ANSWER KEY

ECONOMY TEST 1

QUESTIONS ANSWERS
1. To finance its deficit, government prefers borrowing C
from public over RBI. What can be the best reason for
this?
(a) Rate of interest charged by RBI is higher.
(b) Government has to return the sum to RBI within a fixed
period of time.
(c) Public borrowing does not affect the money supply in
the market.
(d) It increases the sale of government bonds.
2. The Union Government recently came out with the C
National Capital Goods Policy 2016 aimed at increasing
production of capital goods. Which among the following
are considered as capital goods?
1. Dies, moulds and press tools
2. Automobiles
3. Food processing equipment
4. Plastic machinery
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 3 and 4 only
(c) 1, 3 and 4 only
(d) 1, 2, 3 and 4
3. Which among the following is/are not part of the B
Personal Income, a subdivision of National Income?
1. Net Interest payments made by households.
2. Corporate Tax.
3. Direct cash benefits transferred to a household for LPG
subsidy.
4. Personal Tax Payments.
Select the correct answer using the code given below.
(a) 1, 2 and 4 only
(b) 1 and 2 only
(c) and 4 only
(d) 1, 2, 3 and 4
4. Consider the following statements: D
1. The Net Domestic product can be lesser than or equal to
Gross Domestic Product for the same year.
2. Gross National Product of an economy is always lesser
than its Gross Domestic Product for the same year.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
5. With reference to the International Energy Agency, A
consider the following statements:
1. It is an autonomous body within the OECD framework.
2. It releases emergency oil stocks to the markets in case of
disruptions in oil supply.
3. It dispenses grants or makes loans to its member
countries.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
6. With reference to currency deposit ratio, consider the C
following statements:
1. It is the ratio of money held by the public in currency to
that they hold in bank deposits.
2. An increase in the deposit rates decreases the money
multiplier effect.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
7. Which of the following best describes 'Care Economy'? B
(a) It is an economic system in which deliberate attention is
paid to good governance policies for the dependent
population.
(b) It consists of the work done by women at home taking
care of the household chores.
(c) It is an economic system in which genuine care for
people and nature is the top priority.
(d) It refers to the philosophy of making investments in
demographic dividend to ensure better economic results in
future.
8. Which of the following statements is/are correct D
regarding Monetary Transmission?
1. It refers to the process by which a central bank's
monetary policy decisions are passed on to the financial
markets.
2. Rising Non Performing Assets (NPAs) and higher
returns on small savings schemes may hinder effective
monetary transmission.
3. Lowering of CRR and SLR requirements may help
ensure effective monetary transmission.
Select the correct answer using the code given below.
(a) 1 and 3 only
(b) 2 and 3 only
(c) 1 and 2 only
(d) 1, 2 and 3
9. Which of the following measures can be used to reduce B
inflation?
1. Increasing Cash Reserve Ratio (CRR).
2. Increasing Statutory Liquidity Ratio (SLR).
3. Reducing fiscal deficit.
4. Reducing Reverse Repo Rate.
Select the correct answer using the code below.
(a) 1 and 2 only
(b) 1, 2 and 3 only
(c) 3 and 4 only
(d) 1, 2, 3 and 4
10. Which of the following services are accounted in the D
Gross Domestic Product of a country?
1. services rendered by a domestic help
2. services rendered by a worker from unorganized sector
3. services produced in Indian embassies located abroad
4. services produced in military establishments located
abroad
Select the correct answer using the codes given below.
(a) 1 and 2 only
(b) 1, 2 and 3 only
(c) 2, 3 and 4 only
(d) 1, 2, 3 and 4
11. How does Shadow Banking differ from commercial D
banking?
1. While commercial banks are tightly regulated, shadow
banking regulation lacks transparency.
2. While commercial banks can create money being
depository institutions, shadow banking cannot create
money.
3. While liabilities of commercial banks are insured,
shadow banking liabilities are not insured.
4. While commercial banks have access to central bank
liquidity in the times of distress, shadow banking does not
have such recourse.
Select the correct answer using the code given below.
(a) 1 only
(b) 1 and 2 only
(c) 2, 3 and 4 only
(d) 1, 2, 3 and 4
12. Consider the following factors: A
1. Increase in government expenditure
2. Rising population and household consumption
3. Buying and selling of real estate in urban areas
4. Fluctuations in output and supply
5. Increase in administered prices
Which of the above is/are attributed to the demand-pull
factors of inflation?
