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CBSE Questions for Class 8 General Knowledge Indian Economy Quiz 11 - MCQExams.com
CBSE
Class 8 General Knowledge
Indian Economy
Quiz 11
Which one of the following is tho major source of the revenue to State Government in India ?
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0%
Agricultural Income Tax
0%
Professional Tax
0%
General Sales Tax
0%
Stamp Duties
Which one of the following Is correct about the component of the State Government's Budget in India ?
The first pan consist the current receipts and expenditure.
The second part consist the capital receipts and expenditure.
The third part consist market borrowings and grants receipts from the Union Government.
Select the correct answer using the codes given below
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0%
1 and 2
0%
1 and 3
0%
2 and 3
0%
All of these
Consider the following Taxes/duties
Stamp and Registration Duties
Land Revenue
Tax on Urban Immovable properly
General Sales Tax
Which of the taxes/duties given above are the main sources of the revenue from the property and capital transaction of the State Government In India ?
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0%
1, 2, 3 and 4
0%
1, 2 and 3
0%
2 and 3
0%
2 and 4
Consider the following statements:
1) Buying and selling of the eligible securities by Reserve Bank of India is an important feature of the open market operation.
2) Open market operation influences the volume of loans and advance made by the commercial banks in India.
Which of the statements given above is/are correct?
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0%
Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Explanation
Open market operations refer to buying and selling of Govt securities by the Central Bank, i.e. RBI to control money supply in the economy. This in turn has an effect on the amount of loans and various other advantages given by the commercial banks due to the change in money available for lending operations.
With reference to Fiat Money, consider the following statements:
1) It is the money declared by a government to be legal tender.
2) It is the money without intrinsic value.
3) It is the state issued money which is neither legally convertible to any other thing, nor fixed in value terms of any objective standard.
Which of the statements given above is/are correct?
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0%
1 and 2
0%
Only 1
0%
Only 2
0%
All of these
Explanation
Fiat money is currency that has the government backing and is declared by it to be legal tender. It is not backed by a physical commodity and thus doesn't have any intrinsic value. Its value is derived from the relationship between demand and supply rather than the value of the material that the money is made of.
Which one of the following is the custodian of Foreign Exchange Reserve of the Indian Government?
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0%
Security Exchange Board of India
0%
Insurance Regulatory Development Authority
0%
Reserve Bank of India
0%
President of India
Explanation
India's Forex reserves consist of foreign currencies, bank deposits, bonds and other financial assets like gold. They are managed by the Reserve Bank of India. India's Forex reserves are worth roughly $425 billion.
Consider the following statements
The basic defect of the Sale Tax is that it is regressive in nature.
The basic defect of the sales tax is that it is easily evade in the high priced goods.
Which of the statements given above is/are the main defect/defects of the Sales Tax in India ?
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0%
Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Consider the following statements
Interest Tax is the tax imposed on the interest income of commercial banks on their gross loans and advances .
Interest tax is in effect currently only in India.
Which of the above statements is/are correct ?
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0%
Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Which from the followings is NOT true when the interest rate in the economy goes up ?
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0%
Saving increases
0%
Lending decreases
0%
Cost of production increases
0%
Return on capital increases
Explanation
The rise in interest rates results in increasing cost of borrowing so lending decreases because businesses do not borrow at high cost. Moreover it results in increase in cost of production as the cost for all suppliers of raw material increases due to increase in their borrowing cost. For individuals the savings increase as they start saving in lieu for higher return s interest. Higher rates of interest result in decrease in return on capital as cost of investment in capital increases.
When the Reserve Bank of India reduces the Statutory Liquidity Ratio by 50 basis points, which of the following is likely to happen?
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0%
India's GDP growth rate increases drastically.
0%
Foreign Institutional Investor may bring more capital into our country.
0%
Scheduled Commercial Banks may cut their lending rates.
0%
It may drastically reduce the liquidity to the banking system.
Explanation
SLR is a mechanism used by RBI to regulate liquidity of assets and requires the banks to invest a certain portion of their deposits in RBI approved securities or gold. When SLR is reduced, banks have more money to lend which may lead to decrease in lending rates.
