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Money & Banking — UPSC Prelims Economy previous year questions — page 5

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. #161Practice set
   With reference to 'National Investment Fund (NI consider the following statements: 1. The fund is created by the Department of Investment and Public asset management (DIPAM). 2. The capital in the fund is to be mobilised through bonds issued by the Reserve Bank of India. 3. NIF is permanent in nature and is maintained outside the Consolidated fund of India. 4. The funds from NIF can be used for recapitalization of public sector banks in IndiaHow many of the statements given above are correct?
   • AOnly one
   • BOnly two
   • COnly three
   • DAll four
   Answer: (C) Only three
   Explanation

   Option c is the correct Government of India constituted the Fund (NIF) on 3rd November, 2005, into proceeds from disinvestment of Central Public were to be l is correct: National Investment Fund by Department of Investment and public (DIPAM), Ministry of Finance. In 2016, of Disinvestment was renamed as and Public Asset Management (DIPAM) of Finance. It deals with all matters relating to of Central Government equity through offer for sale placement or any other mode in the erstwhile Sector 2 is incorrect: National Investment Fund mobilized through Public Investment bond, but it from the proceeds from Disinvestment Central Government equity through offer for sale 3 is correct: The corpus of the National will be of a permanent nature. And the will be credited to the existing 'Public of the Consolidation fund of India) under the National Investment 4 is correct: The funds from National (NIF

2. #162Practice set
   With reference to the Swiss Challenge method of bidding, consider the following statements: 1. It offers the features of both open auction and dosed tender to discover the best price for an asset. 2. It can help banks to maximize the value realized from auction of stressed assets. 3. It can lead to more innovative project proposals and quicker execution for public projects. 4. It is the best method to avoid the allegations of favouritism and corruption in the award of public projects.How many of the statements given above are correct?
   • AOnly one
   • BOnly two
   • COnly three
   • DAll four
   Answer: (C) Only three
   Explanation

   Option c is the correct the Swiss Challenge method of candidate makes a proposal for a project, which puts before the public to seek more these are received, the original candidate is allowed the best 1 is correct: The Swiss Challenge allows a mix-and-match the features of both an open auction closed tender to discover the best price for an 2 is correct: If Swiss Challenge is applied cases, banks may get to maximize more auction of stressed 3 is correct: If applied to public projects, it to more innovative project proposals and as a bidder with a good idea needn't wait for to set the ball 4 is incorrect: But on the flip side, by bidder to initiate an idea and giving him the first refusal, the Swiss Challenge can promote the award of public projects, opening the doors To guard against this, legal experts suggest list of public projects that allow Swiss Challenge public disclosure of bid d

3. #163Practice set
   With reference to the methods of regulating exchange rates of world currencies, consider the following statements: 1. In a fixed exchange rate system, central banks intervene in the foreign currency market to moderate exchange rate movements. 2. In a floating exchange rate system, the exchange rate is determined by the forces of market demand and supply. 3. In a managed float system, the exchange rate is set by government decisions and maintained by government actions.How many of the above are correct?
   • AOnly one
   • BOnly two
   • CAll three
   • DNone
   Answer: (A) Only one
   Explanation

   Option a is the correct need to devise a system to conduct their transactions because every country has its The exchange rates between a pair of be determined according to three broad systems - rate, floating exchange rate, managed l is incorrect: In a fixed exchange rate exchange rate is pegged at a particular level, backed gold standard or a convertible currency such as the All external transactions take place according to levels. In such a system BOP deficit/surplus cannot through changes to the exchange must happen in either one of the two automatically through the workings of the or through government intervention ( 2 is correct: In a flexible rate system, the are free to change as per the forces of market supply. These changes take place continuously, could be a great degree of volatility in the 3 is incorrect: Managed float is a mixture of and flexible exchange rate systems. In th

4. #164Practice set
   As per the existing classification of Balance of Payments accounts, Consider the following transactions:l. Sale of Trademarks 2. Sale of Mineral rights 3. Goods acquired under a financial lease 4. Sale of Non customized packaged softwareHow many of the above given transactions are categorized under capital account of
   • AOnly one
   • BOnly two
   • COnly three
   • DAll four
   Answer: (B) Only two
   Explanation

   Option bis the correct per Reserve Bank of India (RBI), the capital capital transfers receivable and payable and non-residents. These include disposal of non-produced non-financial assets. Non produced non-financial assets include natural and licenses, and marketing 1 is correct: A trademark is a sign capable goods and services of one entity from It can be traded independently (i.e. without selling business). Other marketing assets include items existing brand names, mastheads, franchises, logos names and goodwill. When these items are separately (i.e. as a standalone item) from the entity them, they are recorded under capital account of 2 is correct: Acquisition and disposal of are considered under the capital The natural resources include forestry rights, water, wishing rights, air space spectrum. Transactions in all these classified under capital account of the 3 is incorrect: In a fi

