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Test: Indian Economy and Indian Financial System - 1 - Bank Exams MCQ


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30 Questions MCQ Test Mock Test Series for JAIIB Exam 2025 - Test: Indian Economy and Indian Financial System - 1

Test: Indian Economy and Indian Financial System - 1 for Bank Exams 2024 is part of Mock Test Series for JAIIB Exam 2025 preparation. The Test: Indian Economy and Indian Financial System - 1 questions and answers have been prepared according to the Bank Exams exam syllabus.The Test: Indian Economy and Indian Financial System - 1 MCQs are made for Bank Exams 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Indian Economy and Indian Financial System - 1 below.
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Test: Indian Economy and Indian Financial System - 1 - Question 1

What is the two-stage reporting process for an Indian company receiving FDI through the automatic route?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 1

The Indian company must first report to the foreign exchange department of the RBI and then submit required documentation with the same department upon issue of shares to non-resident investors.

Test: Indian Economy and Indian Financial System - 1 - Question 2

What is the impact of increasing production costs in the boom phase on the fixed-income category?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 2

They reduce their consumption as they can't afford to keep up with rising prices. The fixed income group finds it difficult to cope with rising prices as their income does not increase accordingly, leading to reduced consumption.

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Test: Indian Economy and Indian Financial System - 1 - Question 3

Which of the following elements are not taken into account when determining 'Owned Funds'?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 3

'Owned Fund' is calculated by aggregating the paid-up equity capital, preference shares, balance in share premium account, and capital reserves representing surplus, arising out of sale proceeds of assets, excluding reserves created by revaluation of assets, after deducting therefrom accumulated balance of loss, deferred revenue expenditure, and other intangible assets.

Test: Indian Economy and Indian Financial System - 1 - Question 4

What is the fundamental purpose of the Depositories Act, 1996 in India from an economic standpoint?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 4

The Depositories Act, 1996 came into being in August, 1996, to provide for regulation of depositories in securities and for matters connected therewith or incidental thereto.

Test: Indian Economy and Indian Financial System - 1 - Question 5

When did Infrastructure Investment Trusts (InvITs) commence operations in India?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 5

InvITs were introduced in India in 2014 as trust-based financial instruments to enable participation, to a wide investor base, in infrastructure financing.

Test: Indian Economy and Indian Financial System - 1 - Question 6

Which of the following explains the ineligibility of non-scheduled banks' in gaining membership of clearing houses?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 6

Non-scheduled banks are those that are not included in the second schedule to the RBI Act, and as a result, they cannot become members of clearing houses.

Test: Indian Economy and Indian Financial System - 1 - Question 7

The government's approach to addressing developmental issues in India involved what specific interventions and policy measures?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 7

The government addressed the developmental issues through five-year plans by setting targets and ensuring the allocation of funds for the development of various sectors.

Test: Indian Economy and Indian Financial System - 1 - Question 8

What are the economic consequences of the integration of financial markets on the global economy?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 8

Implications of integration of financial markets include reduced arbitrage opportunities across financial centres, increased cross-border mobility of funds, changes in the term structure of interest rates, and harmonization of prudential regulations.

Test: Indian Economy and Indian Financial System - 1 - Question 9

What is the specific clause in Chapter III-F of the RBI Act, 1934 that outlines the provision of information to the Monetary Policy Committee (MPC) members?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 9

Sub-section 45ZM Chapter III-F of the RBI Act, 1934 deals with Monetary Policy and its various aspects, including the Monetary Policy Committee (MPC). Sub-section 45ZM deals with the information provided to the members of the MPC.

Test: Indian Economy and Indian Financial System - 1 - Question 10

What is the prescribed time period for the issuance of government securities in the financial market as per the financial regulatory framework?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 10

The period for which government securities are issued can vary from less than 1 year (for Treasury Bills) to 40 years and above.

Test: Indian Economy and Indian Financial System - 1 - Question 11

What is the name of the indicator that shows the relationship between nominal GDP and money supply?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 11

The ratio between nominal GDP and money supply is called 'Velocity of Money'.

