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Money & Banking — UPSC Prelims Economy previous year questions

195 solved previous year questions on Money & Banking, papers from 1995 to 2023, drawn from UPSC CSE Prelims, UPPCS, UPSC CDS. Each carries the printed answer key and the explanation from the source compilation.

1. #1UPSC CSE Prelims 2010
   Sustainable.development is described as the development that meets the needs of the present the ability of future to meet their own needs. perspective, inherently the concept a of sustainable development is intertwined with which of the following concepts?
   • ASocial justice and empowerment
   • BInclusive Growth
   • CGlobalization
   • DCarrying capacity
   Answer: (D) Carrying capacity
   Explanation

   Option d is the correct answer The concept of Sustainable Development is defined in the Bruntland Commission Report (1987) as "development that meets the needs of the present without ability of future generations to meet their own Capacity is defined as the maximum that an ecosystem can support in a sustainable degrading itself. Thus, carrying capacity denotes level of development and population size a complex of interacting factors - physical, and psychological. After going through the meaning of the two concepts, we find that the concept development is intertwined with the carrying capacity

2. #2UPSC CSE Prelims 1996
   The Eighth Five Year Plan is different from the earlier ones. The critical difference lies in the fact that
   • Ait has a considerably larger outlay compared to th e earlier plans
   • Bit has a major thrust on agricultural and rural development
   • Cconsiderable emphasis is placed on infrastructure growth
   • Dindustrial licensing has been abolished
   Answer: (C) considerable emphasis is placed on infrastructure growth
   Explanation

   Option c is the correct answer. Nationalization of State Bank of India - 1955; Introduction of First Five-Year Plan - 1951; Enactment of Banking Regulation Act - 1949; Nationalization of Insurance Companies - 1955

3. #3UPPCS 2016
   Consider the following events and arrange these in chronological order: 1. Garibi Hatao 2. Bank Nationalization 3. Beginning of Green RevolutionSelect the correct answer from the codes given below
   • A1, 2 and 3
   • B2 and 1
   • C2, 1 and 3
   • D3, 1 and 2
   Answer: (B) 2 and 1
   Explanation

   Option his the correct ordex of events Beginning of Green Revolution: The Green Revolution in India commenced the and continued into the early It the introduction ofhigh yielding crop nced agricultural techniques, and f lb Yise of fertilizers and irrigation. This ini! significantly boosted agric ul tural productivity, s India from a food -deficient nation to a self sufficient one Bank Nationalization: On July 19, 1969, the Government of India nationalized 14 major commercial banks, aiming to provide banking services to rural areas and promote economic development. Garibi Hatao In the early Prime Minister Indira Gandhi popularized the slogan "Garibi Hatao" (Eradicate Poverty) as a poli cy forns to uplift the socioeconomic conditions of the poor. Important Tips Key highlights of the Fifth Pive -Year Plan ( 1974- 1978): Focus on Employment and Poverty Alleviation: The plan emphasized genera

4. #4State PCS 2017
   'India Vision 2020, is prepared by
   • AS.P. Gupta Committee
   • BPan th Committee
   • CMalhotra Committee
   • DNarasimham Committee
   Answer: (A) S.P. Gupta Committee
   Explanation

   Option a is the correct Vision 2020 was prepared by the S.P. The committee was constituted by Commission in June 2000 to prepare a for India's development in the 21st century. submitted its report in 2002. Important Tips The Panth Committee, 1999 was constituted for drawing up a systematic, comprehensive, and holistic approach towards disasters. The Malhotra Committee, 1993 was constituted to make recommendations for reforms in the insurance sector. The Narasimham Committee, 1991 was constituted to review the banking sector reforms in India

5. #5Previous year
   Who among the following is not a part of the National Development Council? th [67. (Pre) 2022)
   • AThe Secretary of the NITI Aayog
   • BThe Secretary of the Planning and Programme Implementation Ministry
   • CThe Vice Chairman of the NITI Aayog
   • DThe Chairman of the Finance Commission of India (e) None of the above/More than one of the above s
   Answer: (D) The Chairman of the Finance Commission of India (e) None of the above/More than one of the above s
   Explanation

