comets? (2011)

  1. Asteroids are small rocky planetoids, while comets are formed of frozen gases held together by rocky and metallic material.
  2. Asteroids are found mostly between the orbits of Jupiter and Mars, while comets are found mostly between Venus and Mercury.
  3. Comets show a perceptible glowing tail, while asteroids do not.

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 1 and 3 only

(c) 3 only

(d) 1, 2 and 3

Ans: (b)

Answer 3 B

Explanation

    • Meteorites are indeed fragments of asteroids (and occasionally comets) that enter Earth’s atmosphere and survive impact with the Earth’s surface. 
    • Comets, on the other hand, are composed mostly of ice, dust, and rocky material, and are less likely to survive the journey through Earth’s atmosphere intact.  
  • Therefore, option B is the correct answer.

Agenda for the 16th Finance Commission

Source: The Hindu

https://www.thehindu.com/news/national/what-is-on-the-agenda-for-the-16th-finance-commission-explained/article68356820.ece/amp/  

UPSC Syllabus Relevance: GS2- Polity and Governance, GS- 3- Fiscal Federalism

Context: 16th Finance Commission (FC), under Article 280 of the Indian Constitution

Why in News 

  • The 16th Finance Commission (FC), under Article 280 of the Indian Constitution, recommends fund distribution from the consolidated fund to States, supporting panchayats and municipalities as per the 73rd and 74th constitutional amendments. 

Background 

  • The 16th Finance Commission (FC) has begun its work, established under Article 280 of the Indian Constitution, primarily focusing on the devolution of the consolidated fund. 
  • Since the 73rd and 74th constitutional amendments, local bodies have gained significant recognition within the federal system. 
  • These amendments introduced sub-clauses 280(3) (bb) and (c), which mandate the FC to recommend measures to augment State consolidated funds for supporting panchayats and municipalities.

Fiscal Devolution and Urbanisation 

  • The 16th Finance Commission (FC) is tasked under Article 280 of the Indian Constitution with recommending the devolution of funds from the consolidated fund to States, including measures for supporting panchayats and municipalities mandated by the 73rd and 74th constitutional amendments. 
  • Cities play a crucial role in India’s economy, contributing significantly to GDP and government revenues.

What about cities?

  • The National Commission on Urbanisation in the mid-80s described cities as “engines of growth.” 
  • Although this view is somewhat narrow, the reality is that cities contribute around 66% of India’s GDP and about 90% of total government revenues. 
  • Cities, thus, are an important spatial zone for the overall development of the country. 
  • However, our economic scale is insufficient to meet rising needs. 
  • The World Bank estimates that $840 billion is needed for basic urban infrastructure in the next decade.

What about the taxation system?

  • The introduction of the Goods and Service Tax (GST) has reduced ULBs’ tax revenue (excluding property tax) from about 23% in 2012-13 to around 9% in 2017-18. IGTs from States to ULBs are very low, with State Finance Commissions recommending only about 7% of States’ own revenue in 2018-19. Increasing the quantum of IGTs as a percentage of GDP is necessary. 
  • Despite the 74th constitutional amendment’s aim to financially strengthen ULBs, progress over three decades has fallen short.
  • The 13th Finance Commission observed that “parallel agencies and bodies are emasculating local governments both financially and operationally.” 
  • Local governments require support from Union and State governments through funds, functionaries, and technical aid. However, the growth of parallel agencies has distorted local governments’ roles. 
  • Programs like the Member of Parliament Local Area Development Scheme and the Member of Legislative Assembly Local Area Development Scheme exacerbate this issue, distorting the federal structure.

How important is the Census?