5. #165Practice set
   Human Capital Index is published by
   • AWorld Economic Forum
   • BWorld Bank
   • CInternational Monetary Fund
   • DInternational Labour Organization
   Answer: (C) International Monetary Fund
   Explanation

   Option c is the correct Managers' Index or PMI is an which is derived after monthly surveys of l is correct. The PMI helps in the market conditions, as seen by is expanding, contracting or staying the is used to provide information regarding the current future business conditions. The PMI is derived by questions to a large number of companies concerned sector. The surveys are conducted on 2 is correct. The index shows trends in manufacturing and services sector. The Index (PMI) is an index of the prevailing economic trends in the manufacturing and service 3 is correct. The headline PMI is a number from 100. A PMI above 50 represents an expansion in when compared with the previous month. 50 denotes contraction

6. #166Practice set
   Which of the following organizations were established as a result of the Bretton Woods Conference? 1. International Bank for Reconstruction and Development 2. World Trade Organization 3. International Monetary FundSelect the correct answer using the code given below
   • A1 and 2 only
   • B1 and 3 only
   • C2 and 3 only
   • D1, 2 and 3
   Answer: (B) 1 and 3 only
   Explanation

   Option h is the correct 1 fa coned: The International Bank Development (IBRD) is financ' 1 i 11 established in 1944 Brdton Woods Cm,fcrence and is the lending arm Rank 2 is The WTO officially commenced January 1995 under the Marrakesh Agreement, 123 nations on 15 April 1994, replacing the on Tariffs and Trade (GATT), which 3 is correct: IMF formed in July 1944, at Woods Conference primarily by the ideas of White and John Maynard Keynes, it came into in 1945 with 29 member countries and the goal the international monetary system

7. #167Practice set
   With reference to the BRICS initiatives, consider the following statements: 1. The Contingent Reserve Arrangement provides long-term liquidity to members to manage BOP crisis situation. 2. The New Development Bank was established under Fortaleza declaration to mobilize resources.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 bis the incorrect.. The C.onl.ingenl was signed by the BRICS nations in 2014 of Fortaleza Declaration at 6 th BRICS summit. The to strengthen financial stability by providing short term liquidity support to the members through to help in mitigating BOP crisis 2 is correct. The BRICS leaders signed establishing the New Development Bank the 6 th BRICS Summit in Fortaleza in 2014

8. #168Practice set
   Consider the following statements about the New Development Bank: 1. It enjoys observer status in the United Nations General Assembly. 2. It supports both public and private sector projects. 3. All members enjoy equal rights in its consultative mechanisms.How many of the statements given above are correct?
   • AOnly one
   • BOnly two
   • CAll three
   • DNone
   Answer: (C) All three
   Explanation

   Option c is the correct 1 is correct. In 2018, the New Development received observer status in the United Assembly, establishing a firm basis for active cooperation with the 2 correct. The Bank public or through loans, guarantees, equity participation financial instruments. The main objective is to and sustainable development BRICS and other emerging economies and 3 is correct. The bank functions on a among the BRICS members with all the possessing equal rights

9. #169Practice set
   Regarding the Asian Infrastructure Investment Bank, which of the following statements is/are correct? 1. Japan is the largest shareholder of AIIB. 2. Its membership is open to all the members of World Bank. 3. The President of AIIB is elected for a term of five yearsSelect the correct answer using the code given below
   • A1 only
   • B1 and 3 only
   • C2 and 3 only
   • D1, 2 and 3
   Answer: (C) 2 and 3 only
   Explanation

   Option c is the correct Infrastructure Investment Bank (AIIB) in 2016 with 57 founding members. By of 2020, it had 103 approved members of the global population and GDP. l is incorrect. Its,initial total capital is divided into l million shares of 100 China (and not Japan) is the largest voting shares and India is the (7.62 Statement 2 is correct. Membership in the AIIB is regional and non-regional members. It is open to of Lhe Worhl Bank or the Asian and also allow non-sovereign entities to apply for 3 is correct. It has a Board of Directors to strategic approach to direct and oversee the work of management. AIIB staff is headed by who is elected by AIIB shareholders for a five year term and eligible for re-election once

10. #170Practice set
    With reference to the Asian Development Bank (ADB) and Asian Infrastructure and Investment Bank (AIIB), consider the following statements:l. The ADB funds only the Asian countries while the AIIB funds countries located in the Asia and Pacific region. 2. ADB is headquartered in Manila while AIIB is headquartered in Beijing. 3. India is a founding member of both ADB and AIIB. fll' 11How many of the statements given above are correct?
    • AOnly one
    • BOnly two
    • CAll three
    • DNone
    Answer: (B) Only two
    Explanation