   Option dis the correct Liquidity Ratio (SLR) is a requirement the central bank (Reserve Bank of India in India) banks to maintain a certain percentage net demand and time liabilities (NDTL) in the liquid assets like cash, gold, or government holding government securities as part of their commercial banks indirectly provide credit government. SLR serves as a tool for the central bank the money supply in the economy and to ensure of the financial system

6. #6Previous year
   Mahalanobis Plan Model adopted in India in the mid-fifties aimed at: [56th to 59th. (Pre) 2015)
   • ABuilding a strong defense industry base
   • BSetting up heavy industries which were capital intensive
   • CCurbing inflation in the economy
   • DRemoving unemployment with in a short period
   Answer: (B) Setting up heavy industries which were capital intensive
   Explanation

   Option b is the correct Housing Bank (NHB) was set up on Ju 9, National Housing Bank Act 1987, as a fully of Reserve Bank of India. RBI contributed paid of capital for setting up of government took over the NHB from the RBI in purchasing the entire stake for Rs. 1,450 move is in response to the recommendation of committee report from October 2001. funds via debt instruments such as bonds, borrowings. Its bonds, which are guaranteed by of India, are eligible securities for to use in order to meet the statutory under the Banking Regulation Act. Important Tips National Housing Bank receives external assistance from international organisations such as USAID and i'. OECF Japan. It accepts deposits through commercial banks' Home Loan Accounts. National Housing Bank Refinances Housing Finance Companies, which are located throughout the country and account for the majority of the market, followe

7. #7Previous year
   In India, the term 'Hot money' is used to s refer to,1 (II)
   • AReserves with the RBI
   • BNet GDR
   • CNet Foreign Direct investment
   • DForeign Portfolio Investment
   Answer: (D) Foreign Portfolio Investment
   Explanation

   Option d is the correct money in India refers to Foreign Portfolio refers to short-term capital flows that quickly enter a country's financial markets for short-term investments are volatile and can be easily transferred, including investments in stocks, bonds, financial instruments. Important Tips Banks attract "hot money" through high-interest short-term certificates of deposit (CD}, but investors withdraw funds and transfer them to institutions with higher rates when rates decrease or better options become available. CDs are issued by banks in exchange for deposited funds for a specified time period

8. #8UPSC CSE Prelims 2015
   A decrease in tax to GDP ratio of a country indicates which of the following? 1. Slowing economic growth rate. 2. Less equitable distribution of national income.Select the correct answer using the codes given below
   • A1 only
   • B2 only
   • CBoth 1 and 2
   • DNeither 1 nor 2
   Answer: (B) 2 only
   Explanation

   Option b is the correct lender of last resort is an institution, usually a bank, th at offers loans to banks or other that are experiencing financial difficulty considered highly risky or near lender of last resort functions to protect have deposited funds and to prevent customers out of panic from banks with t emporary Commercial banks usually try not to borrow lender of last resort because such action indicates bank is experiencing a financial crisis. i Important Tips Other functions of RBI Monetary Authority: Formulates implements and monitors the monetary policy. Objective: maintaining price stability while keeping in mind the objective of growth. Regulator and supervisor of the financial system: Prescribes bro ad parameters of banking operations within which the country's banking and financial system functions. Objective: maintain public confidence in the system, protect depositors'

9. #9UPSC CSE Prelims 1998
   Survey of India is published every year by the
   • AReserve Bank of India
   • BPlanning Commission of India
   • CMinistry of Finance, Govt. of India
   • DMinistry of Industries, Govt. of India
   Answer: (D) Ministry of Industries, Govt. of India
   Explanation

   Option d is the correct answer Expansionary monetary policy usually leads to increase in money supply in the economy. RBI lowers interest rate, thus increasing aggregate demand. If domestic interest rates fall relative to elsewhere, it becomes less attractive to save money in domestic banks Therefore, it will lead to flight of foreign capital from India and therefore, weakening the Indian Rupee further. Other measures listed above are likely to strengthen the Indian rupee