  • In the absence of the 2021 Census, reliance on 2011 data is inadequate for evidence-based fiscal devolution. 
  • India has approximately 4,000 statutory towns and an equal number of Census towns, with an estimated 23,000 villages, all of which are effectively urban. 
  • These figures must be captured by the 16th FC, including the significant migration to Tier-2 and 3 cities.
  • Thus, the 15th FC’s nine guiding principles require a revisit. 
  • The 16th FC must consider India’s urbanisation dynamism and ensure IGTs to urban areas are at least doubled. 
  • A McKinsey Global Institute report warns that if India continues investing in urban infrastructure at current rates, urban infrastructure will fall short, leading to water supply issues and untreated sewage. 

Challenges in Urban Financial Devolution 

  • Despite cities being engines of growth, financial devolution to urban areas remains inadequate. 
  • Five finance commissions since the 11th FC have made efforts, but fiscal health remains poor, affecting productivity and quality of life. 
  • Inter-governmental transfers (IGTs) to Urban Local Bodies (ULBs) are much lower than global benchmarks, impacting urban infrastructure development.

Impact of Taxation System and GST

  • Introduction of Goods and Service Tax (GST) has reduced ULBs’ tax revenue, exacerbating financial challenges. 
  • IGTs from States to ULBs are minimal, hindering financial strengthening envisioned by the 74th constitutional amendment. 
  • Property tax and other local revenue sources need enhancement to support urban infrastructure development.

Role of Census Data in Fiscal Devolution 

  • The absence of the 2021 Census data limits evidence-based fiscal devolution planning. 
  • India’s urban landscape, including statutory towns, Census towns, and effectively urban villages, must be accurately represented in fiscal planning. 
  • Migration to Tier-2 and 3 cities necessitates updated demographic and economic data.

Recommendations for the 16th Finance Commission 

  • The 16th FC should revisit guiding principles to address urbanisation dynamics. 
  • Focus areas include enhancing property tax collection, maintaining fiscal accountability, allocating resources for pollution mitigation, and improving essential services like healthcare, solid waste management, and drinking water. 
  • Doubling IGTs to urban areas is critical to meet urban infrastructure demands highlighted by reports warning of future deficiencies.

Finance Commissions

  • FCs are constitutional bodies set up under Article 280 of the Constitution every five years to make recommendations on the distribution of financial resources between the Union and the states.

Recommendations cover three main aspects:

  • Vertical Devolution: The share of states in the divisible pool of central taxes.
  • Horizontal Distribution: The allocation of resources among states based on a formula that reflects their fiscal needs, capacities and performance.
  • Grants-in-aid: The additional transfers to specific states or sectors that are in need of assistance or reform.
  • Among the grants made by the 13th FC, two important ones were justice delivery and the statistical system.
CARE MCQ UPSC PYQ
Q4. Which of the following statements with regard to the constitution of Finance Commission is/are incorrect?

  1. The Government of India has recently established the Sixteenth Finance Commission, with Dr. Arvind Panagariya appointed as its chairman.
  2. The Finance Commission is formed according to the provisions of Article 280 of the Constitution of India.

Select the answer using the code given below: 

    1. 1 only 
    2. 2 only
    3. Both 1 and 
  • None of the above
Q. Consider the following: (2023)

  1. Demographic performance
  2. Forest and ecology
  3. Governance reforms
  4. Stable government
  5. Tax and fiscal efforts

For the horizontal tax devolution, the Fifteenth Finance Commission used how many of the above as criteria other than population area and income distance?

(a) Only two

(b) Only three

(c) Only four

(d) All five

Ans: (b)

Answer 4 D

Explanation

  • The Government of India, with the approval of the President of India, has constituted the Sixteenth Finance Commission, in pursuance to Article 280(1) of the Constitution. Dr Arvind Panagariya, former Vice-Chairman, NITI Aayog, and Professor, Columbia University will be the Chairman. Hence statement 1 is correct.
  • The Finance Commission is constituted as per the provisions laid out in Article 280 of the Indian Constitution. Article 280 specifies the composition, duties, and powers of the Finance Commission. Hence statement 2 is correct.
  • Therefore, option D is the correct answer. 

