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Indian Economy : Mock Test-1

Indian Economy : Mock Test-1
1. An economy pursuing an expansionary fiscal policy can witness :
1. increase in fiscal deficit
2. increase in wages of labour
3. increase in rate of income tax
Select the correct answer using the codes given below.
a) 1 only
b) 1 and 2 only
c) 1 and 3 only
d) 1,2 and 3
2. Equity market instruments help in financing a firm. Which of these is/are equity market instruments ?
1. Bonds
2. Shares
3. Debentures
Select the correct answer using the codes given below.
a) 1 and 2 only
b) 2 only
c) 2 and 3 only
d) 1, 2 and 3
3. India’s central bank, RBI performs various functions. Which of these are its functions according to the RBI act, 1934.
1. managing inflation
2. acting as banker’s bank
3. managing India’s Forex
4. handling government’s borrowing program
Select the correct answer using the codes given below.
a) 2, 3 and 4 only
b) 1, 2 and 3 only
c) 2 and 3 only
d) 1, 2, 3 and 4
4. Which of the following also acts as a mechanism for government lending.
1. CRR
2. Repo rate
3. Reverse repo rate
4. SLR
Select the correct answer using the codes given below.
a) 1 and 3 only
b) 1, 2 and 4 only
c) 1 and 4 only
d) 4 only
5. A decrease in Cash Reserve Ratio (CRR) can lead to which among the following ?
1. increase in cash availability of the banks
2. increase in repo rate
3. decrease in SLR
Select the correct answer using the codes given below.
a) 1 only
b) 1 and 2 only
c) 1 and 3 only
d) 1,2 and 3
6. There were two Narasimham Committees. Narasimham Committee -I was formed in 1991 and Narasimham Committee -II was formed in 1998. In this context, which among the following statements is correct?
a) First Narsimhmam Committee was related to Tax Reforms and Second Narsimhmam Committee was related to Banking Reforms
b) First as well as Second Narsimhmam Committees were related to Tax Reforms
c) First as well as Second Narsimhmam Committees were related to Banking Reforms
d) First Narsimhmam Committee was related to Banking Reforms and Second Narsimhmam Committee was related to Tax Reforms
7. Which among the following body regulates Mutual Funds in India?
a) RBI
b) SEBI
c) NABARD
d) AMFI
8. Which among the following is a qualitative tool of monetary policy?
a) Bank Rate
b) Credit Ceiling
c) Credit rationing
d) Cash Reserve Ratio
9. Fiscal consolidation is one of the objectives of India’s economic policy. Which of the following would help in fiscal consolidation ?
1. increasing taxes
2. getting more loans
3. reducing subsidies
Select the correct answer using the codes given below.
a) 1 and 2 only
b) 1 and 3 only
c) 2 and 3 only
d) 1, 2 and 3
10. Financial market is classified into money market and capital market. Which of these are money market instruments ?
1. T-Bills
2. Preference shares
3. Commercial papers
Select the correct answer using the codes given below.
a) 1 and 2 only
b) 1 and 3 only
c) 2 and 3 only
d) 1,2 and 3
11. A persistent fall in the general price level of goods and services is known as:
a) Deflation
b) Disinflation
c) Stagflation
d) Depression
12. National development council was stated in
a) 1948
b) 1949
c) 1951
d) 1952
13. In India, which of the following is/are a mechanism of deficit financing?
1. borrowing from RBI.
2. borrowing from commercial banks.
3. issuing fresh currency notes.
Select the correct answer using the codes given below.
a) 1 and 2 only
b) 1 and 3 only
c) 2 and 3 only
d) 1, 2 and 3
14. With reference to narrow money, consider the following statements :
1. They are highly liquid.
2. Banks run their lending programme mainly with this money.
Which of the statements given above is/are correct ?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
15. Inclusive growth is an important objective of the development process. In this context, which of the following would amount to inclusive growth?
1. poverty reduction.
2. disinvestment.
3. good governance.
4. skill building.