10. #10UPPCS 2003
    Assertion (A): Deficit financing leads to inflation. Reason It increases money supply as compared to goods and services. In the context of the above which one of the following is correct?
    • ABoth (A) and (R) are true, and (R) is the j r correct explanation of (A)
    • BBoth (A) and (R) true, but (R) is not the correct explanation of (A)
    • C(A) is true, but (R) is false
    • D(A) is false, but (R) is true
    Answer: (A) Both (A) and (R) are true, and (R) is the j r correct explanation of (A)
    Explanation

    Option a is the correct (A) is correct: Deficit financing increases leading to higher demand for goods and supply doesn't match demand, inflation occurs due prices Reason (R) is correct: Deficit financing involves creating new money, which is then added to the supply, leading to an increase in the overall in the (A) and (R) are true, and (R) is the of (A): When the government engages in it increases the money supply in the a consequence of the increased money supply, more money to spe nd, leading to higher dem and and services. If the supply of goods and services increase proportionately with the increased demand, in an increase in prices, causing inflation

11. #11UPSC CSE Prelims 2022
    With reference to the 'Banks Board Bureau (BBB) which of the following statements are correct? 1. The Governor of the RBI is the Chairman of BBB. 2. BBB recommends for the selection of head for Public Sector Banks. 3. BBB helps the Public Sector Banks in developing strategies and capital raising plans.Select the correct answer using the code given below
    • A1 and 2 only
    • B2 and 3 only
    • C1 and 3 only
    • D1, 2 and 3
    Answer: (B) 2 and 3 only
    Explanation

    Option b is the correct 1 is incorrect. Capital infusion into public by the Government of India has seen a and has not increased 2 is correct. To put the public sector banks the merger of associate banks with the parent of India has been affected

12. #12UPSC CSE Prelims 2021
    With reference to India, consider the following statements:l. Retail investors through dernat account can invest in 'Treasury Bills' and 'Government of India Debt Bonds' in primary market. 2. The 'Negotiated Dealing System Order Matching' is a government securities trading platform of the Reserve Bank of India. 3. The 'Central Depository Services Ltd: is jointly promoted by the Reserve Bank of India and the Bombay Stock Exchange.Which of the statements given above is/are correct?
    • A1 only
    • B1 and 2
    • C3 only
    • D2 and 3
    Answer: (B) 1 and 2
    Explanation

    Option b is the correct 1 is con'ect. Retail investors have to invest in treasury bills CT-Bills) and It is mandatory to open demat account for a to invest in 'Treasury Bills' and 'Government Debt Bonds' in primary 2 is correct The Negotiated Dealing Matching is an electronic trading platform the Reserve Bank of India to facilitate the issuing of government securities and other types of 3 is incorrect. CDSL was promoted by BSE with leading banks such as State Bank of India, India, Bank of Baroda, HDFC Bank, Standard and Union Bank of India. Reserve Bank of India is promote _

13. #13UPSC CSE Prelims 2021
    Consider the following statements:l. The Governor of the Reserve Bank of India (RBI) is appointed by the Central Government. 2. Certain Provisions in the Constitution of India give the Central Government the right to Issue directions to the RBI in public interest. 3. The Governor of the RBI draws his power from the RBI Act.Which of the above statements are correct?
    • A1 and 2 only
    • B2 and 3 only
    • C1 and 3 only
    • D1, 2 and 3
    Answer: (C) 1 and 3 only
    Explanation

    Option c is the correct I is correct. Section (a) of the Reserve India Act, 1934, provides that there shall be one not more than four Deputy Governors to be the central government on the central board of 2 is incorrect. Section 7 of the RBI Act Central Government may from time to time give to the Bank as it may, after consultation with of the Bank, consider necessary in the Constitution of India does not provide any Central Government the right to issue directions to in Public inte 3 is correct. According to RBI Act, the have powers of general superintendence and the affairs and the business of the RBI. He/she all powers and do all acts and things which may or done by the RBI