(a) 1, 2 and 3 only
(b) 1, 3 and 5 only
(c) 2, 3 and 4 only
(d) 4 and 5 only
13. With reference to Special Drawing Rights (SDRs), D
consider the following statements:
1. The SDR is an international reserve currency, created by
the IMF to supplement foreign exchange reserves of its
member countries.
2. A member country cannot hold SDRs above the
allocations made in proportion to its quota in the IMF.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
14. High powered money is: C
(a) That money which is issued by the authority of the
government.
(b) That money, whose money value exceeds commodity
value of money.
(c) Notes and coins held by the people as well as cash
reserves of the commercial banks.
(d) That money which is accepted as a medium of
exchange because of the trust between the payer and the
payee
15. Consider the following statements: D
1. Nominal Gross Domestic Product (GDP) reflects the
changes in both prices and quantities of the goods and
services produced in an economy.
2. Real GDP reflects only the changes in the quantities of
the goods and services produced in an economy.
3. GDP deflator reflects only the changes in prices of the
goods and services produced in an economy.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) 1, 2 and 3
16. GDP is defined as the output of economic activities D
carried out within the economic boundaries of a country.
Which of the following constitutes the economic territory
of a country with respect to GDP calculation?
1. Fishing vessels, oil and natural gas rigs operated by the
residents of a country in the international waters.
2. Embassies, consulates and military establishment of the
country located abroad.
3. Ships and aircraft owned by residents of the country
operating between two different countries.
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
17. Consider the following statements: C
1. Decreasing the reverse-repo rate can be a suggestive
monetary policy to combat inflation.
2. Purchasing power of money decreases if there is
inflation in the market.
3. Inflation favors the debtors.
Select the correct answer using the code given below.
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
18. Which of the following would have inflationary effect C
on the economy?
1. RBI releasing new bonds in the market.
2. RBI decreasing the SLR.
3. RBI increasing the Bank Rate.
4. Abolition of CRR.
Select the correct answer using the code given below.
(a) 1, 2 and 3 only
(b) 1 and 4 only
(c) 2 and 4 only
(d) 3 and 4 only
19. Sterilization by RBI is a/an: A
(a) Open market operation
(b) Bank rate policy
(c) Deficit financing operation
(d) Change in SLR
20. With reference to Marginal Standing Facility (MSF), C
consider the following statements:
1. It does not affect the value of rupee in international
market as it is used for overnight transactions.
2. The purpose of marginal standing facility is to reduce
volatility in the overnight lending rates in the inter-bank
market.
3. Marginal standing facility is generally kept lower than
repo rate.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 only
(d) 1, 2 and 3
21. Which of the following developments can occur in an B
economy due to deficit financing by the government?
1. Rise in Inflation
2. Decrease in public debt
3. Increase in money supply
4. Improvement in current account deficit
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 4 only
(d) 1, 3 and 4 only
22. Which the following are the effects of inflation in the D
economy?
1. With the same wages purchasing power of people get
reduced.
2. Savings rate may increase as a result of short-run effect
of inflation.
3. Investment may be boosted as a result of short-run effect
of inflation.
Select the correct answer using the code below.
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) 1, 2 and 3
23. Consider the following statements regarding Nidhi D
Companies:
1. The Nidhi companies borrow from and lend to the
members only.
2. They are registered under Companies Act and are
regulated by Ministry of Corporate Affairs.
3. They are included under NBFCs and are also regulated
by RBI.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 1 and 3 only
(c) 3 only
(d) 1, 2 and 3
24. Consider the following statements: A
1. The income method of GDP calculation considers
incomes received by factors of production only.
2. The Income method of GDP calculation provides a
lower value of GDP than expenditure method for the same
year.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
25. With reference to national income accounting, consider B
the following statements:
1. Depreciation of a capital good is independent of its cost.
2. Depreciation for a capital good does not take into
account the destruction of good in accidents.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
26. With reference to Value added method for national A
income accounting, consider the following statements:
1. Gross Value added (GVA) at factor cost does not
include any taxes.
2. GVA at basic prices excludes production taxes and
includes production subsidies available on the commodity.
Which of the statement given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
27. Priority sector lending by banks in India constitutes the D
lending to which of the following sectors?
