MCQs
Total Questions : 550
| Page 6 of 55 pages
Answer: Option C. -> the distribution of income of an idential set of income recipients in different period of time
Answer: (c)
Answer: (c)
Answer: Option A. -> (ii) & (iii) only
Answer: (a)
Government issues only debt securities like treasury bills, cash management bills, dated securities and state development loans.
Anybody can give a loan (debt) to the government but they cannot own government i.e. they cannot purchase government shares. The government never issues shares.
‘Government’ is different from ‘government companies’ (PSUs) which can issue shares and bonds.
Open Market Operations is conducted by RBI where it buys or sells govt. bonds. (debt securities) So, (ii) & (iii) statements are true.
Answer: (a)
Government issues only debt securities like treasury bills, cash management bills, dated securities and state development loans.
Anybody can give a loan (debt) to the government but they cannot own government i.e. they cannot purchase government shares. The government never issues shares.
‘Government’ is different from ‘government companies’ (PSUs) which can issue shares and bonds.
Open Market Operations is conducted by RBI where it buys or sells govt. bonds. (debt securities) So, (ii) & (iii) statements are true.
Question 53. The Non-Votable charges or ‘Charged Expenditure’ included in the Union Budget include :
- Salary and Allowances of the Presiding Officers of the houses of Parliament.
- Salary and Allowances of the Judges of the Supreme Court and High Courts.
- Salary and Allowances of the CAG.
- Pension of the retired Judges of the Supreme Court.
- Pension of the retired Judges of High Courts.
Answer: Option D. -> All of them
Answer: (d)
Answer: (d)
Answer: Option A. -> (i) & (iii) only
Answer: (a)
Currencies and coins are fiat money because they derive their value from government "fiat"/ order. If the coin is melted then it will not fetch the same value in the market and the paper of which the currency note is made does not have any value in the market.
Hence, Currency notes and coins are called fiat money and they do not have intrinsic value.
They are also called legal tenders as they cannot be refused by any citizen of the country for settlement of any kind of transaction. Cheques were drawn on savings or current accounts, however, can be refused by anyone as a mode of payment. Hence cheques are not legal tenders.
So only (i) & (iii) statements are true.
Answer: (a)
Currencies and coins are fiat money because they derive their value from government "fiat"/ order. If the coin is melted then it will not fetch the same value in the market and the paper of which the currency note is made does not have any value in the market.
Hence, Currency notes and coins are called fiat money and they do not have intrinsic value.
They are also called legal tenders as they cannot be refused by any citizen of the country for settlement of any kind of transaction. Cheques were drawn on savings or current accounts, however, can be refused by anyone as a mode of payment. Hence cheques are not legal tenders.
So only (i) & (iii) statements are true.
Answer: Option A. -> Collecting and compilation of statistical information relating to banking and other financial sector
Answer: (a)
Answer: (a)
Answer: Option C. -> Malegam Committee
Answer: (c)
In normal companies/banks, the Board of Directors (BoD) are independent and representatives of shareholders/owners, but not exactly the shareholders. But in cooperative banks, the Board of Directors are elected from among the shareholders themselves. Because of this, professionalism is missing from the cooperative banks and there were several cases of fraud discovered.
To bring improvement in the governance and functioning of Urban-Cooperative Banks (UCBs), a new organization structure consisting of a Board of Management (BoM), in addition to the Board of Directors (BoD), was suggested by the Malegam Committee (2011). (As changing the selection/appointment process of BoD required changes in Cooperative Societies Act)
Accordingly, RBI published guidelines on 31st Dec 2019, as per which, the BoD of UCBs with deposit size of Rs. 100 crore and above, shall constitute BoM. It shall be mandatory for such banks to constitute BoM for seeking approval to expand their area of operation and/or open new branches.
These UCBs will also require prior approval of RBI for the appointment of their CEOs. UCBs with a deposit size less than Rs. 100 crores are exempted from constituting BoM although they are encouraged to do so voluntarily.
The BoM shall report to the BoD and shall exercise oversight over the banking-related functions of the UCBs, assist the BoD on the formulation of policies and any other related matter specifically delegated to it by the BoD for the proper functioning of the bank.
The BoD will continue to be the apex policy setting body and shall continue to be responsible for the general direction and control of a UCB. It will continue to look after all the administrative functions as spelt out in the respective Co-operative Societies Acts.
Answer: (c)
In normal companies/banks, the Board of Directors (BoD) are independent and representatives of shareholders/owners, but not exactly the shareholders. But in cooperative banks, the Board of Directors are elected from among the shareholders themselves. Because of this, professionalism is missing from the cooperative banks and there were several cases of fraud discovered.