14. #14UPSC CSE Prelims 2021
    With reference to 'Urban Cooperative Ban.ks' in India, consider the following 1. They are supervised and regulated by local boards set up by the state Governments. 2. They can issue equity shares and preference shares. 3. They were brought under the purview of the Banking Regulation act, 1949 through an amendment in 1966.Which of th statement given above is/ are correct?
    • A1 only
    • B2 and 3 only
    • C1 and 3 only
    • D1, 2 and 3
    Answer: (B) 2 and 3 only
    Explanation

    Option b is the correct 1 is incorrect. The Urban Banks Department Reserve Bank of India is vested with the regulating and supervising primary (urban) which are popularly known as Urban 2 is correct. A cooperative bank can, with of the RBI, issue equity shares, preference special shares to its members or to any other within its area of operation, by way of public private 3 is correct. Large cooperative banks with paid up share capital and reserves of Rs l lakh were brought purview of the Banking Regulation Act 1949 amendment in 1966

15. #15UPSC CSE Prelims 2020
    If you withdraw Rs. 1,00,000 in cash from your Demand Deposit Account at your bank, the immediate effect on aggregate money supply in the economy will be
    • Ato reduce it by Rs. 1, 00
    • Bto increase it by Rs. 1, 00
    • Cto increase it by more than Rs. 1, 00
    • Dto leave it unchanged
    Answer: (D) to leave it unchanged
    Explanation

    Option d is the correct supply refers to "total stock of money available for the economy". Demand Deposits are a basic component money supply, thus any withdrawal from such a leave the money supply in the economy unchanged

16. #16UPSC CSE Prelims 2020
    What is the importance of the term "Interest Coverage Ratio" of a firm in India? 1. It helps in understanding the present risk of a firm that a bank is going to give loan to. 2. It helps in evaluating the emerging risk of a firm that a bank is going to give loan to. 3. The higher a borrowing firm's level of Interest Coverage Ratio, the worse is its ability to service its debt.Select the correct answer using the code given below
    • A1 and 2 only
    • B2 only
    • C1 and 3 only
    • D1, 2 and 3
    Answer: (A) 1 and 2 only
    Explanation

    Option a is the correct interest coverage ratio is a debt ratio and used to determine how easily a company can on its outstanding 1 is correct. "Interest Coverage Ratio" helps the present risk of a firm that a bank is give loan 2 is correct "Interest Coverage Ratio" helps the emerging risk of a firm that a bank is give loan 3 is incorrect. A low-interest coverage ratio that a company is at risk of bankruptcy, thus a Coverage Ratio is desirable

17. #17UPSC CSE Prelims 2019
    The Chairmen of public sector banks are selected by the
    • ABanks Board Bureau
    • BReserve Bank of India
    • CUnion Ministry of Finance
    • DManagement of concerned bank
    Answer: (C) Union Ministry of Finance
    Explanation

    Option c is the correct l is correct: National Initiative for Harnessing Innovations (NIDHI) helps the startups / ignition funding and hence would be called 2 is correct: NIDHI, an umbrella program by the Department of Science Government of India, for nurturing ideas (knowledge-based and successful startups. Startup-NIDHI aims to student startups each year financially. financially support each of the selected startups 10.00 lakhs which will be given as ignition startups essentially have to be student startups be a student startup IEDC. would be through a national level competitfon

18. #18UPSC CSE Prelims 2018
    With reference to the governance of public sector banking in India, consider the following statements: 1. Capital infusion into public sector banks by the Government of India has steadily increased in the last decade. 2. To put the public sector banks in order, the merger of associate banks with the parent State Bank of India has been affected.Which of the statements given above is/are correct?
    • A1 only
    • B2 only
    • CBoth 1 and 2
    • DNeither 1 nor 2
    Answer: (B) 2 only
    Explanation

    Option b is the correct l is incorrect. Capital infusion into public by the Government of India has seen a and has not increased 2 is correct. To put the public sector banks the merger of associate banks with the parent of India has been affected. The merger of SBI under Section 35 of the State Bank of India Act, result in the creation of a stronger merged entity. minimize vulnerability to any geographic faced by subsidiary banks. It will create efficiency and economies of scale. It will in improved risk management and unified

