Banking Sector - Inflation And RBI - 2


20 Questions MCQ Test Economy Traditional for UPSC (Civil Services) Prelims | Banking Sector - Inflation And RBI - 2


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QUESTION: 1

The base year to calculate CPI-AL is

Solution:

The base year to calculate CPI-AL is 1986-87 and 260 items are included in the index.

QUESTION: 2

The base year to calculate CPI-UNME is

Solution:

The base year to calculate CPI-UNME is 1984-85. 180 items are included in the index.

QUESTION: 3

 Consider the following statements and identify the right ones.
i. RBI has the sole right to issue currency notes
ii. Minimum reserve system has been replaced by proportional reserve system

Solution:

Proportional reserve system has been replaced by minimum reserve system.

QUESTION: 4

Which of the following is not a function of RBI?

Solution:

RBI performs central banking functions as well as development and promotional functions.

QUESTION: 5

 Consider the following statements and identify the right ones.
i. RBI provides advice in all monetary matters except agriculture and industrial finance.
ii. RBI is obliged to transact business of central government and state governments including J&K

Solution:

RBI provides advice in all monetary matters including agriculture and industrial finance. RBI is obliged to transact business of central government and state governments excluding J&K.

QUESTION: 6

Consider the following statements and identify the right ones.
i. RBI acts as clearing house for commercial banks.
ii. It also grants license for setting up banking operations

Solution:

RBI is also responsible for regulating banks, directs their credit policies and provides advice to them.

QUESTION: 7

The amount a bank needs to maintain in form of cash, gold and other securities before giving credit is

Solution:

The amount a bank needs to maintain in form of cash, gold and other securities before giving credit is called SLR.

QUESTION: 8

The percentage of demand and time liabilities that banks have to keep with RBI is

Solution:

The percentage of demand and time liabilities that banks have to keep with RBI is called cash reserve ratio.

QUESTION: 9

Consider the following statements and identify the right ones.
i. RBI is the custodian of foreign exchange reserves of the country.
ii. It also keeps the exchange rate of domestic currency at stable level.

Solution:

RBI is responsible for transaction of the currencies of IMF countries.

QUESTION: 10

 Which of the following is not a function of RBI?

Solution:

RBI has a set of supervisory functions too.

QUESTION: 11

For bank rate to be effective, which of the following conditions are to be fulfilled?

Solution:

Bank rate is the rate at which banks can borrow from RBI when in need of funds.

QUESTION: 12

The buying, selling of treasury bills, government and other securities by RBI is called

Solution:

CRR, SLR and OMO are various tools in the hands of RBI to influence money supply in the economy.

QUESTION: 13

Which of the following is a union tax?
 

Solution:

Union taxes are given in the list of 7th schedule in the constitution.

QUESTION: 14

Which of the following is not a union tax?

Solution:

Taxes levied by the state government include Sales tax, VAT, tax of land & buildings, tax of agricultural income, stamp duty, luxury tax, dividend distribution tax  and entertainment tax. 

QUESTION: 15

 Consider the following statements and identify the right ones.
i. Central government does not have exclusive power to impose tax which is not mentioned in state or concurrent list.
ii. The constitution also provides for transferring certain tax revenues from union list to states.

Solution:

Central government has exclusive power to impose tax which is not mentioned in state or concurrent list.

QUESTION: 16

The tax levied by the union government on income of individuals is known as

Solution:

It is based on the principle of ability to pay. The tax levied by the union government on income of individuals is known as income tax.

QUESTION: 17

The tax on net income of companies is

Solution:

The tax on net income of companies is corporate tax. Tax rates are uniform for all categories of companies.

QUESTION: 18

Consider the following statements and identify the right ones.
i. Wealth tax is collected from productive as well as unproductive assets
ii. Estate duty was a type of inheritance tax of large estates

Solution:

Wealth tax is collected from unproductive assets only. Estate duty was abolished in 1985.

QUESTION: 19

 Which of the following taxes is/are withdrawn or abolished?

Solution:

Interest tax was withdrawn in 2000-01, estate duty abolished in 1985 and gift tax in 1998-99.

QUESTION: 20

The most important source of revenue to the states is

Solution:

Sales tax is the tax on sale of goods and is influenced by the value added tax system.

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