Investment Cycle and Carbon Markets — MCQs with Answers

GFCF counts spending on new fixed assets like machinery, buildings and infrastructure. The GFCF-to-GDP ratio is the usual measure of the investment rate.

GFCF is spending on new fixed assets. Dividing it by GDP shows how much of national output goes into investment.

Buying shares only changes who owns an existing asset. It creates no new fixed asset, so it is not GFCF.

After the peak, output falls. This is the contraction phase. The lowest point is the trough, and output then recovers.

Capital expenditure builds or improves assets that last many years, such as roads, plants and equipment.

Overleveraged firms could not repay loans. Banks piled up bad loans. Both sides held back fresh lending and new investment.

High capacity utilisation often signals that firms may soon add new capacity. This can lift private investment.

PLI pays a share of the extra sales a firm makes from eligible goods produced in India. The aim is to build domestic manufacturing.

The CCTS was notified on 28 June 2023 under the Energy Conservation Act, as amended in 2022.

The Bureau of Energy Efficiency (BEE) administers the CCTS and develops its targets.

Obligated entities fall under the Compliance Mechanism. Those that beat their target earn certificates. Those that miss it must buy or surrender them.

Targets are measured in tonnes of CO2 equivalent per unit of product. A firm can grow output and still meet its target.

Articles 6.2 and 6.4 cover market cooperation. Article 6.8 covers non-market approaches. A corresponding adjustment stops two countries claiming the same cut.

CBAM covers cement, iron and steel, aluminium, fertilisers, electricity and hydrogen. It applies in its definitive phase from 1 January 2026.

Indian exporters of steel, aluminium and similar goods may face a carbon cost at the EU border. A home carbon price can help show what has already been paid.