19. #19UPSC CSE Prelims 2017
    Which of the following statements is/are correct regarding the 'Monetary Policy Committee (MPC)? 1. It decides the RBI's benchmark interest rates. 2. It is a 12-member body including the Governor of RBI and is reconstituted every year. 3. It functions under the chairmanship of the Union Finance Minister.Select the correct answer using the code given below
    • A1 only
    • B1 and 2 only
    • C3 only
    • D2 and 3 only
    Answer: (A) 1 only
    Explanation

    Option a is the correct I is correct. The Monetary Policy Committee is and institutionalized framework under the of India Act, 1934, for maintaining price stability, in mind the objective of 2 and 3 are incorrect. The Governor of ex-officio Chairman of the committee. The six members (including the Chairman) - of the RBI and three external members the Government of India

20. #20UPSC CSE Prelims 2016
    The establishment of 'Payment Banks' is being allowed in India to promote financial inclusion. Which of the following statements is/are correct in this context? 1. Mobile telephone companies and supermarket chains that are owned and controlled by residents are eligible to be promoters of Payment Banks. 2. Payment Banks can issue both credit cards and debit cards. 3. Payment Banks cannot undertake lending activities.Select the correct answer using the code given below
    • A1 and 2 only
    • B1 and 3 only
    • C2 only
    • D1, 2 and 3
    Answer: (B) 1 and 3 only
    Explanation

    Option b is the correct I is correct. Mobile telephone companies chains that are owned and controlled are eligible to be promoters of Payment 2 is incorrect. Payment Banks can issue but not issue Credit card. Payments banks can cards or debit cards and provide online or 3 is correct. Both current account and can be operated by such banks. It cannot activities

21. #21UPSC CSE Prelims 2016
    With reference to 'Bitcoins', sometimes seen in the news, which of the following statements is/are correct? 1. Bitcoins are tracked by the Central Banks of the countries. 2. Anyone with a Bitcoin address can send and receive Bitcoins from anyone else with a Bitcoin address. 3. Online payments can be sent without either side knowing the identity of the other.Select the correct answer using the code given below
    • A1 and 2 only
    • B2 and 3 only
    • C3 only
    • D1, 2 and 3 H
    Answer: (B) 2 and 3 only
    Explanation

    Option bis the correct I is incorrect. Bitcoin is a decentralized without a central bank. It was founded in 2008 Statement 2 is correct. They can be sent from one to another without verifying the real identity of or 3 is correct. Bitcoins are created as a reward for known as mining. They can be exchanged for products, and services. Online payments can without either side knowing the identity of the other

22. #22UPSC CSE Prelims 2015
    When the Reserve Bank of India reduces the Statutory Liquidity Ratio by 50 basis points, which of the following is likely to happen?
    • AIndia's GDP growth rate increases drastically
    • BForeign Institutional Investors may bring more capital into our country
    • CScheduled Commercial Banks may cut their lending rates
    • DIt may drastically reduce the liquidity to the banking system
    Answer: (C) Scheduled Commercial Banks may cut their lending rates
    Explanation

    Option c is the correct Liquidity Ratio or SLR is the minimum deposits that a commercial bank has to maintain form of liquid cash, gold or other securities. If SLR the lending capacity of banks increases as they park lesser money with RBI in form of securities, cash they have more money to lend and thus the banks m ay cut their lending rates

23. #23UPSC CSE Prelims 2014
    The terms 'Marginal Standing Facility Rate' and 'Net Demand and Time sometimes appearing in news, are used in relation to
    • Abanking operations
    • Bcommunications networking
    • Cmilitary strategies
    • Dsupply and demand of agricultural products
    Answer: (A) banking operations
    Explanation

    Option a is the correct standi ng facility (MSF) is a window for banks from the Reserve Bank of India in an when inter-bank liquidity dries up completely. Important Tips The MSF rate is pegged 100 basis points or a percentage point above the repo rate. Under MSF, banks can borrow funds up to one percentage of their net demand and time liabilities (NDTL)

24. #24UPSC CSE Prelims 2012
    The basic ahn of Lead Bank Scheme is that
    • Abig banks should try to open offices in each district
    • Bthere should be stiff competition among the various nationalized banks
    • Cindividual banks should adopt particular districts for intensive development
    • Dall the banks should make intensive efforts to mobilize deposits
    Answer: (C) individual banks should adopt particular districts for intensive development
    Explanation