1. Renewable Energy
2. Education
3. Housing
4. Social Infrastructure
Select the correct answer using the code given below.
(a) 1 and 4 only
(b) 1, 2 and 3 only
(c) 2, 3 and 4 only
(d) 1, 2, 3 and 4
28. Consider the following statements: C
1. Public goods are non-rival in their consumption but
excludable.
2. Common resources are non-rival in their consumption
and are non-excludable.
3. Private goods are rival in their consumption and
excludable.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 1 and 3 only
(c) 3 only
(d) 1, 2 and 3
29. With reference to assessment of labour market A
condition, consider the following statements:
1. Labour Force Participation Rate is the ratio of the
number of persons in the labour force to the total
population.
2. Unemployment Rate is the ratio of the number of
unemployed persons to the total population.
Which of the above statements is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
30. With reference to Quantitative Easing, which among C
the following statements is/are correct?
1. It is a monetary policy in which the central bank sells
government securities.
2. It is adopted to lower the interest rates and increase the
money supply.
3. It can lead to higher rates of inflation.
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 3 only
(c) 2 and 3 only
(d) 1, 2 and 3
31. When there is a fall in the prices in an economy, it may C
lead to which of the following?
1. Increase in the demand for consumption goods
2. Rise in the interest rates
3. Increase in net exports
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
32. Which of the following best describes 'Disposable A
Income'?
(a) Net wages after deducting direct taxes.
(b) Net wages after deducting indirect taxes.
(c) Net wages after adjusting inflation.
(d) None of the above
33. With reference to Small Banks and Payment Banks, B
consider the following statements:
1. While both can accept deposits, Payment Banks cannot
issue debit cards.
2. While both are required to maintain CRR, Small Banks
are also required to maintain SLR and PSL requirements.
3. Both have the same initial minimum capital requirement
of 100 cr INR.
Which of the statements given above is/are correct?
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
34. With reference to Cash Reserve Ratio (CRR) which of B
the following statements is/are correct?
1. CRR is a reserve requirement that requires banks to
maintain in the form of gold, cash or government securities
with itself.
2. When the RBI lowers CRR, it is said to follow an
expansionary monetary policy.
Select the correct answer from the codes given below.
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
35. Consider following statements regarding components A
of "double financial repression":
1. Statutory liquidity ratio (SLR) and Priority sector
lending (PSL) requirements are a repression on the asset
side.
2. Rising Non Performing Assets (NPAs) and reduction in
households financial savings are a repression on the
liability side.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
36. With reference to recapitalization of public sector C
banks, consider the following statements:
1. Reduction of Repo Rate.
2. Reduction of Statutory Liquidity Ratio (SLR).
3. Infusion of more capital into the banks.
Which of the statement(s) given above is/are not correct?
(a) 2 only
(b) 1 and 3 only
(c) 1 and 2 only
(d) 2 and 3 only
37. Consider the following statements regarding Dear C
Money Policy:
1. RBI raises the Bank Rate.
2. Commercial banks can get the money at the higher rate
of interest.
3. RBI starts raising the CRR and sells the securities to
Commercial Banks.
Which of the statements given above is/are correct?
(a) 1 only
(b) 1 and 3 only
(c) 1, 2 and 3
(d) None
38. With reference to GDP deflator, a measure of general B
price inflation, consider the following statements:
1. GDP deflator is more comprehensive measure of
inflation than consumer price index and wholesale price
index.
2. Unlike WPI and CPI, monthly change in inflation cannot
be tracked using GDP deflator.
3. A GDP deflator value of zero implies no change in price
levels from the base year.
Which of the statements given above is/are correct?
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2, and 3
39. According to RBI, Banks are required to classify C
Special Mention Accounts (SMA) for which of the
following reasons?
(a) Categorization for different sectors in Priority Sector
Lending.
(b) Capital norms as per Basel III norms.
(c) Early recognition of stressed assets.
(d) None of the above
40. Which of the following factors may increase the level C
of inflation in an economy?
1. Deficit financing
2. Reduction in Indirect taxes
3. Increase in Black money in the economy
4. Defective supply chain
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1, 3 and 4 only
(d) 1, 2, 3 and 4
41. Addition of which of the following into Net National B
Product at market prices would convert it into National
Disposable Income of a country?