Record upturn in job creation drives India’s manufacturing PMI to 58.3 in June

Source: Economics Times

https://m.economictimes.com/news/economy/indicators/indias-manufacturing-pmi-rises-to-58-3-in-june-from-57-5-in-may-record-upturn-in-job-creation/articleshow/111394144.cms

UPSC Syllabus Relevance:  GS 3- Economy 

Context: Purchasing Managers’ Index (PMI),

Why in news 

  • India’s manufacturing sector has experienced a significant rebound in activity, driven by robust demand despite lingering inflationary pressures. 

Manufacturing Activity Rebound 

  • India’s manufacturing sector has experienced a significant rebound in activity, driven by robust demand despite lingering inflationary pressures. 
  • The HSBC final India Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 58.3 in June, indicating strong growth momentum compared to May’s 57.5.

Demand and Economic Growth

  • Strong domestic demand has been pivotal for India’s economic growth, sustaining its position as the fastest-growing major economy in Asia. 
  • Government infrastructure spending has played a crucial role in boosting overall economic activity.

Employment Trends 

  • The rebound in manufacturing activity has led to a notable increase in hiring, marking the fastest rate of job creation in over 19 years. 
  • This trend underscores the sector’s expanding capacity and contribution to employment generation in the country.

International Demand and Business Sentiment

  • While growth in international demand moderated slightly in June, it remained above the long-run average. 
  • Business sentiment, although lower than previous months, remained strong, reflecting confidence in future prospects despite some concerns.

Inflationary Pressures 

  • Inflationary pressures persisted, with cost prices rising marginally slower while customer prices saw the fastest increase in two years. 
  • Manufacturers were able to pass on higher costs to customers, improving margins amid robust demand.

Economic Outlook and RBI’s Monetary Policy

  • The overall outlook for the manufacturing sector remains positive, although the future output index dipped to a three-month low. 
  • Inflation is projected to stabilize around the mid-point of the Reserve Bank of India’s target range of 2-6%, influencing expectations of future interest rate cuts.

What is Purchasing Managers Index?

  • Purchasing Managers Index is a survey-based measure that asks the respondents about changes in their perception about key business variables as compared with the previous month.
  • The purpose of the PMI is to provide information about current and future business conditions to company decision makers, analysts, and investors.
  • It is calculated separately for the manufacturing and services sectors and then a composite index is also constructed.
  • The PMI is a number from 0 to 100.
  • A print above 50 means expansion, while a score below that denotes contraction.
  • A reading at 50 indicates no change.
  • If PMI of the previous month is higher than the PMI of the current month, it represents that the economy is contracting.
  • It is usually released at the start of every month. It is, therefore, considered a good leading indicator of economic activity.
  • PMI is compiled by IHS Markit for more than 40 economies worldwide.
CARE MCQ UPSC PYQ
Q5. Consider the following statements regarding the Purchasing Managers Index (PMI):

  1. PMI is a survey-based indicator that reflects changes in key business variables compared to the previous month.
  2. A PMI reading above 50 indicates economic expansion, while a reading below 50 suggests contraction.
  3. PMI is calculated separately for the manufacturing and services sectors, and then a composite index is derived.

Which of the statements given above is/are correct?

A. 1 and 2 only

B. 2 and 3 only

C. 1 and 3 only

D. 1, 2, and 3

Q. What does S & P 500 relate to? (2008)

(a) Supercomputer

(b) A new technique in e-business

(c) A new technique in bridge building

(d) An index of stocks of large companies

Ans: (d)

Answer 5 D

Explanation

  • PMI is indeed a survey-based measure that reflects changes in key business variables compared to the previous month. Hence Statement 1 is correct.
  • A PMI reading above 50 indicates economic expansion, while below 50 indicates contraction. Hence Statement 2 is correct.
  • PMI is calculated separately for the manufacturing and services sectors, and then a composite index is also compiled to provide a comprehensive view. Hence Statement 3 is correct.
  • Therefore, option D is the correct answer. 

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