    Option c is the correct Lead Bank Scheme is a scheme which aims at banking and credit in rural areas through ervice area approach', with one bank assigned for one was introduced in 1969 in view of this aim

25. #25UPSC CSE Prelims 2012
    The Reserve Bank of India (RBI) acts as a bankers' bank. This would imply which of the following? 1. Other bank retains their deposits with the RBI. 2. The RBI lends funds to the commercial banks in times of need. 3. The RBI advises the commercial banks on rnonetary matters.Select the correct answer using the codes given below
    • A2 and 3 only
    • B1 and 2 only
    • C1 and 3 only
    • D1, 2 and 3
    Answer: (D) 1, 2 and 3
    Explanation

    Option d is the correct Banker to Banks, the Reserve Bank focuses Enabling smooth, swift and seamless clearing and settlement of inter-bank Providing an efficient means of funds transfer for ) Enabling banks to maintain their accounts with the Reserve Bank for statutory reserve requirements and maintenance of transaction Acting as a lender of last resort

26. #26Previous year
    In India, the interest rate on savings accounts in all the Nationalized Commercial Banks is fixed by: [UPSC CSE Pre. 20 IO
    • AUnion Ministry of Finance
    • BUnion Finance Commission
    • CIndian Bank's Association
    • DNone of the above
    Answer: (D) None of the above
    Explanation

    Option d is the correct interest rate on savings accounts in all the banks in India is not fixed by any of the The interest rate may vary from bank to on the deposit amount, type of account and Different banks offer different interest rates accounts, usually ranging from p.a. to The interest rate is calculated based on the daily the account and credited quarterly or half-yearly

27. #27Previous year
    With reference to the Non-Banking Financial Companies (NBFCs) in India, consider the following statements 1. They cannot engage in the acquisition of securities issued by the government. 2. They cannot accept demand deposits like Savings Account.Which of the statements given above is / are correct? [UPSC CSE Pre. 2010}
    • A1 only
    • B2 only
    • CBoth 1 and 2
    • DNeither 1 nor 2
    Answer: (A) 1 only
    Explanation

    to the interest the government pays on its borrowings Option a is the correct answer. loans and bonds. Revenue expenditure includes 268 of Constitution of India designates duties expenses for routine functioning and administration, by the Union but collected and appropriated by creating assets or liabilities and fully consumed during like stamp duties and excise on medicinal and toilet current accounting period. AND unit consists of questions from Monetary policy in

28. #28UPSC CSE Prelims 2009
    In the context of independent India's economy, which one of the following was the earliest event to take place?
    • ANationalization of insurance companies
    • BNationalization of State Bank of India
    • CEnactment of Banking Regulation Act
    • DIntroduction of first Five Year Plan
    Answer: (C) Enactment of Banking Regulation Act
    Explanation

    Option c is the correct Banking Regulation Act was enacted in 1949; and the earliest event to take place among the given Banking Regulation Act gave the Reserve Bank of the power to regulate, supervise and control sector in India. Important Tips The nationalization of State Bank of India took place in 1955, when the Imperial Bank of India was renamed as State Bank of India and brought under the control of the RBI. The nationalization of insurance companies took place in 1956, when the Life Insurance Corporation of India was established by nationalizing 245 private life insurers. The introduction of first Five Year Plan took place in 1951, when the Planning Commission launched the first plan for economic development and social justice

29. #29UPSC CSE Prelims 2007
    The National Housing Bank was set up in India as a wholly owned subsidiary of which one of the following?
    • AState Bank of India
    • BReserve Bank of India
    • CICICI Bank
    • DGovernment of India
    Answer: (D) Government of India
    Explanation

