TEST 02: ECONOMY

Syllabus: Banking and Economic Planning in India

1. Consider the following statements.

  1. Monetary policy announced per year

  2. Price stability & exchange rate stabilization are the objectives of monetary policy.

  3. Credit policy is a part of monetary policy.

    Which of the above statements is / are true.

a. 1, 2 & 3

b. 1 & 2 only

c. 2 & 3 only

d. 1 & 3 only

2. Consider the following statements.

  1. SLR & CRR, are not the part of monetary policy.

  2. CRR is adjusted to manage liquidity & inflation.

  3. A purchase of government securities injects money in the market.

      Which of the above statements is / are true.

a. 2 & 3 only

b. 1, 2 & 3

c. 1 & 3 only

d. 3 only

3. What is the most widely used tool of monetary policy?

a. Issuing of notes

b. Open market operations

c. Discount rate

d. None of these

4. What is the mean of Repo Rate?

a. When a bank is in need of cash it can it can discount bills of exchange and avail loan facilities from Reserve Bank of India.

b. When a bank has excess cash, they buy securities from RBI against cash on the condition that they resell the securities to RBI on a pre fixed day and price

c. It is rate at which RBI allows temporary loan facilities to commercial banks against government securities on the condition that the bank will repurchase the securities within a short period.

d. It is a rate which is offered by banks to their most valued customers or prime customers.

5. When RBI does some open market operation transactions, it wishes to regulate which of the following?

a. Inflation

b. Supply of money in the economy

c. Borrowing power of the commercial banks

d. a & b

6. When the cash reserve ratio (CRR) is increased by the RBI, it will:

a. Increase the supply of money in the economy

b. Decrease the supply of money in the economy

c. No impact on the supply of money in the economy

d. Initially increase the supply but later on decrease automatically.

7. How much interest is paid by the RBI on the money deposited under the CRR measure?

a. Equal to the rate of CRR

b. More than the CRR

c. Less than the CRR

d. No interest is paid by the RBI

8. On which commission’s recommendations; Reserve Bank of India was established?

a. Chamberlain Commission

b. Hilton Young Commission

c. Keynes Commission

d. None of the above

9. Which of the following is not the function of the RBI?

a. Banker’s Bank

b. Controller of credit

c. Custodian of Foreign Exchange Reserve

d. Allotting money directly to farmers for agricultural development

10. Now who decides the monetary policy of India?

a. Reserve Bank of India

b. Banking Association of India

c. Monetary Policy Committee

d. NITI Aayog

11. Which of the following is a qualitative credit control tool used by RBI?

a. Moral suasion.

b. Open market operations.

c. Repo rate.

d. Cash reserve requirement.

12. What is the type of Indian economy?

a. Socialist

b. Communist

c. Capitalist

d. Mixed

13. Which of the following statement is not correct about ‘Bombay Plan’?

a. The Bombay Plan is also called the ‘Tata Birla Plan’

b. It was started in 1944

c. Its draft was prepared by the John Mathai

d. There were 10 members in this plan

14. Who was the author of the Book ‘Planned Economy of India’?

a. Visvesvaraya

b. Dada Bhai Navroji

c. Bhim Rao Ambedkar

d. Jawaharlal Nehru

15. Which of the following statements is not correct?

a. The first five year plan was launched from 1st April, 1951

b. Rajendra Prasad was the first chairman of the Planning Commission of India

c. The National Development Council used to give final approval to the Five Year Plan

d. The first five year plan was based on the Harrod- Domar model

Answers

1. C

2. A

3. B

4. C

5. D

6. B

7. D

8. B

9. D

  • Allotting money to farmers for agricultural development is the responsibility of the NABARD.

10. C

11. A

12. D

13. C

  • There were total 8 members in the Bombay plan i.e.J.R.D. Tata, Ghanshyamadas Birla, Kasturbhai Lalbhai, Sir Purushottamdas Thakurdas, Sir Shriram,Sir ardishar Dalal, A.D. Shroff and Dr. John Mathai.

14. A

15. B

  • Prime Minister of India is the ex-officio chairman of the planning commission, so Jawahar Lal Nehru was the first chairman of the planning commission of India.
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