public finance fiscal & monetary policy section 6 MCQ Questions & Answers Detailed Explanation
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The following question based on Fiscal Policy, Public Finance and Monetary Policy topic of indian economy mcq
- At present, the repo rate is 11.75%
- At present, the reverse repo rate is 5.75%
- Repo rate is the rate at which RBI lends to commercial banks
- Reverse Repo is the rate at which RBI borrows from commercial banks
(a) 1 only
(b) 1, 3 and 4
(c) 1 and 2
(d) None of the above
The correct answers to the above question in:
Answer: (a)
At present, the repo rate is 4.00%
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Read more public finance fiscal and monetary policy Based Indian Economy Questions and Answers
Question : 1
The process of budget making after re-evaluating every item of expenditure in every financial year is known as-
a) Performance Budgeting
b) Fresh Budgeting
c) Deficit Budgeting
d) Zero Based Budgeting
Answer »Answer: (d)
Question : 2
When RBI announces an increase in Cash Reserve Ratio (CRR) it means:
a) The Union Government will have less money to lend.
b) The RBI will have less money to lend.
c) The commercial banks will have less money to lend.
d) The commercial banks will have more money to lend.
Answer »Answer: (c)
Cash reserve ratio (CRR) is the amount of funds that the banks have to keep with the RBI. If the central bank decides to increase the CRR, the available amount with the banks comes down.
Question : 3
Current account in the Balance of Payment comprise is ___?
a) difference of total exports and imports in one year
b) trade balance plus invisible balance
c) invisible account like tourism, shipping, insurance, etc.
d) transactions like net external assistance, NRI deposits, etc.
Answer »Answer: (b)
Question : 4
Which one of the following is the most appropriate reason for Inequalities in Income ?
a) Differences in Ability
b) Lack of opportunities
c) Racial factors
d) Inheritance from family Environment
Answer »Answer: (b)
Joseph E. Stiglitz, a Nobel laureate in economics, has pointed how lack of opportunity leads to widening of inequality. It leads to concentration of income and wealth at the top, the hollowing out of the middle, and increasing poverty at the bottom.
Question : 5
The aim of Differentiated Interest Scheme was to provide concessional loans to _______.
a) big exports
b) Public Sector Industries
c) weaker section of the society
d) Public Limited Companies
Answer »Answer: (c)
The Differential Rate of Interest Scheme, formulated in March 1972, offers financial assistance at concessional rate of interest @ 4% to those who intend taking up any productive activity and has been tailored for persons whose income is very low. This scheme is meant for:
• Persons belonging to SC/STs, Adivasis engaged in agricultural operations and/ or allied activities;
• Persons engaged in collection of forest products, fodder and selling these in markets;
• Persons engaged in Village and Cottage Industries on a very small scale; etc.
Question : 6
Capital formation in an economy depends on
a) Total production
b) Total demand
c) Total Income
d) Total savings
Answer »Answer: (d)
Capital formation refers to capital accumulation, referring to the total “stock of capital” that has been formed, or to the growth of this total capital stock.
It also refers to a measure of the net additions to the (physical) capital stock of a country (or an economic sector) in an accounting interval, or, a measure of the amount by which the total physical capital stock increased during an accounting period.
Total capital formation” in national accounting equals net fixed capital investment, plus the increase in the value of inventories held, plus (net) lending to foreign countries, during an accounting period (a year or a quarter).
Capital is said to be “formed” when savings are utilized for investment purposes, often investment in production.
GET Fiscal Policy, Public Finance and Monetary Policy PRACTICE TEST EXERCISES
public finance fiscal & monetary policy section 1
public finance fiscal & monetary policy section 2
public finance fiscal & monetary policy section 3
public finance fiscal & monetary policy section 4
public finance fiscal & monetary policy section 5
public finance fiscal & monetary policy section 6
public finance fiscal & monetary policy section 7
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