    Option d is the correct or Pratyaksh Hanstantrit Labh Scheme is that transfers LPG subsidy via DBT directly into bank accounts. The scheme was launched by the Ministry of Petroleum and Natural Gas in November 2014 to provide subsidy on LPG cylinders directly to the consumers' bank accounts. The scheme aimed to curb leakages, prevent black marketing and ensure subsidy benefits to the intended beneficiaries. The scheme is also one of the components of JAM (Jan Dhan-Aadhaar-Mobile) trinity, which is a strategy to link Jan Dhan accounts, Aadhaar cards and mobile numbers of citizens to plug leakages of government subsidies and ensure that the benefits reach the poor. The scheme has been recognized by the Guinness Book of World Records as the world's largest cash transfer program in terms of the number of households

30. #30UPSC CSE Prelims 2007
    Consider the following statements: 1. The repo rate is the rate at which other banks borrow from the Reserve Bank of India. 2. A value of 1 for Gini Coefficient in a country implies that there is perfectly equal income for everyone in its population.Which of the given above isiare correct?
    • A1 only
    • B2 only
    • CBoth 1 and 2
    • DNeither 1 nor 2
    Answer: (A) 1 only
    Explanation

    Option a is the correct l is correct: The repo rate is the rate at banks can borrow money from the RBI government securities as collateral. It is tool used by the central bank to regulate credit in the 2 is incorrect: Gini Coefficient measures inequality' in an economy. It is a statistical the economic inequality across the popuiation in or between countries. Its value varies O to I. A value of zero indicates perfect equality has the same wealth income and I inequality that is where one person owns all in a country

31. #31Previous year
    Consider the following: 1. Market borrowing 2. Treasury bills 3. Special securities issued to RBIWhich of these is/are of internal debt? [UPSC CSE Pre. 2001)
    • A1 only
    • B1 and 2 only
    • C2 only
    • D1, 2 and 3
    Answer: (D) 1, 2 and 3
    Explanation

    Option d is the correct debt is the component of the total debt that to lenders within the country. It is the money borrows from its own citizens or The internal debt comprises loans raised in the open market, compensation and bonds, etc. It also includes borrowings through treasury bills including treasury bills issued to State Governments, commercial banks and other investors, as well as nonnegotiable, non-interest-bearing rupee securities issued to international financial institutions

32. #32Previous year
    Consider the following statements regarding Reserve Bank of India: 1. It is a banker to the Central Government. 2. It formulates and administers monetary policy. 3. It acts as an agent of the Government in 4. It handles the borrowing programme of Government of India.Which of these statements are correct? [UPSC CSE Pre. 2001)
    • A1 and 2
    • B2, 3 and 4
    • C1, 2, 3 and 4
    • D3 and 4
    Answer: (C) 1, 2, 3 and 4
    Explanation

    Option c is the correct Bank of India (RBI) is the central bank and body for the Indian banking system Some of functions of RBI are

33. #33UPSC CSE Prelims 1998
    The accounting year of the Reserve Bank of India is
    • AApril - March
    • BJuly - June
    • COctober - September
    • DJanuary - December
    Answer: (B) July - June
    Explanation

    Option b is the correct 1940-41 to 2020-21 RBI followed the counting July 1st to June accounting year 2020-21 stated from July 1st 2020 on March 31 2021. RBI realliagned its 2021-22 with Government of India starting from April l't 2021. This is based recommendation of the Bimal Jalan Committee Capital Framework of the RBI, which more transparent presentation of the RBI's annual a better estimation of projected surplus transfers to th for budgeting purposes

34. #34UPSC CSE Prelims 1995
    Which one of the following is not an instrument of selective credit control in India? deposits of commercial banks
    • ARegulation of consumer credit
    • BRationing of credit
    • CMargin requirements ( Variable cost reserve ratios IO 1. Bank Rate implies the rate of interest
    • Dat which the Reserve Bank of India discounts the Bills of Exchange
    Answer: (D) at which the Reserve Bank of India discounts the Bills of Exchange
    Explanation

    Option d is the correct credit control is a qualitative method of by the central bank that aims to regulate or direction of bank resources to of the economy in accordance with broad na ti cost ratios is not an instrument credit control because it is a quantitative credit control that involves changing the percentag; that banks have to keep as reserves with the Important Tips Some of the instruments of selective credit control are: Regulation of consumer credit: This involves setting the down payment and maximum maturities of instalment credit for durable goods such as automobiles, refrigerators, etc. This helps to curb the excessive demand for consumer goods and inflationary pressures. Rationing of credit: This involves fixing the maximum amount of credit that banks can lend for certait) purposes or to certain sectors. This helps to divert credit from less essential to more essential act