Select the correct answer using the codes given below.
a) 1, 2 and 3 only
b) 1 ,3 and 4 only
c) 2 ,3 and 4 only
d) 1 ,2, and 4 only
16. Choose the correct statements in the context of Cooperative Banks in India.
1. Cooperative Banks operate on no profit no loss basis.
2. Cooperative Banks are allowed to operate only in the agriculture sector.
3. NABARD is a Cooperative Bank.
(a) 1 only
(b) 1 and 2
(c) 1 and 3
(d) All of these
17. Which of the following steps that will result in containing inflation?
(1) Increasing Cash Reserve Ratio (CRR)
(2) Decreasing Statutory Liquidity Ratio (SLR)
(3) Permitting Central/State agencies to import duty free pulses and sugar.
Select the correct answer using the codes given below:
(a) 1 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) 1, 2 and 3
18. Consider the following statements with regard to Statutory Liquidity
Ratio (SLR) [CDS-2011-II]
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.
Which of the statements given above is/are correct?
(a) 1, 2 and 3
(b) 1 and 3
(c) 2 and 3
(d) only 2
19. The apex organization of industrial finance in India is—
(a) IDBI
(b) RBI
(c) ICICI
(d) IFCI
20. NABARD was established in the
(a) Fourth Five Year Plan
(b) Fifth Five Year Plan
(c) Sixth Five Year Plan
(d) Eighth Five Year Plan
21. Who estimated national income in India first?
(a) Dadabhai Naoroji
(b) R.C. Dutt
(c) V.K. R.V. Rao
(d) Gopal Krishan Ghokle
22. The Rural infrastructure fund set up in 1995 – 96, is maintained by the
(a) Reserve Bank of India
(b) State Bank of India
(c) NABARD
(d) Regional Rural Bank
23. Consider the following statements :
1. Small Industry Development Bank of India (SIDBI) was set up as a
whole owned subsidiary of the RBI.
2. SIDBI has taken over the responsibility of administering small industry
development funds managed by the IDBI.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
24. In which year was planning commission set up?
a) 1947
b) 1949
c) 1950
d) 1951
25. The share of the concerned State Government in the capital of
Regional Rural Banks is— [BOM-PO 2016]
(a) 15 per cent
(b) 35 per cent
(c) 20 per cent
(d) 50 per cent
26. The ‘Mudra Bank’ is a subsidiary of—
(a) ICICI
(b) RBI
(c) IFCI
(d) SIDBI
27. A central bank of a country uses Open Market Operations (OMO) as the primary means of implementing—
(a) Tax policy
(b) Monetary policy
(c) Fiscal policy
(d) Budgetary policy
28. Bank rate means
(a) Interest rate charged by money lenders
(b) Interest rate charged by Scheduled Banks
(c) Rate of Profit of banking institution
(d) Official rate of interest charged by Central Bank
29. The microfinance institutions (MFI) registered as Non-Banking Finance Companies (NBFC) are presently regulated by
(a) SEBI
(b) Reserve Bank of India
(c) MUDRA (SIDBI) Bank
(d) NABARD
30. The last six characters of the alphanumeric IFSC printed on the cheque helps in identifying the
(a) Bank branch
(b) Type of account
(c) Bank name
(d) Business or profession
31. The recently launched ‘UPI’ is expected to make sending money easy. The letter ‘I’ in the abbreviation ‘UPI’ stands for
(a) Interface
(b) Infrastructure
(c) Institution
(d) International
32. Which of the following activities can lead to financial inclusion in India?
(1) Issuing of general purpose credit cards.
(2) Strict know your customer’ (KYC) norms
(3) Opening of Bank branches in unbanked rural areas.
(4) Opening of SFB and PB account.
Select the correct answer using the codes given below :
(a) 1, 2 and 3 only
(b) 2, 3 and 4 only
(c) 1, 3 and 4 only
(d) 2 and 3 only
33. Currency devaluation done by the government leads to which of the following?
(a) Fall in domestic prices
(b) Increase in domestic prices
(c) No impact on domestic prices
(d) Irregular fluctuations in domestic prices.
34. An economy with very low rate of interest and where economic agents expect the interest rate to rise in future and consequently bond prices to fall, causing capital loss in the economy is going through a situation known as
(a) Hyperinflation
(b) Double dip recession
(c) Slow down in the economy
(d) Liquidity trap
35. Consider the following statements:
(1) Fiat money is a term used for Gold coins
(2) Currency Deposit Ratio is the proportion of the total deposits commercial banks keep as reserves.
Which of the above statements is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
36. When the RBI wants to inject liquidity into economy, it may adopt the following :
(1) Buy the government securities from the banks.