An increase in the bank rate generally indicates that the ___________.
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0%
market rate of interest is likely to fall.
0%
central Bank is no longer making loans to commercial banks.
0%
central Bank is following an easy monetary policy.
0%
central Bank is following a tight monetary policy.
Explanation
TION
Bank rate refers to rate at which the Central bank lends money to its clients for long term. An increase in this rate means that the Central bank is following a tight monetary policy as increase in rates will lead to decrease in money supply thereby leading to decrease in inflation and reduction in investment.
Consider the following statements:
1) Liquidity Adjustment Facility operations help the RBI effectively transmit Interest rate signals to the market.
2) Under the repo or repurchase option, banks borrow money from the RBI via the sale of securities with an agreement to purchase the securities back at a fixed rate at a future date.
Which of the statement(s) given above is/are correct?
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0%
Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Explanation
Liquidity Adjustment Facility is a mechanism used by RBI to control liquidity and transmit interest rate signals to the market. Banks can borrow money for short term at repo rate in case of emergency or for making adjustments to comply with SLR/CRR requirements.
Consider the Following Statements
1 . Scheduled Commercial Banks are those which have been included in the First Scheduled of RBI Act , 1934 .
2 . Non -scheduled Commercial Banks are those which have been included in the Second Scheduled of RBI Act , 1934 .
Which of the statement given above is / are correct ?
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0%
Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Consider the following measures:
1) Repo Rate
2) Cash Reserve Requirement
3) Reverse Repo Rate
Which of the measures given above is/are major instrument(s) used in the Liquidity Adjustment Facility (LAF)?
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0%
1 and 2
0%
1 and 3
0%
2 and 3
0%
Only 2
Explanation
Liquidity Adjustment Facility is a mechanism used by RBI to control liquidity and transmit interest rate signals to the market. Banks can borrow money for short term at repo rate in case of emergency or for making adjustments to comply with SLR/CRR requirements. Government securities are used as collateral in this case.
On the other hand, RBI can borrow from the banks at reverse repo rate by lending securities.
Consider the following statements about the Reserve Requirements:
1) Reserve requirement can be used as an instrument of monetary policy.
2) Required reserve ratio is used as a tool to influence the country's borrowing and interest rates.
Which of the statements given above is/are correct?
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0%
Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Explanation
Reserve ratios like CRR, SLR are key instruments of monetary policy at the disposal of the RBI. An increase in these ratios can lead to decrease in money supply and liquidity in the market and vice-versa. This in turn can influence the country's borrowing and interest rates as banks change their rates depending upon the money available for lending with them.
Consider the following statements
1 . In Indian Commercial Banking System , the number of the Non-scheduled Bank is more than the Scheduled Banks.
2 . The Non-Scheduled Banks in India Commercial Banking System are even less than a dozen in number.
Which of the statement given above is / are correct ?
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Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Open market operations of Reserve Bank of India refers to
Report Question
0%
trading in securities
0%
auctioning of foreign exchange
0%
transaction in gold
0%
None of above
Explanation
Open Market Operations refer to the purchase and sale of the Government securities(trading of the securities) by RBI from/to market. The objective of Open Market Operations is to adjust the rupee liquidity conditions in the economy on a durable basis.
With regards to Scheduled Commercial Banks ,consider the following statements about Regional Rural Banks (RRBs) in India
1 . RRBs are limited to a specific region comprising one or more district of a State .
2 . RRBs grant direct loans and advances only to small and marginal farmers .
3 . The lending rate of the RRBs is always less than the prevailing rates of Indian Commercial Banks.
4 . RRBs are functioned under the supervision of Security Exchange Board of India .
Which of the statement given above is / are correct ?
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0%
1 , 2 , 3 and 4
0%
1 , 2 and 3
0%
2 and 3
0%
3 and 4
With reference to Indian economy , consider the following statements
1 . The Lead Bank Scheme was started towards the close of 1980.
2 . The Lead Bank Scheme was aimed to bring a balanced regional development in the country.
Which of the statement given above is / are correct ?
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0%
Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Which one among the following money supplies is also known as Narrow Money in the Indian economy?
