Indian Economy Multiple Choice Questions (MCQs) for State and UPSC Civil Services Examinations. Objective Questions on Indian Economy for competitive examinations.
31. Consider the following: 1. Foreign Currency Assets 2. Gold 3. Special Drawing Rights (SDRs) Which among the following is the correct decreasing order of the above in the Foreign Exchange Reserves of India?
Notes: T-Bills mean Treasury Bills or the bills issued by the Central Government. The T-Bill is issued by the Government to fulfill its short term money needs. The T-bills are again issued at discount and the face value is higher than the discount value. T-bills have an advantage over the other bills such as Zero Risk weightage associated with them. They are issued by the government and sovereign papers have zero risk assigned to them. In India T-bills are “sold” by the RBI. The State governments do not issue any treasury bills [Source]
33. What functions are done by the Statutory Liquidity Ratio?
It is an instrument of credit control;
It works as a cushion against the possibility of bank failures; and
It finances government deficits
Select the correct option from the codes given below:
[A] Only 1 & 2 [B] Only 2 & 3 [C] Only 1 & 3 [D] 1, 2 & 3
Notes: There are three purposes to keep SLR. These are:
It is an instrument of credit control
It works as a cushion against the possibility of bank failures
It is a conduit for financing government deficits.
We note here that SLR is not very frequently changed; so as an instrument of Credit Control; its role is limited. However, most important function SLR is doing in current times is to “finance the government deficit”. As far as its function as a cushion against bank failures is concerned, it is practically meaningless because weak commercial banks are not allowed to fail by the Government/RBI which is guided by the too-big-to-fail doctrine while resolving bank failures.
34. In respect of Kisan Vikas Patra consider the following statements: 1. The invested amount is doubled in 100 months 2. There is no maximum limit on investment in Kisan Vikas Patra 3. The amount invested in KVP is eligible for tax rebate 4. The interest earned on Kisan Vikas Patra is eligible for tax rebate Which among the above is / are correct statements?
[A] Only 1 [B] Only 1 & 2 [C] Only 1, 2 & 3 [D] 1, 2, 3 & 4
Kisan Vikas Patra doubles the investors money in 100 months or 8 Yrs 4 months. Interest rate is 8.7% per annum.
KVP’s are available in the denominations of Rs 1000, Rs 5000, Rs 10000, Rs 50000.
There is no maximum limit on investment in Kisan Vikas Patra.
KVP’s have a lock-in period of 2 Yrs 6 months. One can encash them after lock-in period and need not wait till maturity.Beyond this 30 month lock-in period, investors can redeem in every 6 month interval.
Any individual or joint individuals can buy KVPs and they can be transferred from one person to another any number of times.
Currently these are issued at all Post Offices in India. Later they would be issued through Nationalized banks in India.
The amount invested in KVP’s are not eligible for tax rebate u/s 80C. The interest amount is also fully taxable.
35. Consider the following equations: 1. Gross Cropped Area – Net Cropped Area = Uncultivable Land 2. Gross Cropped Area +Net Cropped Area = Total Cultivable Land Which among the above is / are correct?
[A] Only 1 [B] Only 2 [C] Both 1 & 2 [D] Neither 1 nor 2
Notes: Both these equations are not correct. If we deduct net sown area from gross cropped area; what we find is those areas where crops are cultivated for more than once in a particular agriculture year.
36. The time period between jobs when a worker is transitioning from one job to another is known as__:
Notes: Frictional unemployment is the time period between jobs when a worker is searching for, or transitioning from one job to another. It is sometimes called search engine and can be voluntary based on the circumstances of the unemployed individual.
37. Mutual Funds:
can have both money and capital market investment
are open-ended funds
can have both debt and equity allocation
Which of the above is/are correct statements?
[A] Only 1 & 2 [B] Only 2 & 3 [C] Only 1 & 3 [D] 1, 2 & 3
Notes: Mutual funds are open ended funds. It means they generally create and sell new shares to accommodate new investors unlike closed end funds which sell a fixed number of shares at one time (in an initial public offering) that later trade on a secondary market.
38. Consider the following statements: 1. A quota is a non-tariff barrier to trade 2. Imposition of quota will result in increased price in the domestic market 3. A quota is a restriction placed on the amount of a product allowed to enter or leave a country Which among the above statements is / are correct?
[A] Only 1 & 2 [B] Only 2 & 3 [C] Only 1 & 3 [D] 1, 2 & 3
Notes: Negative cross elasticity demand means that the increase in price of one good, decreases the demand of of other and vice versa. These are generally called complementary goods. For example increase in price of sugar may decrease the demand of tea. Tea and coffee are substitute goods; increase in price of coffee may increase the demand of tea.
40. The Stand Up India Scheme provides for:
refinance window through Public sector banks
creation of a credit guarantee mechanism through the National Credit Guarantee Trustee Company (NCGTC)
Which of the above statements is/are correct?
[A] Only 1 [B] Only 2 [C] Both 1 & 2 [D] Neither 1 nor 2
