public finance fiscal & monetary policy section 7 Practice Questions Answers Test with Solutions & More Shortcuts
Fiscal Policy, Public Finance and Monetary Policy PRACTICE TEST [7 - 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
Question : 11
Which of the following is the rate at which RBI lends to commercial banks?
- Corporate rate
- Economy rate
- Bank rate
- Growth rate
a) 1 only
b) 3 only
c) 1 and 2
d) 4 only
Answer »Answer: (b)
Bank rate is an instrument of monetary policy which is the rate at which RBI lends to commercial banks
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
Answer »Answer: (b)
Question : 13
With reference to ‘Cash Reserve Ratio’, which of the following statements is/are correct?
- The RBI varies Cash Reserve Ratio to change the liquidity of the market
- CRR is subject to frequent changes as RBI intervenes from time to time to correct monetary or exchange rate imbalances
- CRR currently is 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
Answer »Answer: (d)
Every commercial bank is required to keep a certain percentage of its demand and time liabilities (deposits) with the RBI (either as cash or book balance).
The RBI varies this ratio to change the liquidity of the market. RBI is empowered to fix the CRR at a rate ranging between three per cent and 15 per cent.
Like the Bank Rate, CRR is also subject to frequent changes as RBI intervenes from time to time to correct monetary or exchange rate imbalances. This ratio, currently, is 4%
Question : 14
Consider the following options regarding recommendations of Shyamala Gopinath Committee on post offices:
- The interest rate on fixed deposits for one and two years has been increased to 8.4% from the present 8.2%.
- The interest rate on Public Provident Fund (PPF) has been kept unchanged at 8.7 %.
- The rate on National Savings Scheme (NSC) with 5 and 10-year maturities remains unchanged.
- 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
Answer »Answer: (b)
As per the Shyamala Gopinath Committee’s recommendations, the interest rate on fixed deposits for one and two years has been increased to 8.4% from the present 8.2%.
The rate on National Savings Scheme (NSC) with 5 and 10-year maturities also remains unchanged at 8.5% and 8.8%. The rate on the five-year Monthly Income Scheme (MIS) remains the same at 8.4%.
The interest rate on the Public Provident fund (PPF) has been kept unchanged at 8.7%.
Question : 15 [SSC CML 2001]
The ‘Canons of Taxation’ were propounded by
a) Dalton
b) Adam Smith
c) Edwin Canon
d) J.M. Keynes
Answer »Answer: (b)
Canons of Taxation were first originally laid down by economist Adam Smith in his famous book "The Wealth of Nations".
In this book, Adam smith only gave four canons of taxation:
- canon of equity;
- canon of certainty;
- canon of convenience; and
- canon of economy.
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Fiscal Policy, Public Finance and Monetary Policy Shortcuts »
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indian economy MCQ CATEGORIES
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» Introduction to Indian Economy
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» Planning, Economic Development & Five year Plans
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» National Income & Human Development Index
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» Agriculture Sector, Subsidy and Food Processing
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» Industries, Manufacturing & Service Sectors
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» Inclusive growth, Sustainable development and employment
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» Poverty & Unemployment
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» Introduction to Micro Economics
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» Introduction to Macro Economics
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» Macro fundamentals, GDP, Investment, Growth
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» Demand & Supply, Profit Loss, Inflation & Price Index
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» Fiscal Policy, Public Finance and Monetary Policy
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» Money Supply, Banking and Financial Institutions
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» Taxes Types, Methods & Budgeting Process
-
» Banking, Security Market & Insurance
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