Previous Year Questions: Economics- 5 - UPSC MCQ

When interest rates are rising, both businesses and consumers will cut back on spending. This will cause earnings to fall and stock prices to drop. On the other hand, when interest rates have fallen significantly, consumers and businesses will increase spending, causing stock prices to rise.

The correct option is A.
It recommended the introduction of a four tier banking system in the country: I tier: 3 or 4 International Banks; II tier: 8 to 10 National Banks; III tier Regional Banks; and IV tier: Rural Banks.

C is the correct option.The best way for a bank to avoid loss is to accept only sound collateral. In lending agreements, collateral is a borrower's pledge of specific property to a lender, to secure repayment of a loan.

C is the correct option.Long-term funds in the capital market can be raised either by borrowing from certain institutions or through  issue of securities.
Involve the public issue of equity and preference shares in the stock exchange. Issuing shares is the most common method of raising long-term capital because there are various many investors who are ready to invest in the capital market. Therefore, shares are used to finance projects having a long gestation period.
 

The correct answer is D as Bank rate, Statutory Cash Reserve Requirement, Statutory Liquidity Ratio are the instruments of quantitative credit control.
Except the interest rate on saving deposit.
 

As of July 2020 after the recent mergers of government banks, there are a total of 12 nationalized banks in India and RBI is the governing body that manages these nationalised banks.

A demand deposit account (DDA) consists of funds held in a bank account from which deposited funds can be withdrawn at any time, such as checking accounts. DDA accounts can pay interest on a deposit into the accounts but aren’t required. A DDA allows funds to be accessed anytime, while a term deposit account restricts access for a predetermined time.

D is the correct option.Lowering of the value of a currency of a country tends to raise its exports by making its goods cheaper for foreigners. On the other hand, devaluation or depreciation makes the imports from abroad expensive in terms of domestic currency (rupees in case of India) and therefore the imports tend to fall.

In the investing world, the terms "bull" and "bear" are frequently used to describe market conditions. These terms are used to describe how stock markets are doing in general—that is, whether they are appreciating or depreciating in value. And as an investor, the direction of the market is a major force that has a huge impact on your portfolio. So, it's important to understand how each of these market conditions may impact your investments.