    Option b is the correct l is incorrect: The Asian Development envisions a prosperous, inclusive, resilient, Asia and the Pacific, while sustaining its eradicate extreme poverty in the region. It funds located in the Asia-Pacific region (Eg. 2 is correct: ADB is headquartered in ADB has 67 members, of which 48 are Asia and the Pacific and 19 currently has 93 members' countries and Beijing acts 3 is correct: India is a founding member of and AIIB. India joined ADB in 1966. India along has permanent seats on the AIIB board of directors. Important Tips Japan and US hold the largest proportion of shares in ADB followed by China, India and Australia. ADB is also an official United Nations Observer

11. #171Practice set
    With reference to the World Bank International Monetary Fund (IMF), consider the following statements: 1. IMF aims at economic development and poverty reduction, whereas aim of the World Bank is to ensure the stability of the international monetary system. 2. To become a member of the World Bank Group, a country must first join the IMF. 3. Both World bank and IMF grants loans to Private sector.How many of the above given statements are correct?
    • AOnly one
    • BOnly two
    • CAll three
    • DNone
    Answer: (A) Only one
    Explanation

    Option a is the correct l is incorrect. The International (IMF) primarily aims to ensure the stability of monetary system. It aims to facilitate and balanced growth of international the contrary, the World Bank Group primarily reducing poverty, increasing shared prosperity, sustainable 2 is correct. To become a member of the under the International Bank for Reconstruction (IBRD) Articles of Agreement, a country join the International Monetary Fund (IMF) and 3 is incorrect. IMF only lends to the the private sector or civil society. On the contrary, Finance Corporation (IFC) of the World to the private sector while Multilateral Agency (MIGA) encourages private companies in foreign countries. Important Tips Resources for IMF loans to its members on non-concessional terms are provided by member countries, primarily through their payment of quotas. On the other hand, the World Bank's financia

12. #172Practice set
    Consider the following statements about the Bretton Woods Agreement? I. The Agreement had a proposal of issuance of a new international reserve currency called the bancor. 2. Under it, every country had to peg their currency to the U.S. dollar which was in turn pegged to the price of gold. 3. It created three new organizations - International Monetary Fund, General Agreement on Tariffs and Trade and World Bank.How many of the above given statements are correct?
    • AOnly one
    • BOnly two
    • CAll three
    • DNone
    Answer: (A) Only one
    Explanation

    Option a is the correct Bretton Woods Agreement was negotiated in July 1944 from 44 countries at the United Nations Financial Conference held in Bretton Woods, Thus, the name "Bretton Woods l is incorrect: The primary designers of the System were the famous British economist Keynes and American Economist Harry Keynes' hope was to establish a powerful bank to be called the Clearing Union and issue a reserve currency called the bancor (it did White's plan envisioned a more modest and a greater role for the U.S. dollar, rather than of a new currency. In the end, the adopted plan from both, leaning more toward White's 2 is correct: Under the Bretton Woods System, the basis for the U.S. dollar and other currencies to the U.S. dollar's 3 is incorrect: The Bretton Woods Agreement two important organizations-the Fund (IMF) and the World Bank. The on Tariffs and Trade (GATT), established in with

13. #173Practice set
    With reference to the multilateral bodies, consider the following pairs:Institution Function 1. International Providing loans to Bank for the middle income Reconstruction and creditworthy and Development low-income countries. 2. International Providing grants Development even without Association repayment liability to the countries to improve living conditions. 3. International Advises Finance governments to Corporation encourage private investment and improving the investment climate in the Country.How many of the pairs given above are matched correctly?
    • AOnly one
    • BOnly two
    • CAll three
    • DNone
    Answer: (C) All three
    Explanation

    Option c is the correct l is correct: The International Bank for Development (IBRD) is a global owned by 189 member countries. It supports Bank Group's mission by providing loans, management products, and advisory services to middle income and creditworthy low-income countries, as well coordinating responses to regional and global 2 is correct: The International Development is the part of the World Bank that helps the countries. IDA lends money on concessional means tha,t IDA credits have a zero or very low and repayments are stretched over 30 to 40 than half of IDA countries receive all, or half, of resources on grant terms, which carry no repayments These grants are targeted to the low-income countries risk of debt 3 is correct: International Finance Corporation is global development institution focused on the in developing countries. It helps countries private sectors in a variety of

14. #174Practice set
    Consider the following statements about International Bank of Reconstruction and Development (IBRD): 1. It was an outcome of the 1944 United Nations Monetary and Financial Conference. 2. It provides loans to middle-income developing countries and creditworthy lower-income countries. 3. The IBRD finances investments but does not provide technical assistance and expertise for a project.How many of the above given statements are correct?
    • AOnly one
    • BOnly two
    • CAll three
    • DNone H5
    Answer: (B) Only two
    Explanation