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0%
M1
0%
M2
0%
M3
0%
M4
Explanation
Narrow Money is denoted by M1 and is one of the basic indicators of money supply. It includes the total currency in circulation + demand deposits with banks (eg. savings deposits, current deposits etc) + other deposits with the RBI.
Which of the following is/are examples of ' Near Money'?
1) Treasury bill
2) Credit card
3) Savings accounts and small time deposits
4) Retail money market mutual funds
Select the correct answer using the codes given below.
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0%
Only 1
0%
Only 2
0%
1 , 2 and 3
0%
1 , 3 and 4
Explanation
'Near Money' refers to non-cash assets which are highly liquid, such as bank deposits (saving deposits, current deposits etc), treasury bills, money markets, widely traded foreign currencies etc. These are sometimes also referred to as 'quasi-money'.
With reference to Gilt-edge Securities , consider the following statements
1) it is long term fixed-rate bonds.
2) It is very sensitive to changes in interest rates.
3) It is less demand in the market than the private commercial papers.
Which of the statements given above is / are correct ?
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0%
1 and 2
0%
2 and 3
0%
Only 2
0%
All of these
As we all know , Indian money market is divided in three sectors ,namely organised sector, unorganised sector and co-operative sectors . Call money market is the part of which of the following ?
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0%
Organised sector
0%
Unorganised sector
0%
Co-operative sector
0%
All of the above
With reference to India consider the following
1 . Nationalisation of banks
2 . Formation of Regional Rural Banks
3 . Adoption of village by bank branches
Which of the statement given above are correct about the Indian banking System ?
Report Question
0%
1 and 2
0%
1 and 3
0%
2 and 3
0%
1 , 2 and 3
Consider the following repo options
1) Term repo option refers to a repo with a specified end date in the money market.
2) Overnight repo option has a one-day maturity transaction period in the money market.
3) Open repo option has end date.
Which of the repo rates given above is / are correct ?
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0%
Only 1
0%
1 and 3
0%
2 and 3
0%
All of the above
Consider the following statements:
1) In India , the Cash Reserve Requirement is between 3 to $$15\%$$ of the total demand and time deposits of the commercial banks.
2) In India , the Statutory Liquidity Requirement is not less than $$25\%$$ of the total demand and time deposits of commercial banks.
Which of the statements given above is/are correct about the General Credit Control measures used by the RBI?
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0%
Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Explanation
In current times, the CRR in India remains around 4% of the total demand and time deposits while the SLR remains around 20% of the total demand and time deposits. These values may fluctuate depending upon the periodic monetary policy reviews of the RBI.
Consider the following roles:
1) Bank of issue
2) Controller of credit
3) Supervision to bring sound banking
4) Banker to government
Which of the roles given above are the functions or roles of the Reserve bank of India?
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0%
1 and 2
0%
1 and 3
0%
1 , 2 and 4
0%
All of these
Explanation
RBI is the banker's bank and also the banker to the Govt. It is also the Bank of Issue as it has the responsibility of minting the currency under the RBI Act.
Through various mechanisms like SLR, CRR, LAF etc, it also controls the amount of credit and money supply. RBI also has the responsibility of regulating the banking sector and provides rules, regulations and guidelines in order to ensure sound banking in the country.
Consider the following statements:
1) The printing of notes is the total management of Reserve Bank of India.
2) The volume of rupee coins and smaller coins are controlled by the Ministry of Finance.
Which of the statements given above is/are correct?
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0%
Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Explanation
As per RBI Act, minting of currency except for one rupee notes and coins is the responsibility of the RBI.
As per Coinage Act, Ministry of Finance, Government of India has the responsibility of minting coins. However, the Government doesn't control the volume and circulation of coins.
Which one among the following is correct about the Repo Rate in the Indian Economy?
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0%
It is the rate at which banks borrow funds from the RBI
0%
It is the rate at which banks park their funds with the Central Bank
0%
It is the percentage difference in the prices of repurchase of the bills from the original prices
0%
Both 'a' and 'c'
Explanation
Repo rate is a mechanism under the Liquidity Adjustment Facility (LAF) under which the banks borrow money from the Central Bank using Government securities as the collateral, with an obligation to buy back the securities later.
