money supply, banking & financial institutions section 1 MCQ Questions & Answers Detailed Explanation
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The following question based on Money Supply, Banking and Financial Institutions topic of indian economy mcq
- High growth will lead to inflation.
- High growth will lead to deflation.
(a) Only 2
(b) Only 1
(c) Both 1 and 2
(d) Neither 1 nor 2
The correct answers to the above question in:
Answer: (b)
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.
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Question : 1
NABARD is related with
a) National Rural Development Institution
b) National Financial Institution
c) National Bank for Agriculture and Rural Development
d) National Agriculture Development Institution
Answer »Answer: (c)
Question : 2
Which of the following committee examined and suggested financial sector reforms?
a) Bhagwati Committee
b) Narsimhan Committee
c) Chelliah Committee
d) Abid Hussain Committee
Answer »Answer: (b)
Question : 3
Which of the following will deter investments in the economy?
- High real interest rate
- High capacity utilization
a) (ii) only
b) Both (i) & (ii)
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (c)
Investments depend essentially on the real interest rates. It is the difference in the lending rate and inflation. For businessmen, it is this cost i.e. the real interest rate which matters. If it is high, businessmen will not borrow and invest.
For example, if inflation is 6% and the lending rate is 10%, then the real interest rate for businessmen is 4%. For businessmen, it is the real interest rate of 4% that matters. If the real interest is high then it deters investment.
If in the economy, capacity utilization is high that means factories are running at full utilization and then the businessmen plan for an increase in capacity so that in future they are able to supply the goods and services in case there is an increase in demand.
But, if the existing capacity is not fully utilized, then businessmen defer new investments.
Question : 4
What all are local authorities?
- City corporations
- Municipalities
- Port trusts
a) 2 only
b) 1 only
c) 3 only
d) None of the Above
Answer »Answer: (d)
Local authorities are city corporations, municipalities and port trusts.
Question : 5
Devaluation usually causes the internal prices to :
a) remain unchanged
b) None of the above
c) fall
d) rise
Answer »Answer: (a)
Devaluation reduces the export price in terms of foreign currencies in the world market.
As a result, the exports are increased so as to increase the revenue of the country. When the exports are increased all efforts are made to increase the production of the country.
However, the devaluation of currency is in relation to external currencies and external trade. It has effects on a country’s international trade by alluring traders. But, internal prices remain unaffected.
Question : 6
Which of the following statements correctly expresses the difference between preference shares and equity shares?
a) equity shareholders have no voting right but preference shareholders have voting rights
b) preference shareholders have no right to profit whereas equity shareholders have a right to profit
c) preference shareholders have no have voting rights but equity shareholders have voting rights
d) preference shareholders get exemption from taxes while equity shareholders do not get any exemption
Answer »Answer: (b)
GET Money Supply, Banking and Financial Institutions PRACTICE TEST EXERCISES
money supply, banking & financial institutions section 1
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Money Supply, Banking and Financial Institutions Shortcuts and Techniques with Examples
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