1. Remittances from foreign countries.
2. Gifts to residents from foreign citizens.
3. Amount received in the form of aid.
4. Surplus of merchandise export.
Select the correct answer using the code given below.
(a) 1 and 4 only
(b) 1, 2 and 3 only
(c) 2, 3 and 4 only
(d) 1, 2, 3 and 4
42. The "Gross" concept of income accounting can be D
changed to "Net" concept by:
(a) Adjusting for inflation
(b) Adjusting for Exchange rate fluctuations
(c) Adjusting for Bad debts of banks and other financial
institutions
(d) Adjusting for Depreciation
43. With respect to inflation in India, consider the C
following statements:
1. Decline in fuel prices leads to sharper reduction in the
Wholesale Price Index (WPI) as compared to the
Consumer Price Index (CPI).
2. Increase in food prices leads to sharper increase in the
Consumer Price Index (CPI) as compared to Wholesale
Price Index (WPI).
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
44. With reference to Indian economy, consider the B
following:
1. Increase in Bank rate
2. Increase in rates of income tax
3. Decrease in expenditure on healthcare
4. Open Market Operations by the RBI
Which of the above is/are fiscal policy measures?
(a) 1 only
(b) 2 and 3 only
(c) 1, 2 and 3 only
(d) 1, 2, 3 and 4
45. While computing national income, income of only B
normal residents of a country is included. In this context,
which of the following is an example of 'normal residents
of India'?
(a) Ambassador in India from rest of the world.
(b) Ambassador for India in rest of the world.
(c) A foreigner working in the office of WHO located in
India for a period of less than one year.
(d) A foreign technical expert working in India for a period
of less than one year
46. With reference to Gross Domestic Product accounting B
of a country, consider the following statements:
1. The ownership status of goods and services play
important role while accounting for GDP.
2. An oil company spills oil in Ocean causing the damage
in tune of billions. This cost of damage is not accounted in
GDP calculation.
3. GDP accounts for the opportunity cost.
Which of the statements given above is/are not correct?
(a) 1 only
(b) 1 and 3 only
(c) 2 only
(d) 1, 2 and 3
47. Consider the following statements regarding 'Import D
Substitution':
1. It aims to encourage domestic industries gain self-
sufficiency in merchandise as well as services.
2. Import control and tariffs are methods for import
substitution.
3. Defense Indigenisation in India is an example of import
substitution.
Which of the statements given above is/are correct?
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
48. Consider the following statements with reference to D
Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio
(SLR):
1. CRR is the fraction of the total Net Demand and Time
Liabilities maintained by bank with itself in form of cash
deposits.
2. SLR is the fraction of the total Net Demand and Time
Liabilities maintained by bank with RBI in form of
specified liquid assets.
3. CRR and SLR are part of Liquidity Adjustment Facility
(LAF).
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 3 only
(c) 1, 2 and 3
(d) None
49. In Economics, what does the term Usual Principal B
Status indicate?
(a) Comparison of GDP of two different nations
(b) Employment status of a worker
(c) Principal amount invested by a person in
the bank on a particular interest
(d) Status of Non-performing assets
50. Which of the following factors is/are responsible for
informalisation of labour force?
1. Pressure to cut cost of production
D
2. Rigid labour laws
3. Demand - supply imbalance of labour force
Select the correct answer using the code given below.
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
51. Consider the following statements: C
1. Deflation is the persistent fall in the general price level
of goods and services.
2. Disinflation is a decrease in the rate of inflation.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 and 2
52. Which among the following is/are the qualitative tools D
to control credit creation by RBI?
1. Open Market Operations
2. Repo Rate
3. Margin Requirements
4. Credit Rationing Policy
Select the correct answer using the code given below:
(a) 1 and 2 only
(b) 3 only
(c) 1, 2 and 3 only
(d) 3 and 4 only
53. Which of the following functions can be performed by D
a Payment bank?
1. Opening current deposit accounts
2. Opening Demand deposit accounts
3. Accept NRI deposits
4. Distribution of insurances.
5. Utility bill payments
Select the correct answer using the code given below.
(a) 1, 2 and 3 only
(b) 1, 3 and 5 only
(c) 2, 3, 4 and 5 only
(d) 1, 2, 4 and 5 only
54. Which of the following programmes aim at improving D
the food and nutritional status of the poor?