Consider the following statements about Sinking Fund
1) It is a method of repayment of public debt.
2) It is created by the government out of budgetary revenues every year.
Which of the statements given above is / are correct ?
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0%
Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Explanation
A Sinking Fund is a means of repaying debt borrowed through a bond issue through periodic payments to a trustee. The money deposited in the Fund is used to retire preferred stocks and debentures. A Sinking Fund provides additional safeguards to the bond holders.
Consider the following liquid assets
1 . Demand deposits with the banks
2 . Time deposits with the banks
3 . Saving deposits with the banks
4 . Currency
The correct sequence of these assets in the decreasing order of liquidity is
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0%
1-4-3-2
0%
4-3-2-1
0%
2-3-1-4
0%
4-1-3-2
Consider the following objectives:
1) To restrict the expansion of bank credit.
2) To augment the investment of the banks in government securities.
3) To ensure solvency of banks.
Which of the objectives given above are the main objectives of the Statutory Liquidity Requirements (SLRs)?
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0%
1 and 2
0%
1 and 3
0%
2 and 3
0%
All of these
Explanation
Statutory Liquidity Ratio (SLR) refers to the percentage of money which the banks have to set aside and invest in gold or RBI approved securities. It is maintained by the banks with themselves and restricts the banks' leverage in pumping more money into the economy. This is to ensure the solvency of banks and also augment the investment of the banks in Govt securities. SLR also restricts expansion of credit thereby controlling inflation.
Which of the following grants / grant direct credit assistance to rural households ?
1 . Regional Rural Banks.
2 . National Bank for Agriculture and Rural Development.
3 . Land development Banks.
Select the correct answer using the codes given below.
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0%
1 and 2
0%
Only 2
0%
1 and 3
0%
All of the above
Consider the following statements
1 . Priority Sector Lending is started since the establishment of the Banking system in India.
2 . Priority Sector Lending is mainly aimed to give adequate assistance to those sector which contributed a significant proportion of national product.
Which of the statement given above is / are correct ?
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0%
Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
The terms 'Marginal Standing Facility Rate' and 'Net Demand and Time Liablities', sometimes appearing in news, are used in relation to _________________.
Report Question
0%
banking operation
0%
communication networking
0%
military Strategies
0%
supply and demand of agricultural products
Explanation
Marginal Standing Facility is a ruote created by the RBI (came in May 2011) under which banks can barrow maximum 1 per cent (fixed by the RBI) of their Net Demand and Time Liabilities (NDTL) from the RBI for one night. This works as an alternate ruote to the Repo but is costlier to it.
Consider the following transactions
1) Payment between Nepal and India.
2) Payment between Bhutan and India.
Which of the payments given above is / are the payments not eligible for settlement though the Asian Clearing Union ?
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0%
Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Shishu , Kishor and tarun are the schemes of
Report Question
0%
Regional Rural Banks.
0%
Micro Units Development and Refinance Agency Limited (MUDRA).
0%
Small Industries Development Bank of India.
0%
Industrial Development Bank of India.
Explanation
The primary product of PM's 'Pradhan Mantri Mudra Yojana' will be providing refinance for lending to micro businesses. The interventions have been named 'Shishu', 'Kishor', and 'Tarun' to signify the stage of growth/development.
Consider the following statements
1 . Differential interest Rate (DIR) Scheme was introduced in the Fifth Five Year Plan in India.
2 . Under the DIR Scheme , Public Sector Banks give loans and advance to the weaker sections of the society who have no tangible security.
Which of the statement given above is / are correct ?
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0%
Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Consider the following statements
Foreign banks are allowed to operate in India through branches and representative offices only.
The largest branch network of foreign banks in India is the Standard Chartered Bank.
Which of the statement given above is / are correct ?
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0%
Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Consider the following statements
1 . Allahabad Bank was the first bank to be established exclusively by Indians.
2 . Seven banks forming subsidiary of State Bank of India was nationalised in 1960.
