Practice Quiz set 4 - indian economy mcq Online Quiz (set-1) For All Competitive Exams

Q-1)   Which of the following is/are treated as artificial currency?

(a)

(b)

(c)

(d)


Q-2)   Which among the followings is the type of inflation?
  1. Demand Pull Inflation
  2. Cost Push Inflation
  3. Stagflation
  4. Hyperinflation
Choose the correct type.

(a)

(b)

(c)

(d)

Explanation:

Types of inflation are Demand Pull Inflation, Cost Push Inflation, Stagflation, Hyperinflation.


Q-3)   The Prevention of Money Laundering Act came into force in India during

(a)

(b)

(c)

(d)


Q-4)   The Apex bank for providing Agricultural Refinance in India is

(a)

(b)

(c)

(d)


Q-5)   Why is the offering of “teaser loans’’ by commercial banks a cause of economic concern ?
  1. The teaser loans are considered to be an aspect of sub-prime lending and banks may be exposed to the risk of defaulters in future.
  2. In India, the teaser loans are mostly given to inexperienced entrepreneurs to set up manufacturing or export units.
Which of the statements given above is/are correct?

(a)

(b)

(c)

(d)

Explanation:

The statement (1) is correct because it includes the definition of teaser loans but the statement (2) is not correct, because in India teaser loan is provided to the home buyers not for setting up manufacturing or export units.


Q-6)   What is the difference between Inflation and Deflation?
  1. Inflation is an increase in the price of goods while Deflation is that state in which the value of money rises and the price of goods and services falls.
  2. Deflation is an increase in the price of goods while Inflation is that state in which the value of money rises and the price of goods and services falls.
  3. Inflation is a state in which the value of money rises and the price of goods and services falls while deflation is an increase in the price of goods.
Choose the correct difference between Inflation and Deflation.

(a)

(b)

(c)

(d)

Explanation:

Inflation is an increase in the price of goods while Deflation is that state in which the value of money rises and the price of goods and services falls.


Q-7)   What are the measures of checking deflation?
  1. Increasing money supply
  2. Promote credit creation by the banks.
  3. Curtailment in taxes so as to increase the purchasing power of the people.
Choose the correct measure.

(a)

(b)

(c)

(d)

Explanation:

Measures of checking deflation are:

  1. Increasing money supply.
  2. Promoting credit creation by the banks.
  3. Curtailment in taxes so as to increase the purchasing power of the people.
  4. Increasing the public expenditure and the employment opportunities in the economy.
  5. Increasing the money supply in circulation by repayment of old public debts.
  6. Providing economic subsidy by the Government to the industrial sector of the econ.


Q-8)   Consider the following statements:
  1. The repo rate is the rate at which other banks borrow from the Reserve Bank of India.
  2. A value of 1 for Gini Coefficient in a country implies that there is perfectly equal income for everyone in its population.
Which of the statements given above is/are correct?

(a)

(b)

(c)

(d)

Explanation:

Repo Rate is the rate at which commercial banks borrow funds from RBI. A reduction in the repo rate will help banks to get money from the central bank at a cheaper rate. When the repo rate increases borrowing from RBI becomes more expensive.

A value of (0) for the Gini Coefficient in a country implies that there is perfect equality in the system. If the value is 1 then there is complete inequality in the country.


Q-9)   Consider the following statement:
  1. Capital market deals with long-term finance funds.
  2. Capital Market includes all facilities and institutional arrangements available for borrowing and lending of term funds (including medium-term).
  3. Long-term funds are raised either by borrowing from certain institutions or by issuing securities.
Choose the correct statement.

(a)

(b)

(c)

(d)

Explanation:

Capital market deals with long-term finance (more than 365 days) funds. It includes all facilities and institutional arrangements available for borrowing and lending of term funds (including medium-term).

The difference between the money market and capital market is not so much in the institutions involved as in their term of borrowing or lending. Long-term funds are raised either by borrowing from certain institutions or by issuing securities.


Q-10)   Consider the following statement:
  1. Ad hoc treasury bills are sold to the banks and public and are freely marketable.
  2. Regular treasury bills are not sold to the banks and the general public and are not marketable.
Choose the correct code.

(a)

(b)

(c)

(d)

Explanation:

Ad hoc treasury bills are not sold to the banks and the general public and are not marketable while regular treasury bills are sold by the Reserve Bank of India on behalf of the Central Government.