Indian Economy Test 37

Result

Indian Economy Test 37

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Weekly Quiz Competition

Question 1
1 / -0

Consider the following statements:
(1) Headline inflation may not present an accurate picture of the current state of the economy.
(2) Inflationary spikes occur when a particular section of the economy experiences a sudden price rise.
Which of the statements given above is/are correct?

A
Only 1

B
Only 2

C
Both 1 and 2

D
Neither 1 nor 2

Solution

Headline inflation includes the inflation of all sectors and commodities, food and energy as well, which often experience inflationary spikes. It is for this reason that headline inflation may not present an accurate picture of the current state of economy. These inflation spikes are not there to stay all the time and hence distort the inflation numbers. Core inflation, however, does not include food and energy sectors in the measurement of inflation.
Question 2
1 / -0

When the Reserve Bank of India announces an increase in the Cash Reserve Ratio (CRR)? What does it mean?

A
The commercial banks will have less money to lend

B
The Reserve Bank of India will have less money to lend

C
The Union Government will have less money to lend

D
None of the above

Solution

CRR refers to the percentage of deposits banks have to keep as reserve (in cash). This reserve sum is not available for banks for lending and thus if the CRR increases, banks will have less money to lend.
Question 3
1 / -0

Which one among the following is an appropriate description of deflation?

A
It is a sudden fall in the value of a currency against other currencies

B
It is a presistent recession in the economy

C
It is persistent fall in the general price level of goods and services

D
It is fall in the rate of inflation over a period of time

Solution

When there is a continuous fall in the price levels of goods and services over a period of time, it is called deflation. Under such condition, the rate of inflation falls below 0%.
Question 4
1 / -0

Consider the following statements:
1. The National Housing Bank , the apex institution of housing finance in India, was set up as a wholly owned subsidiary of the RBI.
2. The Small Industries Development Bank of India was established as a wholly-owned subsidiary of the Industrial Development Bank of India.
Which of the statement given above is/are correct?

A
Only 1

B
Only 2

C
Both 1 and 2

D
Neither 1 nor 2
Solution
- National Housing Bank was set up as a wholly owned subsidiary of RBI in 1988 under the National Housing Bank Act 1987. It is the apex institution in India for housing.
- The Small Industries Development Bank of India was established in 1990 as a wholly owned subsidiary of the Industrial Development Bank of India with the aim to aid in the growth and development of micro, small and medium-scale enterprises (MSME). Currently, the ownership is held by 34 Government of India owned/controlled institutions.
Question 5
1 / -0

Which one of the following is the composition of Liquidity aggregate--2 (L2) other than Liquidity aggregate - 1 (L1) in the Indian Monetary System ?

A
Term deposits with Term Lending Institutions and Refinancing Institiutions

B
Term Borrowing by Refinancing Institutions

C
Certificates of Deposit issued by Refinancing Institutions

D
All of the above
Question 6
1 / -0

Which one of the following is related with the Atkinson's Index of an economy?

A
A method to determine the income inequality

B
An effect of supply-demand mismatch

C
A method to determine the unemployment

D
None of the above

Solution

The Atkinson index is a measure of income inequality developed by British economist Anthony Barnes Arkinson. The measure is useful in determining which end of the distribution contributed most to the observed inequality.
Question 7
1 / -0

Which one of the following is the nature of the Beveridge curve when there is a decrease in frictional unemployment that reduces the number of firms searching for employees and the number of unemployed searching for jobs?

A
The curve will become parabolic shape.

B
The curve will become hyperbolic shape.

C
The curve will be shifted towards origin.

D
The curve will remain unchanged.
Question 8
1 / -0

Which one of the following is the basic objective for the setting up of Regional Rural Banks (RRBs) in India?

A
Development of more diverse banking systems in Indian money market

B
Diversification of scheduled commercial banking systems in India to tap the deposits potential of rural areas

C
Development of rural areas by providing credit to agriculture, trade, commerce and other productive activities in rural areas

D
Both 'a' and 'b'

Solution

Regional Rural Banks (RRBs) were established on the recommendations of the Narsimham Committee in 1975. The basic objective was to further the goal of financial inclusion and extend credit and other banking facilities to rural areas so as to ensure overall rural development.
Question 9
1 / -0

Which of the following is not the function of Reserve Bank of India?

A
Provide credit facility to the general public

B
Keep government money in various account heads

C
Frame monetary and credit policy

D
All are RBI's functions
Solution
- RBI is also known as the banker's bank (as it lends to banks) and lender of last resort. It keeps government money in various account heads and frames monetary and credit policies. It also regulates the banking sector.
- Providing credit to the general public is a job which is done by the commercial banks and not the RBI.
Question 10
1 / -0

Which one of the following is correctly matched?
Bank Headquarters
1 . Federal Bank : Kerala
2 . Dhanlaxmi Bank Limited : Maharashtra
3 . Industrial Bank Limited : Delhi
Select the correct answer using the codes given below.

A
1 and 2

B
Only 2

C
2 and 3

D
Only 1

Solution

Both the Federal Bank and Dhanlaxmi Bank are headquartered in Kerala, in Aluva (Kochi) and Thrissur respectively. IDBI is a government-owned bank and is headquartered in Mumbai, Maharashtra.

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Indian Economy Test 37

Result

Indian Economy Test 37

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SHARING IS CARING

Question 1

Only 1

Only 2

Both 1 and 2

Neither 1 nor 2

Solution

Question 2

The commercial banks will have less money to lend

The Reserve Bank of India will have less money to lend

The Union Government will have less money to lend

None of the above

Solution

Question 3

It is a sudden fall in the value of a currency against other currencies

It is a presistent recession in the economy

It is persistent fall in the general price level of goods and services

It is fall in the rate of inflation over a period of time

Solution

Question 4

Only 1

Only 2

Both 1 and 2

Neither 1 nor 2

Solution

Question 5

Term deposits with Term Lending Institutions and Refinancing Institiutions

Term Borrowing by Refinancing Institutions

Certificates of Deposit issued by Refinancing Institutions

All of the above

Question 6

A method to determine the income inequality

An effect of supply-demand mismatch

A method to determine the unemployment

None of the above

Solution

Question 7

The curve will become parabolic shape.

The curve will become hyperbolic shape.

The curve will be shifted towards origin.

The curve will remain unchanged.

Question 8

Development of more diverse banking systems in Indian money market

Diversification of scheduled commercial banking systems in India to tap the deposits potential of rural areas

Development of rural areas by providing credit to agriculture, trade, commerce and other productive activities in rural areas

Both 'a' and 'b'

Solution

Question 9

Provide credit facility to the general public

Keep government money in various account heads

Frame monetary and credit policy

All are RBI's functions

Solution

Question 10

1 and 2

Only 2

2 and 3

Only 1

Solution

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