(2) Enter into reverse repo operations
(3) Raise cash Reserve Ratio
(4) Reduce SLR.
Select the correct answer using the codes given below:
(a) 1 only
(b) 1 and 4 only
(c) 1, 2 and 4 only
(d) 1, 2, 3 and 4
37. Which of the following statements is/are correct in regard to ‘microfinance’?
(1) Micro-credit extended by banks to individual is reckoned as a part of their priority sector lending.
(2) RBI has prescribed a particular model the banks to provide microfinance.
Choose the correct answer using the codes given below:
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
38. Consider the following statements in regard to ‘Marginal Standing Facility (MSF)’ of RBI :
(1) It will help in reducing volatility in the overnight lending rates in the inter-bank market.
(2) The borrowing under the MSF should be over and above the statutory liquidity requirement.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
39. ‘Basel III’ norms target at which of the following?
(1) Improve the banking sector’s ability to absorb shocks arising from
financial and economic stress.
(2) Improve risk management and governance.
(3) Strengthen banks’ transparency.
Choose the correct answer using the codes given below:
(a) 1 only
(b) 1 and 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
40. In the context of Indian economy, open market operations to :
1. borrowing by scheduled banks from RBI
2. lending by commercial banks to industry and trade
3. purchase and sale of government securities by the RBI
4. None of the above
Select the correct answer using the codes given below :
(a) 1 and 2 only
(b) 3 only
(c) 4 and 1 only
(d) 2 and 3 only
41. If all the banks in an economy are nationalized and converted into a monopoly bank, the total deposits
(a) will decrease
(b) will increase
(c) will neither increase nor decrease
(d) None of the above
42. Consider the following liquid assets:
1. Demand deposits with the banks
2. Time deposits with the banks
3. Savings deposits with the banks
4. Currency
The correct sequence of these decreasing orders of Liquidity is:
(a) 1-4-3-2
(b) 4-3-2-1
(c) 2-3-1-4
(d) 4-1-3-2
43. In the context of Indian economy; which of the following is/are the purpose/purposes of ‘Statutory Reserve Requirements’?
1. To enable the Central Bank to control the amount of advances the banks can create
2. To make the people’s deposits with banks safe and liquid
3. To prevent the commercial banks from making excessive profits
4. To force the banks to have sufficient vault cash to meet their day-to-day requirements
Select the correct answer using the code given below.
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2, 3 and 4
44. Economic growth is usually coupled with
(a) Deflation
(b) Inflation
(c) Hyper inflation
(d) Stagflation
45. Consider the following statements in regard to money market in India:
(1) It is a market for short-term funds with maturity ranging from overnight to one year.
(2) It acts as an instrument of liquidity adjustment for the Central Bank.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
46. Which of the following can be the outcomes of very high inflation in the economy?
(1) Reduction in economic growth
(2) Increase in savings
(3) Reduction in exports
Select the correct answer using the codes below :
(a) 1 and 4 only
(b) 3 and 4 only
(c) 2 and 3
(d) 1 and 3 only
47. In an economy a condition of lack of money supply in comparison to the supply of the goods services, will lead to:
(a) Inflation
(b) Deflation
(c) Hyperinflation
(d) Devaluation
38. Consider the following statements in regard to Headline inflation :
(1) It provides an accurate picture of the inflation in the country.
(2) It is affected by short term transitory effect on prices of products.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
49. Which committee recommended merger of banks:
a) Jaitly Committee
b) Naichet Mor Committee
c) Narshiman Committee
d) Ranjan Commmittee
50. Consider the following statements
1. National Payments Corporation of India (NPCI) helps in promoting the financial inclusion in the country.
2. NPCI has launched RuPay, a card payment scheme.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
1.a, 2.b, 3.d, 4.d, 5.a, 6.c, 7.b, 8.c, 9.b, 10.b, 11.a, 12.a, 13.b, 14.a, 15.b, 16.a, 17.b, 18.c, 19.a, 20.c, 21.a, 22.a, 23.b, 24.c, 25.a, 26.d, 27.b, 28.d, 29.b, 30.a, 31.a, 32.c, 33.c, 34.d, 35.d, 36.b, 37.a, 38.a, 39.d, 40.b, 41.c, 42.d, 43.b, 44.b, 45.c, 46.d, 47.b, 48.a, 49.a, 50.c

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