Indian Economy Test 81

Result

Indian Economy Test 81

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Weekly Quiz Competition

Question 1
1 / -0

Which of the following is correct about the 'reserve tranche' member nations maintain with the International Monetary Fund?

A
This must be maintain in the form of either hard currencies or gold.

B
Nation states need not take permission from the IMF to use this fund and neither need to pay any interest.

C
It is fourth of the Special Drawing Rights quota of the member nation.

D
This is generally used by the member nations to pay their current payments.

Solution

Rest of the SDRs (three fourth) a member nation may be maintained with the IMF in local currency which can be withdrawn in any foreign currency if need be. But for this, the member nations needs to procure permission from the IMF and it involves payment of interest cost also.
Question 2
1 / -0

Which of the policy decision/decisions is/are likely come from the Government during the times of 'recession' in the economy? Select your answer using the code given below:
1. Cut in direct taxes, more government spending side by side cheaper credit policies
2. Increase in indirect taxes, higher subsidies sides lower fiscal deficits

A
Only 1

B
Only 2

C
1 and 2

D
Neither 1 nor 2

Solution

In such times, the Government tries to give lesser burden of taxes on the customers (it means it may also cut down the indirect tax rates). So that demand is created in the economy it also tries to make directly richer (by cutting direct taxes) and increasing its own expenditures (better if it is done in the developmental kind category).
Question 3
1 / -0

Which one of the following statements is/ are incorrect? Select your answer using the code given below:
1. The Committee on Financial Sector reforms suggested the RBI to pay interest on the Cash Reserve Ratio maintained by the commercial banks with the RBI-it has been followed by the RBI.
2. GoI has started paying market-bases interest on its borrowings from the commercial banks by mortgaging the G-Secs-as was suggested by the Committee on Financial Sector reforms.

A
Only 1

B
Only 2

C
1 and 2

D
Neither 1 nor 2

Solution

Such a recommendation was done by the Committee on Financial Sector reforms (the Narasimhan Committee-I) while the first recommendation has been accepted by the government, the second one still awaits action.
Question 4
1 / -0

What is correct one/ones about the RBI from the given choices? Select your answer using the code below:
1. National Housing Bank, Deposit Insurance and Credit Guarantee Corporation of India (DICGC) and the Bhartiys Reserve Bank Note Mudran Private Limited (BRBNMPL) are the only fully-owned subsidiaries of the RBI in India.
2. While RBI maintains a majority stake in the National Bank for Agriculture and Rural Development (NABARD), it has recently divested all its stake in State bank of India to the government of India.

A
Only 1

B
Only 2

C
1 and 2

D
Neither 1 nor 2
Question 5
1 / -0

If RBI announces cut in the term repo rates which the following could be the possible actions coming from the banks?

A
Banks will necessarily announce a cut in the lending rates.

B
Banks should announce a cut in the lending rates.

C
Banks are bound by the regulatory control of the RBI.

D
Monetary transmission is not so effective in India.
Question 6
1 / -0

What is not correct about the Liquidity Management Framework provisioned by the RBI for the banks operating in India?

A
Total repo operation by banks cannot be more than one per cent of their NDTLs.

B
Overnight repo is allowed upto 0.25 per cent of the banks 'NDTLs.

C
Banks have to use the term repos for rest of 0.75 per cent of the allowed repo.

D
There is no daily upper ceiling on the amount for banks' repo operation.

Solution

There is a ceiling of Rs. 90, 000 crore per day on the repo operation of the banks. Once this level has been reached and a bank needs working capital, they need to utilise the 'marginal standing facility rate' route.
Question 7
1 / -0

An upsurge has been in the NPAs of public sector banks, recently-select the correct factors responsible for it using the code given below:
1. Lower economic growth in the country.
2. Aggressive lending by banks in the past, especially during good times.
3. Lack of right loan-recovery legal provisions.
4. Banks switching over to a system based identification of NPAs.

A
1,2 and 3

B
2,3 and 4

C
1,2 and 4

D
1,3 and 4

Solution

Some other factors were also responsible for the increase in the NPAs, i.e., increased interest rates in the recent past; current macro-economic situation in the country.
Question 8
1 / -0

Functioning of which of the following is not overseen by the Board for Financial Supervision (BFS)?

A
Department of Banking Supervision (DBS)

B
Department of Non-Banking Supervision (DNBS)

C
Financial Institutions Division (FID)

D
Merchant Banking Division

Solution

Merchant Banks in India are regulated and supervised by the Securities and Exchange Board of India (SEBI).
Question 9
1 / -0

Which of the following are incorrect when the Government starts repuchasing its bonds before their maturity periods? Select the answer using the code given below:
1. Promotion of an 'expansionist' monetary policy.
2. An attempt to increase the saving rate of the economy.
3. A tool to check the rising inflation.
4. Promotion to credit creation by the banks.

A
1,2 and 3

B
1,3 and 4

C
2,3 and 4

D
1,2,3 and 4

Solution

The money which flows from the government into the system was called the 'cheap currency' by J.M. Keynes. By doing so governments promote economic activities which supports business and trade.
Question 10
1 / -0

Which of the following best described the term 'brain waste'?

A
A situation when the innovative ideas of entrepreneurs do not get utilised due to a weak financial system.

B
The migrants to foreign countries who take up unskilled jobs despite having professional qualifications.

C
Top brains of scientist community going for salaried jobs in place of entering research and development works.

D
A highly skilled person employed in a low-paid job.

Solution

This a concept belonging to economics. Such situations might arise due to forced labour cut during recession which was seen among the recession-hit western economies.

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Re-Attempt Weekly Quiz Competition

Indian Economy Test 81

Result

Indian Economy Test 81

Score

-

Rank

-

SHARING IS CARING

Question 1

This must be maintain in the form of either hard currencies or gold.

Nation states need not take permission from the IMF to use this fund and neither need to pay any interest.

It is fourth of the Special Drawing Rights quota of the member nation.

This is generally used by the member nations to pay their current payments.

Solution

Question 2

Only 1

Only 2

1 and 2

Neither 1 nor 2

Solution

Question 3

Only 1

Only 2

1 and 2

Neither 1 nor 2

Solution

Question 4

Only 1

Only 2

1 and 2

Neither 1 nor 2

Question 5

Banks will necessarily announce a cut in the lending rates.

Banks should announce a cut in the lending rates.

Banks are bound by the regulatory control of the RBI.

Monetary transmission is not so effective in India.

Question 6

Total repo operation by banks cannot be more than one per cent of their NDTLs.

Overnight repo is allowed upto 0.25 per cent of the banks 'NDTLs.

Banks have to use the term repos for rest of 0.75 per cent of the allowed repo.

There is no daily upper ceiling on the amount for banks' repo operation.

Solution

Question 7

1,2 and 3

2,3 and 4

1,2 and 4

1,3 and 4

Solution

Question 8

Department of Banking Supervision (DBS)

Department of Non-Banking Supervision (DNBS)

Financial Institutions Division (FID)

Merchant Banking Division

Solution

Question 9

1,2 and 3

1,3 and 4

2,3 and 4

1,2,3 and 4

Solution

Question 10

A situation when the innovative ideas of entrepreneurs do not get utilised due to a weak financial system.

The migrants to foreign countries who take up unskilled jobs despite having professional qualifications.

Top brains of scientist community going for salaried jobs in place of entering research and development works.

A highly skilled person employed in a low-paid job.

Solution

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