public finance fiscal & monetary policy section 3 MCQ Questions & Answers Detailed Explanation

Question : 1

Convertibility of rupee implies

a) being able to convert rupee notes into gold

b) developing an international market for currencies in India

c) allowing the value of rupee to be fixed by market forces

d) freely permitting the conversion of rupee to other currencies and vice versa

Question : 2

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.

a) 1, 2 and 3

b) 2 and 3

c) 1 and 3

d) only 2

Question : 3

Which of the following is not a technique of Deficit financing?

1. Internal Borrowings
2. Counting Currency
3. Printing Currency
4. External aid and borrowings

a) 1 only

b) 2 and 3

c) 2 only

d) 1, 2, 3 and 4

Question : 4

Tarapore Committee submitted its report on “Full Convertibility on Rupee” in-

a) Current account

b) Special Drawing Rights (SDRs)

c) Capital account

d) Both in current as well as in capital account

Question : 5

Who among the following appoints a Finance Commission under Article 280 of the Constitution?

1. Prime Minister
2. Finance Minister
3. President
4. Public

a) 1 only

b) 3 only

c) 2 only

d) 3 and 4

Question : 6

States’ debt does not include:

a) loos from State Bank of India

b) treasury bills issued to inter-national financial institutions

c) loans from the Central government

d) provident fund