    Option bis the correct International Bank for Reconstruction and is an international financial institution established and headquartered in Washington, D.C., United is the lending arm of World Bank l is correct. The Brctton Woods officially known as the United Nations Monetary Conference. The two major accomplishments of were the creation of the International (IMF) and the International Bank for Development 2 is correct. The IBRD was founded in 1944 goal of helping war-torn European countries infrastructure and their economies. Today, the loans at market rates of interest to countries and creditworthy 3 is incorrect. The IBRD provides as well as strategic coordination and to its borrowing member countries along with know-how

15. #175Practice set
    With reference to the Bank for International Settlements (BIS), consider the following statements: 1. It aims to promote global monetary and financial stability through the coordination of global central banks. 2. The BIS is an autonomous institution that functions under the International Monetary Fund.Which of the statements given above is/are correct?
    • A1 only
    • B2 only
    • CBoth 1 and 2
    • DNeither 1 nor 2
    Answer: (A) 1 only
    Explanation

    Option a is the correct for International Settlements was established in is owned by 63 central banks, representing around the world that together account for about world l is correct: The Bank for (BIS) is an international financial aims to promote global monetary and financial the coordination of global central banks and policy 2 is incorrect: The Bank for (BIS) is an international financial by central banks that fosters international financial cooperation and serves as a bank for

16. #176Practice set
    In the context of International Monetary Fund (IMF), which of the following statements is correct regarding the Reserve Tranche Position of a country? It is a portion of a member country's quota which
    • Acan be withdrawn without service fees or economic reform conditions
    • Bcannot be withdrawn under any circumstances
    • Ccan be withdrawn only on paying a penal rate of interest
    • Dcan be withdrawn as a last resort on the conditionality of full-fledged economic reforms. book
    Answer: (A) can be withdrawn without service fees or economic reform conditions
    Explanation

    Option a is the correct reserve tranche is a portion of the required quota each member country must provide to the IMF. be utilized by a country for its own purpose service fee or economic reform conditions. It member's unconditional drawing rights on IMF. nations' reserve tranches are of their this position can change according to any lending IMF does with its holdings of the member's are considered as facilities of first resort, which member countries first utilize reserve tranches a formal credit tranche that charges Important Tips Credit Tranche: Theoretically, members can borrow of their quota. However, if amount sought as credit exceeds reserve tranche, then it becomes credit tranche. Credit tranche must be repaid within three years with interest. Quota: Quotas determine the maximum amount of financial resources a member is obliged' to provide to IMF. It determines power in IMF, to

17. #177Practice set
    Which of the following options best describe the meaning of the term "Herbigation"? It is an/a
    • Aeffective method of applying herbicides through irrigation systems
    • Bmethod for production of natural drugs obtained from organisms such as plants, microbes, and animals
    • Cprocess of application of volatile chemicals to confined spaces or soil to produce gas that will destroy weed seeds
    • Dprocess aimed at destroying the aggregates of soil by agricultural operations on it when it is too wet. ok
    Answer: (A) effective method of applying herbicides through irrigation systems
    Explanation

    Option a is the correct is an effective method of applying irrigation systems. Weed control has been better with herbigation than applications with aerial sprayers. More herbicide registrations and equipment has given the growers greater herbigation programs. Important Tips Pharmacognosy deals with the natural drugs obtained from organisms such as most plants, microbes, and animals, Application of volatile chemicals in confined spaces or to soil to produce gas that will destroy weed seeds is called fumigation. Herbicides used for fumigation are called fumigants. Puddling is destroying the aggregates of soil by agricultural operations on it when it is too wet. Puddling can be defined as the process of breaking down soil aggregates into uniform mud, accomplished by applying mechanical force to the soil at high moisture content

18. #178Practice set
    With reference to International Fund for Agricultural Development (IFAD), consider the following statements: 1. IFAD is a specialized agency of United Nations. 2. India is founding member of IFAD. 3. It is dedicated at eradicating poverty in rural areas of developing countries only. 4. It publishes Rural development report.Which of the statements given above is/are correct?
    • A2 Only
    • B2, 3 and 4 Only
    • C1, 2 and 4 Only
    • D1, 2, 3 and 4
    Answer: (D) 1, 2, 3 and 4
    Explanation

    Option dis the correct answer. IE' Dis an international financial institution and specialized United Nations agency based in Rome, of which India is a founding member. It is dedicated to eradicating poverty and hunger in rural areas of developing countries. It also publishes the Rural Development Report

19. #179Practice set
    With reference to Negotiable Warehouse Receipts, consider the following statements: 1. They can be traded or transferred from person to person. 2. They cannot be used as collateral to seek loans from banks.Which of the statements given above is/are correct? LTURE
    • A1 only
    • B2 only
    • CBoth 1 and 2
    • DNeither 1 nor 2
    Answer: (A) 1 only
    Explanation