Test: Indian Economy and Indian Financial System - 1 - Question 12

The Prime Minister dedicated Digital Banking Units (DBU) across districts to the nation. These DBU will further financial inclusion and enhance banking experience for citizens. The government aims to provide maximum services with minimum infrastructure, and all of this will happen digitally without involving any paperwork. It will also simplify the banking procedure while also providing a robust and secure banking system. Recently, the Reserve Bank of India (RBI) also issued guidelines on ‘Establishment of DBUs
In which types of centres can SCBs open DBUs in without seeking permission from the RBI?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 12

The SCBs are permitted to open DBUs in Tier 1 to Tier 6 centres without the need to seek permission from RBI, unless otherwise specifically restricted.

Test: Indian Economy and Indian Financial System - 1 - Question 13

The Prime Minister dedicated Digital Banking Units (DBU) across districts to the nation. These DBU will further financial inclusion and enhance banking experience for citizens. The government aims to provide maximum services with minimum infrastructure, and all of this will happen digitally without involving any paperwork. It will also simplify the banking procedure while also providing a robust and secure banking system. Recently, the Reserve Bank of India (RBI) also issued guidelines on ‘Establishment of DBUs
What are the specific features and functionalities available to customers at the self-service zone of a DBU?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 13

The self-service zone of a DBU allows customers to access an ATM, a Cash Deposit Machine, print pass book, access internet banking, pay bills and taxes, etc.

Test: Indian Economy and Indian Financial System - 1 - Question 14

The Prime Minister dedicated Digital Banking Units (DBU) across districts to the nation. These DBU will further financial inclusion and enhance banking experience for citizens. The government aims to provide maximum services with minimum infrastructure, and all of this will happen digitally without involving any paperwork. It will also simplify the banking procedure while also providing a robust and secure banking system. Recently, the Reserve Bank of India (RBI) also issued guidelines on ‘Establishment of DBUs
In the context of financial technology, what is a Digital Banking Unit (DBU)?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 14

A physical banking outlet with digital infrastructure for delivering banking services. DBU stands for "a specialized fixed-point business unit/hub housing certain minimum infrastructure for delivering digital banking products & services as well as servicing existing financial products & services digitally".

Test: Indian Economy and Indian Financial System - 1 - Question 15

What is the basis for determining the interest rates according to the classical theory of interest?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 15

The theory asserts that interest rates are determined by the equilibrium of demand and supply of savings.

Test: Indian Economy and Indian Financial System - 1 - Question 16

What does the interpretation of the term "foreign exchange" in the context of the FEMA, 1999, as per the provisions of Section 2(n) include?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 16

The definition of 'foreign exchange' as per Section 2(n) of FEMA, 1999, includes both (a) deposits, credits, and balances payable in any foreign currency and (b) drafts, travellers' cheques, letters of credit or bills of exchange, expressed or drawn in Indian currency but payable in any foreign currency.

Test: Indian Economy and Indian Financial System - 1 - Question 17

Which among the following options is not considered as a program to tackle legacy non-performing assets (NPAs)?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 17

Financial Awareness Weeks aims to create awareness about financial products, services and good financial practices.

Test: Indian Economy and Indian Financial System - 1 - Question 18

Which of the following factors is not deemed to be a cause of non-performing assets (NPAs)?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 18

Improved asset quality reduces the levels of NPA in the banking system.

Test: Indian Economy and Indian Financial System - 1 - Question 19

What are the three fundamental characteristics that define the concept of interest?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 19

Three elements can be distinguished in interest: (i) payment for the risk involved in making the loan; (ii) payment for the trouble involved; (iii) pure interest, that is a payment for the use of the money.

Test: Indian Economy and Indian Financial System - 1 - Question 20


If the price is $10, what is the excess demand in the market?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 20

At $10, the quantity demanded is 100, while the quantity supplied is 20. The excess demand is 100 - 20 = 80 units.

Test: Indian Economy and Indian Financial System - 1 - Question 21


At what price will the market be in equilibrium?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 21

$30 At $30, the quantity demanded and quantity supplied are both 60, which is the equilibrium point.

Test: Indian Economy and Indian Financial System - 1 - Question 22


If the price is $25, what is the quantity supplied in the market?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 22

At $25, the quantity demanded is 70 (interpolating between $20 and $30), while the quantity supplied is 50.