1. Public Distribution System
2. Integrated Child Development Scheme
3. Midday Meal Scheme
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
55. In an economy, head count ratio is the measure of: B
(a) Unemployment
(b) Poverty
(c) Literacy
(d) Malnutrition
56. Consider the following statements regarding C
Employment Elasticity of Growth:
1. It is the percentage change in employment of labour
force in response to percentage change in population
growth.
2. Additional labour force can be suitably employed only
when employment elasticity of growth is high.
3. In India, employment elasticity has shown a declining
trend in the past decade.
Which of the statements given above is/are correct?
(a) 3 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
57. With reference to Gross National Product (GNP), D
consider the following statements:
1. It represents the monetary value of all goods and
services produced within a nation's geographic borders
over a specified period of time.
2. It is always greater than Gross domestic product.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
58. Consider the following statements regarding C
'Substitutes' and 'Complementary' goods?
1. Demand for a good moves in opposite direction of the
price of its complementary goods.
2. Demand of a good usually moves in the direction of the
price of its substitutes.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
59. The term "Escrow account" generally refers to: A
(a) the money held in a third-party account on behalf of
transacting parties.
(b) the bank accounts that could be maintained without or
with very low minimum balance.
(c) the bank account on which no restrictions on the
number of times deposit in cash/cheque can be made.
(d) the bank accounts for senior citizens and disabled
persons.
60. As per the law of demand, with all other factors being A
constant, the demand of any particular good depends on
which of the following factors?
1. price of the good
2. price of other goods
3. consumer preference
Select the correct answer from the code given below.
(a) 1 only
(b) 2 and 3 only
(c) 1 and 2 only
(d) 1, 2 and 3
61. Aggregate demand for final goods in an economy is D
generated though which of the following?
1. Consumption expenditure
2. Investment expenditure
3. Government expenditure
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 only
(d) 1, 2 and 3
62. Microeconomics deals with which of the following B
parameters?
1. Behavior of consumers in the markets for different
goods and services.
2. Employment and aggregate price level.
3. The way prices and quantities of goods and services are
determined in market.
Select the correct answer using the codes given below.
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) 1, 2 and 3
63. With reference to the value added method for national A
income accounting, consider the following statements:
1. Gross Value Added (GVA) at factor cost does not
include any taxes.
2. GVA at basic prices excludes production taxes and
includes production subsidies available on the commodity.
Which of the statement given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
64. Consider the following statements with regard to C
depreciation:
1. It refers to that portion of the capital goods which goes
in maintenance and replacement of existing goods due to
wear and tear.
2. It takes into account unexpected and sudden destruction
caused due to natural calamities.
3. To obtain gross investment in an economy, depreciation
is subtracted from the net investment.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 only
(d) 1 and 3 only
65. Which of the following problems is/are associated with D
the barter system of exchange?
1. It requires the double coincidence of wants.
2. It is difficult to use in large economies.
3. It is difficult to carry forward perishable wealth under
barter system.
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
66. Which of the following is/are the characteristics of B
recession?
1. General fall in demand
2. High inflation
3. Fall in employment rate
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) 1, 2 and 3
67. The Reserve Bank of India performs which of the D
following functions?
1. Regulation and supervision of the non-banking financial
institutions.
2. Management of foreign exchange reserves
3. Banker to banks
4. Banker to the Central and State Governments
Select the correct answer using the code given below.
(a) 1, 2 and 3 only
(b) 1, 2 and 4 only
(c) 3 and 4 only
(d) 1, 2, 3 and 4
68. Consider the following statements with reference to D
relative and absolute poverty:
1. Relative poverty is defined as the condition under which
one cannot afford 'the minimum provision needed to
maintain health and working efficiency'.
2. Absolute poverty is the condition in which people lack
the minimum amount of income needed in order to
maintain the average standard of living in the society in
which they live.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
69. Consider the following statements with reference to D
Consumer Price Index (CPI) and GDP Deflator:
1. GDP deflator includes all goods and services produced
in the country, while CPI does not.
2. CPI includes imported goods, while GDP deflator does
not.
3. Weights assigned to each good is constant in CPI, while
it changes in GDP Deflator.
Which of the statements given above is/are correct?
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
70. Which of the following is correct regarding Giffen B
goods?
(a) The demand of Giffen goods decreases with an increase
in their prices.