    Option a is the correct Warehouse Receipts are documents issued to depositors against the commodities the l is correct: Negotiable warehouse be traded, sold, swapped and used as collateral to support borrowing. Negotiable Warehouse Receipts can from person to person. It can be any number of persons. Negotiable warehouse transfer of ownership of that commodity stored in without having to deliver the physical 2 is incorrect: Negotiable Warehouse be used as collateral to seek loans from banks. by registered warehouses help farmers to seek banks against NWRs. The warehouse issues to customers (farmers and people who have produce in the godowns) in place of the normal these receipts are recognized by the government, easily grant loans against them

20. #180Practice set
    Consider the following statements about the e-National warehouse receipts (e-NWR), that is often seen in the news:1. e-NWRs do not have time validity. 2. e-NWRs can be traded through off market or on-market in Commodity Exchange platforms. 3. An e-NWR can be transferred to another party either fully or in part. 4. An e- NWR can be auctioned under certain conditions like spoilage of the commodity in the warehouse.How many of the statements given above are correct?
    • AOnly one
    • BOnly two
    • COnly three
    • DAll four
    Answer: (C) Only three
    Explanation

    Option c is the correct features of e-NWR is available only in electronic e-NWR has a time validity that is co-terminus with of the commodity or withdrawal of the from the warehouse, after which it expires; 1 is single source of information for the e-NWR is system where e-NWR is issued by Confidentiality, integrity and availability of information is provided by the Repository e-NWRs can be traded through off-market or Commodity Exchanges platforms. Hence Statement 2 can be transferred fully or in part. Hence is correct An e-NWR can be auctioned under certain conditions loan not repaid, on expiry and delivery not taken, and damage or spoilage of the commodity in the Statement 4 is correct Important Tips The negotiable warehouse receipt (NWR) system was launched in 2011 allowing the transfer of ownership of a commodity stored in a warehouse without having to deliver it physically. These re

21. #181Full-length test
    With reference to the likely impact/s of the Reserve Bank of India decision to hike the repo rate, consider the following statements: 1. It may reduce the multiplier effect of money on the economy. 2. It essentially brings down demand pull as well as cost push inflation in the economy. 3. It would incentivise banks to sell their government securities to the Reserve Bank of India (RBI). 5.How many of the above given statements are
    • AOnly one
    • BOnly two
    • CAll three
    • DNone
    Answer: (A) Only one
    Explanation

    Option a is the correct answer. The RBI by increasing interest rates influences the various economic activities in the country. Statement 1 is correct: Multiplier effect of money means the impact of money on the total economic activity of the country. The rising interest rate will increase the cost of borrowing which in turn will reduce the quantum of loans disbursed by commercial banks. This will discourage investment and it leads to a reduced multiplier effect of money on the economy. Statement 2 is incorrect: The rising interest rate will help in reducing the money supply in the economy as high interest rates encourage savings and discourage borrowing/ investment in the economy. Although it will be effective in controlling demand pull inflation which is caused by high demand (too much money chasing few goods), it will not be effective in controlling cost push inflation which is caused

22. #182Full-length test
    It is a statutory body under the Ministry for Finance. 2. It supervises Cooperative Banks, commercial banks and Regional Rural Banks (RRBs) situated in rural areas. 3. It prepares district level credit plans and guides the banking industry in achieving these targets.How many of the above given statements are correct?
    • AOnly one
    • BOnly two
    • CAll three
    • DNone
    Answer: (A) Only one
    Explanation

    Option a is the correct 1 is incorrect: Banks in India cart be under one of two categories: commercial cooperative banks. Commercial banks include banks (RRBs); and scheduled commercial are: government-owned or public sector banks banks; branches or subsidiaries of foreign finance banks Statement 2 is incorrect: Bank customers are the definition of 'consumer' and can take the Consumer Protection Act, 3 is correct: As per the RBI guidelines, No open subsidiaries/joint ventures/representative or shall make investment in any foreign obtaining prior approval in writing from Bank of India

23. #183Full-length test
    With reference to Consumer Confidence Survey of India, consider the following statements: 1. The survey is released annually by the National Sample Survey Organisation (NSSO). 2. Higher consumer confidence would most likely result in a higher savings rate in the country.Which of the staterient/s given above is/are correct?
    • A1 only
    • B2 only
    • CBoth 1 and 2
    • DNeither 1 nor 2
    Answer: (D) Neither 1 nor 2
    Explanation

    Option d is the correct Consumer Confidence indicates how optimistic consumers are regarding their expected 1 is incorrect: Consumer confidence released by the Reserve Bank of India (RBI), It is a survey of RBI which obtains current one year ahead expectations of consumers on situation, employment scenario, overall artd their own income and spending across 2 is incorrect: If the consumer confidence then it leads to higher spending the consumers, which means reduced savings rate. if consumers are not so confident, then it to a poor consumption pattern which in turn might recession