Test: Indian Economy and Indian Financial System - 1 - Question 23

What is the tenor of financial assistance typically offered by DFIs in India?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 23

DFIs in India typically offered financial assistance with a tenor of up to 10 years, with a suitable initial moratorium period, which means that borrowers were given a grace period before they started repaying the loan.

Test: Indian Economy and Indian Financial System - 1 - Question 24

The Reserve Bank of India (RBI) has issued a note on Central Bank Digital Currency (CBDC). CBDC pilot launched by the RBI in retail segment has components based on blockchain technology. RBI has identified 9 banks for phase-wise participation in the retail pilot project. Like cash, the CBDC will not earn any interest and can be converted to other forms of money, like deposits with banks. Other steps being taken by RBI for full operationalisation of CBDC include expanding the scope of the pilots gradually to include more banks, users and locations based on feedback received during the pilots.
Among the following options, which bank is not included in RBI’s CBDC pilot project initiative?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 24

Punjab National Bank 9 prominent banks have been identified for participation in the pilot project. These are State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC.

Test: Indian Economy and Indian Financial System - 1 - Question 25

The Reserve Bank of India (RBI) has issued a note on Central Bank Digital Currency (CBDC). CBDC pilot launched by the RBI in retail segment has components based on blockchain technology. RBI has identified 9 banks for phase-wise participation in the retail pilot project. Like cash, the CBDC will not earn any interest and can be converted to other forms of money, like deposits with banks. Other steps being taken by RBI for full operationalisation of CBDC include expanding the scope of the pilots gradually to include more banks, users and locations based on feedback received during the pilots.
Which of the following characteristic is not a feature of a central bank digital currency (CBDC)?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 25

Non- fungible legal tender It is fungible legal tender i.e freely convertible against fiat currency.

Test: Indian Economy and Indian Financial System - 1 - Question 26

The Reserve Bank of India (RBI) has issued a note on Central Bank Digital Currency (CBDC). CBDC pilot launched by the RBI in retail segment has components based on blockchain technology. RBI has identified 9 banks for phase-wise participation in the retail pilot project. Like cash, the CBDC will not earn any interest and can be converted to other forms of money, like deposits with banks. Other steps being taken by RBI for full operationalisation of CBDC include expanding the scope of the pilots gradually to include more banks, users and locations based on feedback received during the pilots.
What is the fundamental dissimilarity between currency and money in economic domain?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 26

All currency is a form of money but not all money is currency While currency is a form of money, not all money is currency.

Test: Indian Economy and Indian Financial System - 1 - Question 27

What is the rationale for the foreign exchange market operating around the clock, as per financial regulations?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 27

The Forex market is a 24-hour market to accommodate different time zones of banks located in different corners of the globe.

Test: Indian Economy and Indian Financial System - 1 - Question 28

What was the innovative accounting system created by the Sumerians that revolutionized early civilization's economic transactions?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 28

The people of Sumer used clay tokens and clay writing tablets as a revolutionary new accounting method for financial transactions.

Test: Indian Economy and Indian Financial System - 1 - Question 29

Which chapter in the Reserve Bank of India Act, 1934, outlines the provisions of the central banking activities?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 29

Chapter III of the RBI Act, 1934 deals with the Central Banking Functions of the Reserve Bank of India, which includes functions like issuing currency notes, keeping reserves, providing credit to banks, and acting as a banker to the government.

Test: Indian Economy and Indian Financial System - 1 - Question 30

Recently, World Bank postulated that Digital markets work differently than traditional physical markets. The winner-take-all markets of the digital economy prompt 'winners' to resort to certain actions that discourage competition, the Standing Committee on Finance, chaired by Jayant Sinha, said in its report. The committee interacted with Indian representatives of foreign big tech companies like Amazon, Apple, Facebook, Google, Netflix, Twitter, and Uber, as well as representatives of domestic companies like PayTM, MakeMyTrip, Zomato, Ola, Swiggy, Flipkart, etc., to identify competition concerns.
In which year did the World Bank decide to stop publishing the 'Ease of Doing Business' reports due to "data irregularities"?

Detailed Solution for Test: Indian Economy and Indian Financial System - 1 - Question 30

September 2021 World Bank Group had decided to discontinue publication of its ‘Doing Business” rankings of country business climates after a review of data irregularities in the 2018 and 2020 reports.

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