Practice Quiz set 1 - indian economy mcq Online Quiz (set-1) For All Competitive Exams

Q-1)   Consider the following statements:
  1. Increase in deposit rate results in higher savings
  2. Increase in deposit rate results in fall in credit off takes
  3. Increase in deposit rate results in increase in investment
Which among the above statements is / are correct?

(a)

(b)

(c)

(d)

Q-2)   Consider the following statements. The function of commercial banks in India includes
  1. Purchase and sale of shares and securities on behalf of customers.
  2. Acting as executors and trustees of wills.
Which of the statement(s) given above is/are correct?

(a)

(b)

(c)

(d)

Q-3)   Consider the following statements.
  1. Reserve Bank of India was nationalised in the year 1949.
  2. The borrowing programme of the Government of India is handled by the Department of Expenditure, Ministry of Finance.
Which of the statement(s) given above is/are correct?

(a)

(b)

(c)

(d)

Q-4)   Consider the following statement.
  1. NABARD stands for National Bank for Agriculture and Rural Design
  2. NABARD is an apex developmental bank in India.
  3. Setting up of NABARD was recommended by the committee to review arrangements for institutional credit for agriculture and rural development, set up by the RBI, under the chairmanship of Shri B. Sivaraman.
Which statement is incorrect?

(a)

(b)

(c)

(d)

Explanation:

NABARD stands for National Bank for Agriculture and Rural Development.

Q-5)   Consider the following statement:
  1. As per recommendations of the Narasimham Committee, it has been decided that credit facilities granted by banks will be classified into performing and non-performing assets (NPA)
  2. NPA is a loan which is in default for more than nine months.
Choose the incorrect statement.

(a)

(b)

(c)

(d)

Explanation:

NPA is a loan (whether term loan, cash credit, overdraft, or bills discounted), which is in default for more than six months.

Q-6)   _______ are conducted by the RBI by selling and buying government securities from banks.
  1. Bank rate
  2. Cash reserve ratio
  3. Open market operations
  4. Statutory Liquidity Ratio
Choose the correct code.

(a)

(b)

(c)

(d)

Explanation:

Open Market Operations: These are conducted by the RBI by selling and buying government securities from banks.

Q-7)   Which term is not related to banking ?

(a)

(b)

(c)

(d)

Explanation:

NEER stands for Nominal Effective Exchange Rate which represents the relative value of a home country’s currency compared to the other major currencies being traded (U.S. dollar, Japanese yen, euro, etc.). It also represents the approximate relative price a consumer will pay for an imported good.

Q-8)   Consider the following statement:
  1. Inflation is a decrease in price of goods
  2. Inflation is caused by excess demand in economy
  3. Inflation results from excessive increase in the money supply
  4. Inflation effects all segments of the economy
Which among the following statement is/are incorrect?

(a)

(b)

(c)

(d)

Explanation:

Inflation is an increase in the price of goods. It can be seen as a devaluation of the worth of money. A crucial feature of inflation is that price rises are sustained.

Once only an increase in the rate of, say, value-added tax, will immediately put up prices, but this does not represent inflation unless the indirect effects of the VAT rise have repercussions of prices in periods after the direct effects.

Accounts of the causes of inflation are numerous. The most popular arguments are that it is caused by excess demand in the economy (demand-pull inflation), that it is caused by high costs (cost-push inflation) and that it results from excessive increases in the money supply (monetarism).

Inflation affects all segments of the economy.

Q-9)   What all are local authorities?
  1. City corporations
  2. Municipalities
  3. Port trusts
Choose the incorrect option.

(a)

(b)

(c)

(d)

Explanation:

Local authorities are city corporations, municipalities and port trusts.

Q-10)   Consider the following statements:
  1. High growth will lead to inflation.
  2. High growth will lead to deflation.
Which of the statements given above is/are correct?

(a)

(b)

(c)

(d)

Explanation:

Typically, higher inflation is caused by strong economic growth. If Aggregate demand in an economy expanded faster than aggregate supply, we would expect to see a higher inflation rate.

If demand is rising faster than supply, then this suggests that economic growth is higher than the long-run sustainable rate of growth.