public finance fiscal & monetary policy section 7 Practice Questions Answers Test with Solutions & More Shortcuts

Question : 11

Which of the following is the rate at which RBI lends to commercial banks?

1. Corporate rate
2. Economy rate
3. Bank rate
4. Growth rate

a) 1 only

b) 3 only

c) 1 and 2

d) 4 only

Question : 12

The diagram shows a relationship between inflation and unemployment for an economy. Which of the following policies would move the economy from A to B?

a) Reduce interest rate and increase income tax rates

b) Increase interest rates and increase Income tax rates

c) Reduce interest rates and decrease income tax rates

d) Increase interest rates and decrease income tax rates

Question : 13

With reference to ‘Cash Reserve Ratio’, which of the following statements is/are correct?

1. The RBI varies Cash Reserve Ratio to change the liquidity of the market
2. CRR is subject to frequent changes as RBI intervenes from time to time to correct monetary or exchange rate imbalances
3. CRR currently is 4%
4. RBI is empowered to fix the CRR at a rate ranging between three per cent and 15 per cent

a) 1 only

b) 3 only

c) 1 and 2

d) 1, 2, 3 and 4

Question : 14

Consider the following options regarding recommendations of Shyamala Gopinath Committee on post offices:

1. The interest rate on fixed deposits for one and two years has been increased to 8.4% from the present 8.2%.
2. The interest rate on Public Provident Fund (PPF) has been kept unchanged at 8.7 %.
3. The rate on National Savings Scheme (NSC) with 5 and 10-year maturities remains unchanged.
4. Rate on the five-year Monthly Income Scheme (MIS) changed to 10%.

a) 3 and 4

b) 1, 2 and 3

c) 1 and 2

d) 1, 2, 3 and 4

Question : 15 [SSC CML 2001]

The ‘Canons of Taxation’ were propounded by

a) Dalton

b) Adam Smith

c) Edwin Canon

d) J.M. Keynes