Practice Quiz set 8 - indian economy mcq Online Quiz (set-1) For All Competitive Exams

Q-1)   ‘Money is a matter of functions four, a medium, a measure a standard and .....’. What is the fourth function of money indicated in this popular phrase?

(a)

(b)

(c)

(d)


Q-2)   Consider the following statement:
  1. EXIM bank in India was established on January 1, 1982
  2. National Housing Bank was established in July, 1988.
  3. SIDBI started its operations from April 2, 1990.
Choose the correct code.

(a)

(b)

(c)

(d)

Explanation:

EXIM bank in India was established on January 1, 1982. National Housing Bank was established in July 1988. SIDBI started its operations from April 2, 1990.


Q-3)   Consider the following statements.
  1. The National Housing Bank, the apex institution of housing finance in India, was set up as a whollyowned subsidiary of the Reserve Bank of India.
  2. The Small Industries Development Bank of India was established as a wholly-owned subsidiary of the Industrial Development Bank of India.
Which of the statement given above is/are correct?

(a)

(b)

(c)

(d)


Q-4)   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 ‘0’ for Gini Coefficient in country implies that there is perfectly equal income for everyone in its population.
Which of the statement(s) given above is/are correct?

(a)

(b)

(c)

(d)


Q-5)   Consider the following statements with regard to Statutory Liquidity Ratio (SLR) :
  1. To meet SLR, Commercial banks can use cash only.
  2. SLR is maintained by the banks with themselves.
  3. SLR restricts the banks leverage in pumping more money into the economy.
Which of the statements given above is/are correct?

(a)

(b)

(c)

(d)

Explanation:

SLR used by bankers indicates the minimum percentage of deposits that the banks have to maintain in the form of gold, cash or other approved securities.


Q-6)   With reference to India, consider the following.
  1. Nationalisation of Banks.
  2. Formation of Regional Rural Banks.
  3. Adoption of villages by Banks Branches.
Which of the above can be considered as steps taken to achieve the ‘financial inclusion’ in India?

(a)

(b)

(c)

(d)


Q-7)   The smaller the Cash Reserve Ratio, the scope for lending by banks is :

(a)

(b)

(c)

(d)

Explanation:

Cash Reserve Ratio is a regulation set by the Central bank (RBI in India) which dictates the minimum amount (reserves) that a commercial bank must be held to customer notes and deposits.

A decrease in CRR will make it mandatory for the banks to hold a lesser proportion of their deposits in the form of deposits with the RBI. This will increase the number of Bank deposits and they will lend more as they have more amount as their reserve.


Q-8)   Consider the following statement regarding the concept of money:
  1. $M_1$: Money with the Public (currency notes and coins) + Demand deposits of banks (on current and saving bank accounts) + Other demand deposits with RBI. It is highly liquid and banks will not be able to run their lending programmes on this basis.
  2. $M_2: M_1$ + Saving bank deposits with Post-offices.
  3. $M_3: M_2$ + Term deposits with the bank.
  4. $M_4: M_3$ + All deposits of Post-offices.
Which among the following is correct?

(a)

(b)

(c)

(d)

Explanation:

The four concepts of money used in calculating money supply are known as the money stock measures or measures of monetary aggregates.

These are M1, M2, M3, M4.

M3 = M1 + Term deposits with the bank.


Q-9)   Debenture holders of a company are its

(a)

(b)

(c)

(d)

Explanation:

Companies issue debentures instead of shares to extend their business. These debentures are issue to borrow loans from the general public; interest is paid on the borrowed money to the debenture holders.

So a debenture holder is essentially a creditor who simply gives a loan to the company.


Q-10)   The amount of Money Supply in the economy affects the following macroeconomic variables:

(a)

(b)

(c)

(d)

Explanation:

The amount of money supply in the economy impacts prices i.e. when money supply increases inflation increases and when money supply decreases inflation decreases.

Money supply impacts GDP also, as more money is required to increase the output.

When the demand for money increases, rate of interest goes up in the economy. So, when money supply increases then rate of interest may cool/decrease in the economy and vice versa.

So, all statements are correct.