24. #184Full-length test
    In the context of Indian banking system, consider the following statements in respect of loan write offs: 1. It frees the borrower from his/her liability to pay back loans 2. Loans written off by a bank will no longer be counted as the asset of the bank. 3. Commercial banks cannot write off loans given against the collateral security.How many of the above given statements are correct?
    • AOnly one
    • BOnly two
    • CAll three
    • DNone
    Answer: (A) Only one
    Explanation

    Option a is the correct 1 is incorrect: Unlike loan waivers, loan does not free the borrower from his/her liability back loans. Usually, the loans written off by the in their books as they hope to recover it at a later 2 is correct: Writing off a loan essentially will no longer be counted as an asset. By writing off bank can reduce the level of non-performing assets its books. An additional benefit is that the amount off reduces the bank's tax 3 is incorrect: Commercial banks can write loans granted against collateral securities too. In of a write-off of such loans, any collateral given by will either be confiscated until the borrower repayment or the collateral is auctioned off to loan amount

25. #185Full-length test
    Which among tlie following measures is/are most likely to be taken by the Reserve Bank of India (RBI) to control the deflation in Indian economy? 1. Raising the Statutory Liquid Ratio (SLR). 2. Buying the Government Securities. 3. Reducing the Repo rates. 4. Moratorium on the existing loans of companies.Select the correct answer using the code given below
    • A1, 2 and 4 only
    • B2, 3 and 4 only
    • C3 and 4 only
    • D3 only
    Answer: (B) 2, 3 and 4 only
    Explanation

    Option b is the correct 1 is incorrect: Statutory Liquidity Ratio or the minimum percentage of deposits that a must maintain in the form of liquid cash, gold or In deflationary time, the Reserve Bank of most likely will reduce the SLR rate to enable lend more as increasing SLR rate will reduce the to lend thus aggravating the deflationary 2 is correct: The RBI by buying the from the market will release more money into thus aid in fighting the deflationary situation. in inflationary times, the RBI will sell to absorb excess money from the 3 is correct: The RBI is most likely to reduce to fight deflation in the economy. The Repo rate is at which commercial banks borrow money from the mortgaging their government securities. Reduction rates will incentivise banks to borrow more money ri furn will lead folerid the in-vestment activity in the 4 is correct: The Reserve Bank of India to announce

26. #186Full-length test
    On which of the following financial institutions the Prompt Corrective Action (PCA) Framework of the Reserve Bank of India (RBI) is applicable? 1. Scheduled Commercial Banks (SCBs) 2. Regional Rural Banks (RRBs) 3. Small Finance Banks (SFBs) 4. All deposit taking Non -Banking Financial Companies (NBFCs) 5. Payment Banks (PBs) 6. Foreign Banks operating through branches in India 7. Primary (Urban) Cooperative Banks (UCBs)Choose the correct answer from the codes given below
    • A1, 3, 4, 5 and 6 only
    • B1 and 6 only
    • C1, 2, 3, 5 and 7 only
    • D1, 2, 3, 4, 5 and 6 only 1
    Answer: (B) 1 and 6 only
    Explanation

    Option bis the correct RBI introduced the PCA framework in 2002. of Prompt Corrective Action (PCA) Framework enable Supervisory intervention by RBI at and require the Supervised Entity (i.e., the institution) to initiate and implement in a timely manner. The PCA Framework is to act as a tool for effective market Asset Quality and Leverage are the key are considered before initiating the 1 and 6 are correct: The PCA framework to the Scheduled Commercial Banks. It is on foreign banks. operating through branches based on breach of risk thresholds of 4 is incorrect: According to RB I's latest PCA framework will be applicable to the NBFCs in way

27. #187Full-length test
    Consider the following statements with reference to Monetary Policy Framework (MPF) in India: 1. The Monetary Policy Committee is constituted by the Reserve Bank of India, under the provisions of RBI Act 1934. 2. The primary objective of Monetary Policy is to maintain price stability in India. 3. The Reserve Bank of India determines the inflation targets in India, once in five years. 4. If the RBI fails to maintain the inflation target, it is required to submit a report to Parliament explaining the reasons for such failure.How many of the above given statements are correct?
    • AOnly one
    • BOnly two
    • COnly three
    • DAll four
    Answer: (A) Only one
    Explanation

    Option a is the correct 1 is incorrect: Section of the Act, 1934 provides for an empowered policy committee (MPC) to be constituted Central Government (not by Reserve Bank of India) in the Official Gazette. The first such MPC on September 29, 2016. The MPC policy repo rate required to achieve the The MPC is required to meet at least four times year. The quorum for the meeting of the MPC has 2 is correct: Under the Reserve Bank of RBI is entrusted with the responsibility monetary policy in India with the of maintaining price stability while keeping the objective of l l { 3 is incorrect: In May 2016, the RBI Act, 1934 to provide a statutory basis for the the flexible inflation targeting framework. under the Central Government, in consultation RBI, determines the inflation target in terms of Price Index (CPI), once in five years it in the Official 4 is incorrect: The Central Government the