35. #35UPPCS 2017
    Open operations are in duded in
    • AQualitative techniques of credit control
    • BQuantitative techniques of credit control
    • CFiscal policy control
    • DLabour policy control
    Answer: (B) Quantitative techniques of credit control
    Explanation

    Option b is the correct market operations are a quantitative method control by the central bank that involves the sale of securities in the open market to influence supply and interest rates in the economy. The can buy securities to increase the money supply the interest rates, or sell securities to decrease supply and raise the interest rates. This affects and cost of credit in general, not for or sectors

36. #36UPPCS 2016
    With fixed demand and increase in supply,. the price of the commodity is likely to: 1. According to new RBI Governor) which among the following factors determines the exchange value of money?
    • Aremain constant
    • Bincrease
    • Cdecrease
    • Dno definite pattern can be predicted ]
    Answer: (C) decrease
    Explanation

    Option c is the correct is an inverse relationship between the supply of goods and services when demand is unchanged. is an increase in supply for goods and services remains the same, prices tend to fall to a price and a higher equilibrium quantity of services. Important Tips Law of Supply and Demand: The law of supply and demand is an economic theory that explains how supply and demand are related to each other and how that relationship affects the price of goods and services It's a fundamental economic principle that explains when supply exceeds demand for a good or service, prices fall. When demand exceeds supply, prices tend to rise

37. #37UPPCS 2012
    Who maintains the foreign exchange reserves in India?
    • AReserve Bank of India
    • BState Bank of India
    • CMinistry of Finance, Government of India
    • DExport-Import Bank of India
    Answer: (A) Reserve Bank of India
    Explanation

    Option a is the exchange reserves are the foreign assets held by the country's central bank. They are gold or a specific currency. They act as a buffer shocks, facilitate external trade and payments, orderly development and maintenance of the market in India The foreign exchange reserves are managed by the Reserve Bank of India for govenunent and the main component is assets The foreign exchange reserves also special drawing rights and reserve tranche the IMF

38. #38UPPCS 2011
    Which one of the following is not an objective of Monetary Policy?
    • APrice Stability
    • BEconomic Stability
    • CEquitable Distribution of Income and Assets
    • DForeign Exchange Rate Stability
    Answer: (A) Price Stability
    Explanation

    Option a is the correct working of the price mechanism in a free-market to the interplay of the forces of demand and a free-market economy, the price of a good or determined by the balance between consumer producer supply. When demand for a product is to its supply, the price tends to increase. supply exceeds demand, the price tends to decrease. interaction between buyers and sellers, driven preferences needs, and available resources, guides of resources and the determination of prices market

39. #39UPPCS 2009
    Non-performing assets in commercial banks mean
    • ABank deposits which are not invested
    • BCapital assets not in use
    • CLoans in which interest or principal amount is not recovered
    • DLow-interest rate loans
    Answer: (C) Loans in which interest or principal amount is not recovered
    Explanation

    Option c is the correct answer. in which interest or principal amount is are loans that have become overdue or the borrowers. Such loans are classified as nonperforming assets (NPAs) by commercial banks, as not generate any income for the banks and also pose of loss of the principal amount. According to the a loan is considered as NPA if the interest amount remains unpaid for more than 90 term loans, or more than 180 days for NPAs affect the profitability, liquidity and solvency as they have to make provisions for them also reduce their lending

40. #40UPPCS 2009
    Treasury bills are sold in India by
    • AReserve Bank of India
    • BState Governments
    • CCommercial Banks
    • DSEBI
    Answer: (A) Reserve Bank of India
    Explanation

    Option a is the correct bills are short-term money market by the Government of India as a promissory note repayment at a later date. They are issued by Bank of India on behalf of the Central meet its short-term funding requirements and to money supply in the economy. Treasury bills are securities and pay no interest. They are issued at and redeemed at the face value at maturity

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