(b) The demand of Giffen goods increases with an increase
in their prices.
(c) The demand of Giffen goods does not change with a
change in their prices.
(d) The demand of Giffen goods increases with a decrease
in their prices.
71. With reference to Capital Adequacy Ratio (CAR), A
consider the following statements:
1. It is the ratio of banks capital to its risk-weighted credit
exposure (loans).
2. A bank with lower CAR is considered safe.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
72. Consider the following statements with regard to Price C
Elasticity of Demand of a good:
1. It is the ratio of percentage change in the demand of a
good to the percentage change in its price.
2. For an inelastic good the Price Elasticity of Demand is
less than 1.
Select the correct answer using the code given below.
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
73. In an economy a situation of liquidity trap is C
characterized by which of the following?
1. Low savings rate
2. High demand for bonds
3. Expansionary monetary policy
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 2 and 3 only
(c) 3 only
(d) 1, 2 and 3
74. Which one of the following statement regarding Factor A
of Production is correct?
(a) It is the input that a firm uses in the production process.
(b) It is the output which is produced in the production
process.
(c) It is the additional input that is required to achieve the
maximum output.
(d) It is the ratio of the output to that of the input of the
production process.
75. Which among the following represents the effective B
monetary policy transmission?
(a) Banks increasing the lending rate, when RBI reduces
the Repo rate.
(b) Banks reducing the lending rate, when RBI reduces the
Repo rate.
(c) Banks increasing lending rate, when RBI reduces the
Reverse Repo rate.
(d) Banks increasing the lending rate and deposit rates,
when RBI reduces both Repo and Reverse Repo rate.
76. Consider the following statements: C
1. According to Laffer curve, tax revenues always increase
with increase in tax rate.
2. According to Philips curve, there exist inverse
relationship between rate of unemployment and rate of
inflation.
3. Lorenz curve is a graph showing the degree of inequality
in income in a given population or an economy.
Which of the statements given above is/are correct?
(a) 1 and 3 only
(b) 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
77. Which of the following banks can be classified as D
universal banks?
1. Small Finance banks
2. Payment banks
3. Non-Banking Financial companies
Select the correct answer using the code given below.
(a) 1 only
(b) 1 and 2 only
(c) 1, 2 and 3
(d) None
78. Which of the following can be considered as legal A
tenders?
1. Currency notes issued by the RBI
2. Coins issued by the Government
3. Cheques issued by a private person
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
79. Consider the following statements: C
1. Headline inflation excludes those commodities from its
basket which are volatile in short-term.
2. Core inflation is a correct measure of inflation in long
term.
3. Consumer Price Index (CPI) is the measure of headline
inflation in India.
Which of the following statements given above is/are
correct?
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
80. In an economy, base effect refers to: B
(a) the impact of rise of increased per capita income on
direct tax revenue.
(b) the impact of rise in price level in the previous year
over the corresponding rise in price levels in current year.
(c) the impact on lending capacity of the banks due to
slowdown in the economy.
(d) the impact on exchange rate due to lower growth in the
economy
81. Consider the following differences between Marginal B
Cost of Funds based Lending Rate (MCLR) and Base Rate:
1. Unlike base rate calculation, Cash Reserve Ratio (CRR)
cost is considered in the calculation of MLCR.
2. Unlike base rate calculation, Repo rate is mandatory in
the calculation of MCLR.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
82. Consider the following factors: A
1. Increase in government expenditure
2. Rising population and household consumption
3. Buying and selling of real estate in urban areas
4. Fluctuations in output and supply
5. Increase in administered prices
Which of the above is/are attributed to the demand-pull
factors of inflation?
(a) 1, 2 and 3 only
(b) 1, 3 and 5 only
(c) 2, 3 and 4 only
(d) 4 and 5 only
83. With reference to Inflation Targeting, consider the D
following statements:
1. It indicates the primacy of price stability as the key
objective of fiscal policy by the government.
2. It aims to target wholesale price index.
3. It was recommended by Nachiket More Committee.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) None
84. Which of the following is/are the likely impacts of B
salary hike on a market in equilibrium?
1. There will be higher demand for goods.
2. Consumers will spend less on an inferior good and shift
to superior goods.
3. Suppliers will increase supply owing to higher demand,
with no impact on equilibrium.
Select the correct answer using the code given below.