Which of the statement given above is / are correct ?
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0%
Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Consider the following statements:
1) During inflation, RBI increases the Cash Reserve Ratio.
2) During deflation, RBI increases the cash Reserve Ratio.
Which of the statements given above is/are correct?
Report Question
0%
Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Explanation
In case of high inflation, RBI increases the CRR which decreases the amount of cash available to the banks for lending purposes. This reduces the money supply in the economy thereby decreasing the rate of inflation in the economy.
Consider the following criteria with regards to the allotment of different districts to Indian banks under the Lead Bank Scheme
1 . Size of the banks .
2 . Adequacy of its resources to take part in Lead bank scheme .
3 . Regional orientation of the banks .
4 . Banks wishes to involve in Loan Mela .
Which of the criteria given above are considered for the selection of banks to take part in the 'Lead Bank Scheme' ?
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0%
1 , 2 , 3 and4
0%
1 , 2 and 3
0%
2 and 3
0%
3 and 4
Consider the following statements
1 . Global Trust Bank (GTB) has been amalgamated with the Punjab National Bank.
2 . The second report of the Kelkar Committee dealing with direct and indirect taxes has maintained its original recommendation including the abolition of exemptions relating to housing loans.
Which of the statement given above is / are correct ?
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0%
Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Which of the following is / are the objectives of MURDA Bank ?
1 . Regulates the lender and borrower of microfinance and bring stability to microfinance system.
2 . Extent finance and credit support to Microfinance Institutions and agencies.
3 . Develop the standardised covenants that will from the backbone of the last mile business in future.
4 . Introduce appropriate technologies to assist in the process of efficient lending , borrowing and monitoring of distributed capital.
Choose the right answer from the following codes.
Report Question
0%
1 and 2
0%
1 , 2, 3 and 4
0%
3 and 4
0%
None of these
Who was the first Governor of RBI?
Report Question
0%
CD Deshmukh
0%
Sir James Taylor
0%
PC Bhattacharya
0%
Sir Osbornesmith
Explanation
Sir Osborne Smith was the first Governor of RBI. Urjit Patel is the current and 24th Governor of the RBI.
Which among the following is / are true about the contactiess credit cards launched by ICICI ?
1 . The card is powered by 'VISA Pay Wave ' contactless technology .
2 . The card can also be used by dipping or swiping at the non-contactless merchants .
3 .It offers dual advantage of reward programme on the expenses and repayments of credit cards .
4 . The technology enables cardholder to make payments by simply tapping card at contactless enabled terminals in more than 48 countries including India .
choose the correct answer from the following codes
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0%
1 ,2 ,3 and 4
0%
1 and 4
0%
2 and 3
0%
1 , 3 and 4
Consider the following statements
1 .The maximum limit for house holding of India promoters in private sector banks in India is $$49\%$$ of the paid up capital.
2 . Foreign Direct Investment (FDI) upto $$49\%$$ from all sources is permitted in private sector banks in India under the automatic route.
Arrange the following correctly
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0%
Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Which one of the following is correctly matched ?
List I List II
(Bank ) (Headquarters )
1 . Standard Chartered : United Kingdom
2 . Citibank : United States
3 . Dresdner Bank AG : Germany
Select the correct answer using the codes given below.
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0%
1 and 2
0%
Only 1
0%
2 and 3
0%
All of these
Consider the following about the Lead Banks' role in the Lead Bank Scheme
1 . To co-ordinate the Co-operative banks , commercial banks and other financial institutions in their allotted districts .
2 . To survey and Identify the unbanked districts and take initiatives to open bank branches .
3 . To estimate the deposits potential and the credit gaps and fill the vaccum in the districts .
Which of the roles given above is / are correct ?
Report Question
0%
Only 1
0%
1 and 3
0%
2 and 3
0%
All of these
Consider the following statements .
Regional Rural Banks
1 . have limited area of operations .
2 . have free access to liberal refinance facilities with NABARD .
3 . are required to lend only to weaker sections.
Which of the statement given above is / are correct ?
Report Question
0%
1 and 2
0%
1 and 3
0%
2 and 3
0%
only 2
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