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Total Questions : 650 | Page 1 of 65 pages
Question 1. Consider the following :
  1. Market borrowing
  2. Treasury bills
  3. Special securities issued to RBI
Which of these is/are components of internal debt?
  1.    1 and 2
  2.    2 only
  3.    1 only
  4.    1, 2 and 3
 Discuss Question
Answer: Option D. -> 1, 2 and 3
Answer: (d)All these statements are components of internal debt.
Question 2. Poverty in less developed countries is largely due to
  1.    lack of intelligence of the people
  2.    income inequality
  3.    lack of cultural activities
  4.    voluntary idleness
 Discuss Question
Answer: Option B. -> income inequality
Answer: (b)
Despite the developing countries’ impressive aggregate growth of the past 25 years, its benefits have only reached the poor to a very limited degree.
Not only have the poorest countries grown relatively slowly, but growth processes are such that within most developing countries, the incomes of the poor increase much less than the average.
Much of the poverty is due to severe inequality which in turn is due to lop-sided development. Income inequality is the major determinant of poverty both in developed and non-developed countries.
Rising unemployment is a major source of spreading poverty. Lack of access to crucial assets and services (health care, schooling, and infrastructure) exclude the poor from the very beginning.
Question 3. Open market operation refers to
  1.    lending by scheduled banks to non-scheduled banks
  2.    borrowing by commercial banks from the R.B.I.
  3.    purchase and sale of Government securities by the R.B.I.
  4.    purchase and sale of bonds and securities by the Central Govt.
 Discuss Question
Answer: Option C. -> purchase and sale of Government securities by the R.B.I.
Answer: (c)
Open Market Operations (OMO) is the buying and selling of government securities in the open market in order to expand or contract the amount of money in the banking system. Purchases inject money into the banking system and stimulate growth while sales of securities do the opposite.
OMOs are the market operations conducted by the Reserve Bank of India by way of sale/ purchase of Government securities to/ from the market with an objective to adjust the rupee liquidity conditions in the market on a durable basis.
Question 4. Which of the following areas make the largest contribution to national income in India?
  1.    Services
  2.    Industry
  3.    Agriculture
  4.    Mining
 Discuss Question
Answer: Option A. -> Services
Answer: (a)
Assuming national income being measured as the Gross Domestic Product (GDP), the lion’s share in the national income of India is of the SERVICE sector (tertiary sector) which stands at 57% in 2013.
India’s dynamic services sector has grown rapidly in the last decade with almost 72.4 per cent of the growth in India’s GDP in 2014-15 coming from this sector. (Source: Economic Survey 2015-16).
Question 5. Estimation of national income in India are not accurate as there is:
  1. illiteracy
  2. non-monetised consumption
  3. inflation
  4. people holding multiple jobs
  1.    2 and 3
  2.    1 and 4
  3.    1, 2, 3 and 4
  4.    1, 2 and 4
 Discuss Question
Answer: Option D. -> 1, 2 and 4
Answer: (d)
Question 6. The gradation and standardisation of agricultural products are conducted through
  1.    Central Statistical Organisation
  2.    Directorate of Marketing and Inspection
  3.    Indian Standards Institution
  4.    Food Corporation of India
 Discuss Question
Answer: Option B. -> Directorate of Marketing and Inspection
Answer: (b)
The Directorate of Marketing and Inspection (DMI) is an attached office of the Ministry of Agriculture. It was set up in the year 1935 to implement the agricultural marketing policies and programmes of the Central Government.
It aims at bringing integrated development of marketing of agricultural and allied products in the country. It is entrusted with the promotion of standardisation and grading of agricultural and allied produce.
Question 7. Consider the following statements in regard to ‘Inflation Index bonds’?

  1. Investment in these bonds is more risky as these bonds increase the inflation risk attached to the investment.

  2. It is better financial instrument compared to gold to hedge the risk rising out of volatile economy.


Which of the statements given above is/are correct?
  1.    2 only
  2.    Both 1 and 2
  3.    1 only
  4.    Neither 1 nor 2
 Discuss Question
Answer: Option D. -> Neither 1 nor 2
Answer: (d)
Inflation-indexed bonds are bonds where the principal is indexed to inflation. They are thus designed to cut out the inflation risk of an investment.
These bonds thus decrease the inflation risk attached to the investment. Moreover, these bonds are a better hedge than gold in a volatile economy as gold does.
Question 8. Plan Holiday was declared after
  1.    The Second Five Year Plan
  2.    The First Five Year Plan
  3.    The Third Five Year Plan
  4.    The Fourth Five Year Plart
 Discuss Question
Answer: Option C. -> The Third Five Year Plan
Answer: (c)
Plan Holiday refers to three annual plans implemented during 1966-69 after the end of the Third Five Year Plan (1961-66).
During these plans, a whole new agricultural strategy involving the widespread distribution of High–Yielding Varieties (HYVs) of seeds, the extensive use of fertilizers, exploitation of irrigation potential and soil conservation was put into action to tide – over the crisis in agricultural production.
Question 9. Who wrote a book describing the theory of economic drain of India during British rule?
  1.    J.L. Nehru
  2.    Lala Lajpat Rai
  3.    Mahatma Gandhi
  4.    Dadabhai Naoroji
 Discuss Question
Answer: Option D. -> Dadabhai Naoroji
Answer: (d)Dadabhai, known as the Grand Old Man, wrote the book ‘Poverty and Un-British Rule in India’ describing the theory of economic drain of India during British rule.
Question 10. Commercial banks lend to which of the following Priority sectors ?
  1.    Agriculture, Small scale industries
  2.    Heavy Industries
  3.    Foreign Companies
  4.    State Government in emergency situation
 Discuss Question
Answer: Option A. -> Agriculture, Small scale industries
Answer: (a)
Priority sector lending is an important role given by the Reserve Bank of India (RBI) to the banks for providing a specified portion of the bank lending to few specific sectors like agriculture and allied activities, micro and small enterprises, and weaker sections.
It aims to ensure that adequate institutional credit flows into some of the vulnerable sectors of the economy, which may not be attractive for the banks from the point of view of profitability.

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