28. #188Full-length test
    Which of the following statements is incorrect with reference to Unified Payments Interface (UPI)?
    • AIt is a system that accommodates multiple bank accounts into a single mobile application
    • BIt has been developed by National Payments Corporation of India
    • CIt provides better security for payments as it is based on two factor authentication
    • DIt is based on Real Time Gross Settlement (RTGS) system
    Answer: (D) It is based on Real Time Gross Settlement (RTGS) system
    Explanation

    Option d is the correct a and b are correct: Unified Payments is a payment system launched by National of India. Unified Payments Interface (UPI) system that powers multiple bank accounts into a single { application (of any participating bank), banking features, seamless fund routing into one hood. It also caters to the "Peer to request which can be scheduled and paid as and c is correct: While adhering to the Unified Payments Interface (UPI) strong feature of seamless single click payment. At time, the system follows a 2 Factor factor authentication means besides the password an additional piece of information is to be OTP) by the individual to authenticate the dis incorrect: Unified Payments Interface not based on Real Time Gross Settlement Rather it can be said that l.JPI i.s an advance Immediate Payment Service (IMPS). UPI is built IMPS infrastructure and allows you to instantly betw

29. #189Full-length test
    Who among the following can provide loans to Non sovereign entities? 1. International Finance Corporation (IFC) 2. International Monetary Fund {IMF) 3. New Development Bank 4. Bank for International Settlement (BIS)Select the correct answer using the code given below
    • A1 and 2 only
    • B1 and 3 only
    • C1, 3 and 4 only
    • D2 and 4 only
    Answer: (B) 1 and 3 only
    Explanation

    Option b is the correct Entity. means an entity that is not a subnational government or any other public entity or organisation. In short, a non-sovereign Private sectors. While some of the global financial services to Governments/Sovereign some provide financial services to both sovereign 1 is correct: The World Bank Group refers five institutions of World.bank collectively. institutions are IBRD, IDA, International (IFC), the Multilateral Investment (MIGA) and the International Centre for Investment Disputes (ICSID). While IFC and financial assistance to private players, the legal disputes between international States to encourage private investment in the 2 is incorrect: Unlike development banks, Monetary Fund (IMF) does not assistance to private players, nor does it specific projects. Instead, the IMF provides to countries hit by crises to create breathing they implement policies tha

30. #190Full-length test
    Which of the following statements is correct with respect to the design and circulation of currency in India?
    • AThe Coinage Act, 2011 empowers the Reserve Bank of India to design and mint coins in various denominations
    • BThe Reserve Bank of India (RBI) Act,1934 empowers the central government to demonetise any series of bank notes
    • CRBI is the final deciding authority in matters related to the design of currency notes in India
    • DThe Union Ministry of Finance has the sole right to issue currency notes in India on the recommendation of Reserve Bank of India
    Answer: (D) The Union Ministry of Finance has the sole right to issue currency notes in India on the recommendation of Reserve Bank of India
    Explanation

    Option d is the correct Union Minister of Commerce and Industry chaired the sixth meeting of the National Council (NSAC) in New I is incorrect: The National Startup (NSAC) meeting is chaired by the Union Minister Commerce and Industry, not the Prime 2 is incorrect: The Central the non-official members on the National Council representing various stakeholders founders of successful startups (nowhere it is all founders of Super Unicorns startups are included), veterans who have grown and in India, persons capable of representing investors into startups, persons capable of of incubators and accelerators, representatives of stakeholders of startups and industry 3 is incorrect: The Department for Industry and Internal Trade (DPIIT) is implementation of Startup India initiative Government Departments. National Start-up is not mentioned as the nodal body for Start initiative

31. #191Full-length test
    With reference to Indian economy, consider the following initiatives: 1. Market stabilization scheme is a monetary policy intervention tool to control money supply by withdrawing excess liquidity. 2. Market Intervention Scheme is a financial policy intervention tool to bailout scheduled commercial banks which are facing crisis.Which of the statements given above is/are correct?
    • A1 only
    • B2 only
    • CBoth 1 and 2
    • DNeither 1 nor 2
    Answer: (A) 1 only
    Explanation

    Option a is the correct 1 is correct: Market stabilization monetary policy intervention tool used by the RBI money supply by sucking out excess liquidit the selling of securities and bonds. MSS is e a short period of time less than 6 months which is not with 2 is incorrect: Government Intervention Scheme (MIS) for procurement and horticultural commodities which in nature and are not covered under the Scheme (PSS). The objective of intervention is the growers of these commodities in the event of crop during the peak arrival period. The implemented at the request of a State/UT is ready to bear 50 percent of the loss (25 case of North-Eastern States), if any, incurred on Hence, MIS is not related to the the banks

