Important Economy MCQ for wbcs upsc bank ssc and other examintions

1. A merchant bank is a financial institution conducting money market activities and:
a. Lending
b. Underwriting and financial advice
c. Investment service
d. All of the above

2. In India Merchant banking along with management of public issues and loan syndication covering activities like-
1. Project counseling
2. Portfolio management
3. Investment counseling
4. Mergers and amalgamation of the corporate firms
5. Securities and exchange
a. 1, 2, 4, 5
b. 1,2, 3, 5
c. 1, 2, 3, 4
d. 2, 3, 4, 5

3 The term ‘Merchant Bank’ is used in:
a. United States
b. United Kingdom
c. America
d. India

4. Banks implement the RBI’s _______ policies.
a. Monetary
b. Credit
c. Commercial
d. Both a and b

5 State level financial institutions are:
1. IFCI
2. SFCs
3. SIDCs
4. IRBI
5. SIICs
a. 1, 2, 4
b. 2, 3, 5
c. 1, 3, 5
d. 1, 4, 5

6 _____ is basically a savings and investment corporation.
a. UTI
b. IDBI
c. SBI
d. RBI

7 Identify the money market instruments:
1. Call Money Market
2. Treasury Bills
3. Commercial bills
4. Commercial paper
5. Certificate of deposit
6. Foreign investment policy
d. All of the above

8 Secondary markets in treasury bills require involvement of ________ and _______.
a. Brokers, Dealers
b. Buyers, Sellers
c. Consumer, Producer
d. All of the above

9. Companies raise funds for the purposes of:
1. Financing new projects
2. Expansion of existing units
3. Modernization & diversification of existing units
4. Organizing long term resources for working capital purposes
a. 1, 2, 3
b. 2, 3, 4
c. 1, 2, 3, 4
d. 1, 3, 4

10. Categories of securities issue:
a. Public issue
b. Rights issue
c. Private placement
d. All of the above

11. Why the national income is measured at factor prices and not at market prices before 2015?
A It gives us actual money value
B It gives us actual production increase or decrease
C both
D none

12 Expansionary monetary policy
(a) tends to lead to an appreciation of a nation's currency.
(b) usually has no effect on a currency's exchange value.
(c) tends to lead to a depreciation of the currencies of other nations.
(d) tends to lead to a depreciation of a nation's currency.

13 Banks can create money
(a) only by illegally printing additional dollar bills.
(b) by paying interest to
their depositors.
(c) by making loans that
result in additional
deposits.
(d) by offering financial
services, such as stick
market brokerage.

14 A bank has excess reserves to lend but is unable to find anyone to borrow the money.
This will __________ the size of the money multiplier.
(a) reduce
(b) increase
(c) have no effect on
(d) double

15 Which of the following represents an action by the RBI that is designed to decrease the money supply?
(a) an increase in federal
tax rates
(b) selling government
securities in the open
market
(c) a decrease in the Bank
rate
(d) a transfer of
government funds from
the RBI to private banks

16 If the interest rate falls, then
(a) bond prices will remain
the same
(b) bond prices will rise
(c) bond prices will fall
D first rise then fall

17 If the quantity of money demanded is less than the quantity of money supplied, then the interest rate will
(a) either increase or decrease, depending on the amount of excess demand.
(b) increase.
(c) decrease.
(d) not change.

18 If the RBI reduces the money supply to reduce inflation, a flexible exchange rate will aid the RBI in fighting inflation because
(a) as the money supply is decreased, the interest rate will increase, and the exchange rate will rise, causing Indian exports to fall and Indian imports to rise.
(b) as the money supply is decreased, the interest rate will increase, and the exchange rate will rise, causing Indian exports to rise and Indian imports to fall.
(c) as the money supply is decreased, the interest rate will increase, and the exchange rate will fall, causing Indian exports to fall and Indian imports to rise.
(d) as the money supply is decreased, the interest rate will increase, and the exchange rate will fall, causing Indian exports to rise and Indian imports to fall.

19 When economists refer to "tight" monetary policy, they mean that the RBI is taking actions that will
(a) Increase the demand for money.
(b) Decrease the demand for money
(c) Expand the supply of money
(d) Contract the supply of money

20 Which of the following actions is an example of expansionary fiscal policy?
(a) a decrease in welfare payments
(b) a purchase of government securities in the open market
(c) a decrease in the Bank rate
(d) a decrease in the corporate profits tax rates

21 If the economy is operating at potential GDP, an increase in the money supply will lead to
(a) stagflation.
(b) structural inflation.
(c) demand-side inflation.
(d) supply-side inflation.

22 The sale of government securities by the RBI is predicted to
a. decrease reserves of the chartered banks, and eventually lead to an expansion of the money supply.
b. decrease reserves of the chartered banks, and eventually cause a contraction of the money supply.
c. increase reserves of the chartered banks, and eventually cause a contraction of the money supply.
d. increase reserves of the chartered banks, and eventually cause an expansion of the money supply. e. none of the above.

23 To lower interest rates, the RBI could
a. buy securities.
b. decrease the chartered banks' reserves.
c. decrease the money supply.
d. raise the treasury bill rate.
e. raise the reserve requirement

24 Which price index measures the average price of things purchased by the typical family?
a. GDP deflator
b. producer price index
c. consumer price index
d. minimum wage

25 If the consumer price index has a value of 115 today and the base year is 2000, then consumer prices have
a. increased by 15 percent since 2000.
b. increased by 1.5 per cent since 2000.
c. more than doubled since 2000.
d. declined 15 per cent since 2000.

26 The real interest rate on a loan
a. is the amount that the consumer agrees to pay.
b. is always the same as the nominal rate.
c. is the percentage increase in the lender's purchasing power that results from making the loan.
d. decreases as the inflation rate increases.

27 When the inflation rate ends up being lower than expected,
a. everyone benefits because money is cheaper.
b. everyone benefits because prices do not increase.
c. lenders of fixed rate mortgages generally benefit because they will make higher profits than they had calculated.
d. borrowers with fixed rate loans will benefit because their purchasing power will not decline as much.

28 In general, a higher than anticipated inflationrate
a. helps everyone.
b. hurts everyone.
c. helps creditors and harms debtors.
d. helps debtors and harms creditors

29 The Kisan Credit Card Scheme is being implemented by all
[A] Public Sector Commercial Banks
[B] Regional Rural Banks
[C] State Cooperative Banks/DCCBs/PACS and Scheduled Primary Cooperative Banks
[D] All of the above
[E] None of the above

30 What is the minimum period of maturity prescribed for Commercial Paper (CP)?
[A] 17Months
[B] 14 Days
[C] 01 Year
[D] 07 days
[E] 05 years
nandosir

I am a civil services teacher. I teach online / offline for UPSC CSE / WBCS

6 Comments

Post a Comment
Previous Post Next Post