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
85. Consider the following statements with regard to C
proportional taxation:
1. The rate of taxation does not change as the taxable
amount increases or decreases.
2. It makes consumer spending less sensitive to
fluctuations in GDP.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
86. Which among the following employment are part of D
unorganized sector in India?
1. Sweeper working in PWD department on contract basis
2. Household industry with 8 employees
3. Rickshaw puller
4. Domestic servant
Select the correct answer using the code given below.
(a) 1, 2 and 4 only
(b) 1 and 3 only
(c) 2, 3 and 4 only
(d) 1, 2, 3 and 4
87. Which of the following inflation indices are released by A
Central Statistical Office (CSO)?
1. CPI (Combined)
2. Wholesale Price Index (WPI)
3. Consumer Food Price Index (CFPI)
4. CPI (Industrial Worker)
Select the correct answer from the code given below.
(a) 1 and 3 only
(b) 1, 3 and 4 only
(c) 1, 2 and 4 only
(d) 2 and 3 only
88. With reference to monetary aggregates M1 and M2, A
also known as narrow money, consider the following
statements:
1. M1 is the most liquid part of the money supply.
2. M2 is obtained by excluding Savings with Post offices
from M1.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
89. Consider the following statements with regard to C
private and public goods:
1. Private goods are rivalrous in nature which means that
its consumption by one individual prevents another
individual from consuming it.
2. Public goods are non-excludable in nature which means
there is no feasible way of excluding anyone from enjoying
the benefits of the good.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
90. Consider the following statements with reference to B
'Economically Active Population':
1. It is the population in the age group of 15-59 years.
2. It has increased in the last two decades in India.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
91. Consider the following statements with regard to the A
Gini Coefficient:
1. It depicts the economic inequalities prevailing in the
country.
2. Its value ranges from 0 to 1, with 0 representing high
inequality and 1 representing that there is no income
inequality in the country.
Which of the above statement/statements is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
92. Which among the following correctly describes C
skewflation in an economy?
(a) It refers to a situation of inflation combined with a slow
growth rate and a relatively high unemployment rate.
(b) It refers to a sustained, across-the-board price increase
in the market.
(c) It refers a price rise in one or a small group of
commodities over a sustained period of time along with
decreasing prices in others.
(d) None of the above
93. Which among the following sectors is/are covered D
under the Index of Industrial Production (IIP)?
1. Mining
2. Manufacturing
3. Electricity
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
94. With reference to the Demographic Dividend, consider C
the following statements:
1. A country with a high population between 15-64 years is
considered to have a high demographic dividend.
2. Focus on providing skill development and education will
help in effective utilization of demographic dividend.
Which of the statements is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
95. Which of the following was/were features of the B
Mahalanobis growth model?
1. Emphasis on Self-Reliance
2. Indicative planning
3. Emphasis on heavy goods industries
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 1 and 3 only
(c) 3 only
(d) 1, 2 and 3
96. With reference to Incremental Capital Output Ratio A
(ICOR), consider the following statements:
1. It refers to the additional capital required to generate
additional output in the economy.
2. A higher value of ICOR represents higher efficiency of
investment in the economy.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
97. Consider the following statements, regarding India's C
economic policy before 1991 reforms:
1. Private industries were allowed in every field but license
was mandatory.
2. Large business houses required permission from the
government to expand their business operations.
3. Rate of taxation was kept minimum to encourage faster
growth.
Which of the statements given above is/are not correct?
(a) 1 and 2 only
(b) 2 only
(c) 1 and 3 only
(d) 1, 2, and 3
98. Which of the following is/are characteristics of a B
capitalist system of economy?
1. Income equality
2. Production for profit
3. Minimal government intervention
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 2 and 3 only
(c) 3 only
(d) 1, 2 and 3
99. Which of the following factors can be attributed to D
growth of unemployment in India?
1. Slow growth in agricultural and industrial productivity.
2. Slow expansion of manufacturing sector
3. Concentration of investment in capital goods industry.
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) 1, 2 and 3
100. Consider the following statements: C
1. Only the companies having the Navratna status are
eligible for obtaining Maharatna status.
2. To be eligible for Miniratna status a company should
have profits continuously for three years.
3. Coal India Limited and Steel Authority of India Limited
are Maharatna companies.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 1 only
(c) 2 and 3 only
(d) 1, 2 and 3