To bring improvement in the governance and functioning of Urban-Cooperative Banks (UCBs), a new organization structure consisting of a Board of Management (BoM), in addition to the Board of Directors (BoD), was suggested by the Malegam Committee (2011). (As changing the selection/appointment process of BoD required changes in Cooperative Societies Act)
Accordingly, RBI published guidelines on 31st Dec 2019, as per which, the BoD of UCBs with deposit size of Rs. 100 crore and above, shall constitute BoM. It shall be mandatory for such banks to constitute BoM for seeking approval to expand their area of operation and/or open new branches.
These UCBs will also require prior approval of RBI for the appointment of their CEOs. UCBs with a deposit size less than Rs. 100 crores are exempted from constituting BoM although they are encouraged to do so voluntarily.
The BoM shall report to the BoD and shall exercise oversight over the banking-related functions of the UCBs, assist the BoD on the formulation of policies and any other related matter specifically delegated to it by the BoD for the proper functioning of the bank.
The BoD will continue to be the apex policy setting body and shall continue to be responsible for the general direction and control of a UCB. It will continue to look after all the administrative functions as spelt out in the respective Co-operative Societies Acts.
Answer: Option A. -> Increasing Trend
Answer: (a)
Answer: (a)
Answer: Option D. -> All of the above
Answer: (d)
A bond (debt paper) holder is expected to get a fixed interest regularly and principal at maturity.
But if the inflation in the economy starts increasing the price of the bond decreases (because now the actual value of the principal and interest which the bondholder will get will be of less value) and bondholders lose.
When the price of the bond decreases in the market, the person who will purchase the bond will have to pay less price and hence he will get more return/yield.
(The interest rate on the bond remains fixed but its price fluctuates in the market and hence the return also fluctuates.
If the market price of the bond is low, then the return/yield on the bond will be high.
This is because the person who will purchase the bond will have to pay less price to get the same bond).
For a detailed understanding, you can refer to the book on Indian Economy by Vivek Singh.
Answer: (d)
A bond (debt paper) holder is expected to get a fixed interest regularly and principal at maturity.
But if the inflation in the economy starts increasing the price of the bond decreases (because now the actual value of the principal and interest which the bondholder will get will be of less value) and bondholders lose.
When the price of the bond decreases in the market, the person who will purchase the bond will have to pay less price and hence he will get more return/yield.
(The interest rate on the bond remains fixed but its price fluctuates in the market and hence the return also fluctuates.
If the market price of the bond is low, then the return/yield on the bond will be high.
This is because the person who will purchase the bond will have to pay less price to get the same bond).
For a detailed understanding, you can refer to the book on Indian Economy by Vivek Singh.
Answer: Option A. -> i-b, ii-a, iii-c, iv-d
Answer: (a)
Correct matching between Stock exchange name & Set up Year
NSE - a. 1984
BSE - b. 1887
OTCEI - c. 1989
ISE - d. 1998
Answer: (a)
Correct matching between Stock exchange name & Set up Year
NSE - a. 1984
BSE - b. 1887
OTCEI - c. 1989
ISE - d. 1998
Question 60. Which of the following could be the after-effects of demonetization?
Select the correct answer using the code given below:
- RBI's liability would reduce to the extent the old notes does not come to the banking system
- Transfer of wealth from holders of illicit black money to the public sector
- The shift of resources from the private sector to the government
- Indirect and corporate taxes would decline to the extent growth slows
Select the correct answer using the code given below:
Answer: Option D. -> All of the above
Answer: (d)
The currency held by the public is the liability of RBI as whenever somebody comes with the currency note to the RBI, it needs to return a sum equivalent to the value of the currency.
So, if some old notes do not come to the banking system then they will become invalid, and RBI will never have to return the equivalent value of those currency notes.
If the black money does not come back to the banking system after demonetization then RBI's liability would reduce by that amount and its net Assets (net worth) will increase.
This ultimately means that the private money has been transferred to the RBI. Hence it is a kind of transfer of illicit black money to the public sector.
Demonetization may have some negative impact on GDP growth which will impact the revenues from indirect and corporate taxes.
"Black economy is the market-based production of goods and services – legal or illegal – that escapes capture in the official GDP statistics. And the tax that the government forfeits on this activity circulates as black money."
Answer: (d)
The currency held by the public is the liability of RBI as whenever somebody comes with the currency note to the RBI, it needs to return a sum equivalent to the value of the currency.
So, if some old notes do not come to the banking system then they will become invalid, and RBI will never have to return the equivalent value of those currency notes.
If the black money does not come back to the banking system after demonetization then RBI's liability would reduce by that amount and its net Assets (net worth) will increase.
This ultimately means that the private money has been transferred to the RBI. Hence it is a kind of transfer of illicit black money to the public sector.
Demonetization may have some negative impact on GDP growth which will impact the revenues from indirect and corporate taxes.
"Black economy is the market-based production of goods and services – legal or illegal – that escapes capture in the official GDP statistics. And the tax that the government forfeits on this activity circulates as black money."
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