Indian Economy MCQs

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The Bank Index commonly known as “NIFTY BANK” or “Bank NIFTY” was launched by India Index Service and Product Limited (IISL) in the year 2000. The index has 12 most liquid and large capitalized stocks from the banking sector which trade on the National Stock Exchange (NSE). It provides investors and market intermediaries a benchmark that captures the capital market performance of Indian Banking sector.  At present (July, 2024) , these banks include AU Small Finance Bank, Axis Bank, Bandhan Bank, Federal Bank, HDFC Bank, ICICI Bank, IDFC First Bank, Indusind Bank, Kotak Mahindra Bank, PNB, RBL Bank and SBI.

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Complementary goods, defined by their negative cross elasticity of demand, are products whose demand is influenced by one another. When the price of a good declines, the demand for its complementary good rises. Printers need ink cartridges, tea is often consumed with sugar, and mobile phones require SIM cards for operation. However, tea and coffee are substitutes, not complements, as they are consumed separately and often in place of one another, hence they are not complementary goods.

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A fund of funds (FOF) is a f mutual fund that invests in other types of funds or hedge funds. It is also called as a multi-manager investment. Their advantages are broad diversification and appropriate asset allocation.

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Stagflation refers to persistent high inflation coupled with high unemployment and stagnant demand /growth in economy.
High Inflation + Low Economic Growth {or conditions of recession} + Low Employment Generation = Stagflation
Stagflation generally occurs because recession reduces demand for goods. In the post 2008 crisis years, slowdown in growth and investment was accompanied by elevated levels of consumer price inflation in India. This condition was called stagflation.

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The correct answer is State Bank of India (SBI). It was established in 1955, evolving from the Imperial Bank of India, which itself was formed in 1921. The Imperial Bank was a successor to the Bank of Calcutta, founded in 1806, making SBI one of the oldest banks in India. SBI is now the largest bank in India, serving millions of customers worldwide.

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Profit/loss on sale of assets is an entry in the manufacturing company` s P & L account under the heading other income. In banks the other income includes income from distribution of financial products, income from investment banking related activities, treasury gains and other fee incomes

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Qualitative or selective methods of credit control refers to those methods which limit the nature or variety of money supply rather than its quantity. Such methods include regulation of margin requirement, credit rationing, regulation of consumer credit and direct action.

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If a person is dissatisfied with a decision made by the Banking Ombudsman, the next appellate authority to approach is the Deputy Governor of the Reserve Bank of India (RBI). The Banking Ombudsman operates under the Banking Ombudsman Scheme, which is a mechanism for resolving complaints against banks. The Deputy Governor oversees the functioning of the Ombudsman and can review the decisions made. This tiered approach ensures that consumers have multiple avenues for redressal within the banking regulatory framework.

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The Khadi and Village Industries Commission is a statutory body formed in April 1957 by the Government of India, under the Act of Parliament, ‘Khadi and Village Industries Commission Act of 1956’. It was second five year plan period then.

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Cost Push Inflation occurs when production costs rise, leading to increased prices. 1. True: It is indeed driven by rising costs like wages and rent. 2. False: It is generally harder to control than Demand Pull Inflation, as it often involves external factors (e.g., oil price shocks). 3. True: As prices rise, the purchasing power of currency decreases. Thus, statements 1 and 3 are correct.