32. #192Full-length test
    Which of the following policies help to raise interest rate unambiguously and thereby lead to appreciation of currency?
    • AExpansionary fiscal and monetary policies
    • BContractionary fiscal and monetary policies
    • CContractionary fiscal policy and Expansionary monetary policy
    • DExpansionary fiscal policy and Contractionary monetary policy
    Answer: (D) Expansionary fiscal policy and Contractionary monetary policy
    Explanation

    Option d is the correct Expansionary fiscal policy leads to an appreciation domestic currency as foreign investment increases lower tax rate. Higher government spending or increase aggregate demand and raise prices, Central bank to use contractionary monetary policy. the interest rate to control inflation and increases due to higher interest rate leading of currency Solution: Option C is the correct a is correct. Nagarjuna was a contemporary of King b is correct. His of the (madhyamaka) based around the central notion (sunyata). Emptiness (sunyata) is a not mean "non-existence" or ''nihility" rather the lack of autonomous existence C is incorrect. Nagarjuna's discussion we usually find him investigating a set ways in which cause and effect could be of these is subsequently found to be 'a result, Nagarjuna does not conclude that causation but that our understanding of the causal be based

33. #193Full-length test
    In the context of Indian economy, which of the following statements is correct regarding the 'Standing Deposit Facility'?
    • AIt has replaced the Marginal Standing Facility of the RBI
    • BThis facility mandatorily requires Government Securities as collateral for its operation
    • CThe interest rate for operating this facility is equal to Repo Rate
    • DIt is aimed at reducing excess liquidity from the banking system. "(estbook { }
    Answer: (D) It is aimed at reducing excess liquidity from the banking system. "(estbook { }
    Explanation

    Option d is the correct a is incorrect. The SDF will replace the fixed repo (FRRR) as the floor of the liquidity corridor. Both the standing facilities - the standing facility) and the SDF will be available days of the week, throughout the bis incorrect. SDF does not require any its operation. By removing the binding on the RBI, the strengthens the of monetary c is incorrect. The SDF rate will be 25 bps policy rate (Repo rate), and it will be applicable deposits at this stage. It would, however, retain to absorb liquidity of longer tenors as and need arises, with appropriate d is correct. The main purpose of SDF is the excess liquidity in the Banking system, inflation. Important Tips What is Marginal Standing Facility (MSF)? MSF is a provision made by the Reserve llank of India through which scheduled commercial banks can cilitrun liquidity overnight, if inter-bank liquidity compktdy dri

34. #194Full-length test
    Arrange the following types of banks in a chronological order according to their year of establishment/introduction in India: 1. National Bank for Agriculture and Rural Development L Local Area Banks 3. Regional Rural Banks 4. Payment banksWhich of the following is the correct chronological order?
    • A3-4-1-2
    • B1-3-2-4
    • C1-2-3-4
    • D3-1-2-4
    Answer: (B) 1-3-2-4
    Explanation

    Option b is the correct 1 is incorrect: The National Protection of Child Rights (NCPCR) was set up as body in March 2007 under the Commissions of Child Rights (CPCR) Act, 2 is correct: The Commission is section 13 of CPCR Act, 2005 to ensure that all Programmes, and Administrative in consonance with the Child Rights perspective in the Constitution of India and the Convention. on the Rights of the 3 is correct: As per the definition of children commission it includes all children below the age of looks after the matters related to deprivation and child rights, non-implementation of laws providing and development of children etc

35. #195Full-length test
    Consider the following statements with reference to the Marginal standing facility (MSF): 1. It enables banks to borrow from the Reserve Bank of India in an emergency when inter-bank liquidity dries up completely. 2. Under this facility banks borrow from RBI at an interest rate equal to the repo rate. 3. Under MSF, banks can borrow funds up to ten per cent of their net demand and time liabilities.How many of the above given statements are correct?
    • AOnly one
    • BOnly two
    • CAll three (a) 1, 2, 3 and 5 only
    • DNone (b) 1, 2, 3 and 4 only
    Answer: (A) Only one
    Explanation

    99. Solution: Option a is the correct answer. Exp) Option b is the correct l is correct. Marginal standing facility (MSF) Improvements in healthcare and medical procedures a window for banks to borrow from the Reserve Bank of treatments have resulted in several diseases being in an emergency when inter-bank liquidity dries from India. Elimination of a disease refers to the completely. The Marginal standing facility is a scheme effort that leads to the reduction to zero of the incidence by RBI while reforming the monetary policy in infection caused by a specific agent in a defined The Marginal Standing Facility (MSF) refers to the area. A disease can be eliminated from a specific under which scheduled commercial banks can borrow without being eradicated globally. Actions to prevent additional amount of overnight money from the central disease from transmitting or re-emerging are still ove

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