Structure of the Indian Economy & Demographics - Solved Questions (2013-2024)

Question 1: Which one of the following activities of the Reserve Bank of India is considered to be part of 'sterilization'? (2023)
(a) Conducting 'Open Market Operations'
(b) Oversight of settlement and payment systems
(c) Debt and cash management for the Central and State Governments
(d) Regulating the functions of Non-banking Financial Institutions

Question 2: Consider the following markets: (2023)

1. Government Bond Market
2. Call Money Market
3. Treasury Bill Market
4. Stock Market

How many of the above are included in capital markets?
(a) Only one
(b) Only two
(c) Only three
(d) All four

Question 3: In India, which one of the following is responsible for maintaining price stability by controlling inflation? (2022) 
(a) Department of Consumer Affairs
(b) Expenditure Management Commission
(c) Financial Stability and Development Council
(d) Reserve Bank of India

Question 4: Consider the following statements: 

1. The Governor of the Reserve Bank of India (RBI) is appointed by the Central Government.
2. Certain provisions in the Constitution of India give the Central Government the right to issue directions to the RBI in public interest.
3. The Governor of the RBI draws his power from the RBI Act.

Which of the above statements are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Question 5: With reference to casual workers employed in India, consider the following

statements:

1. All casual workers are entitled for Employees Provident Fund coverage.
2. All casual workers are entitled for regular working hours and overtime payment.
3. The government can by a notification specify that an establishment or industry shall pay wages only through its bank account.

Which of the above statements are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Question 6: Which among the following steps is most likely to be taken at the time of an economic recession?
(a) Cut in tax rates accompanied by increase in interest rate
(b) Increase in expenditure on public projects
(c) Increase in tax rates accompanied by reduction of interest rate
(d) Reduction of expenditure on public projects

Question 7: With reference to urban cooperative banks in India consider the following

statements:

1. They are supervised and regulated by local boards set up by the state governments
2. They can issue equity shares and preference shares.
3. They were brought under the purview of the Banking Regulation Act, 1949 through an Amendment in 1966.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Question 8: Indian Government Bond Yields are influenced by which of the following?

1. Actions of the United States Federal Reserve
2. Actions of the Reserve Bank of India
3. Inflation and short-term interest rates

Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 2 only
(c) 3 only
(d) 1, 2 and 3

Question 9: Consider the following:

1. Foreign currency convertible bonds.
2. Foreign institutional investment with certain conditions
3. Global depository receipts
4. Non-resident external deposits

Which of the above can be included in Foreign Direct Investments?
(a) 1, 2 and 3
(b) 3 only
(c) 2 and 4
(d) 1 and 4

Question 10: Consider the following statements:

The effect of devaluation of a currency is that it necessarily

1. Improves the competitiveness of the domestic exports in the foreign markets
2. Increases the foreign value of domestic currency
3. Improves the trade balance

Which of the above statement is/are correct?
(a) 1 only
(b) 1 and 2
(c) 3 only
(d) 2 and 3

Question 11: Which one of the following effects of creation of black money in India has been the main cause of worry to the Government of India?
(a) Diversion of resources to the purchase of real estate and investment in luxury housing
(b) Investment in unproductive activities and purchase of precious stones, jewelley, gold, etc.
(c) Large donations to political parties and growth of regionalism
(d) Loss of revenue to the state exchequer due to tax evasion

Question 12: Which one of the following is likely to be the most inflationary in its effects?

(a) Repayment of public debt

(b) Borrowing from the public to finance a budget deficit

(c) Borrowing from the banks to finance a budget deficit

(d) Creation of new money to finance a budget deficit

Question 13: The money multiplier in an economy increases with which one of the following?   [2021]
(a) Increase in the cash Reserve Ration in the banks
(b) Increase in the Statutory Liquidity Ratio in the banks
(c) Increase in the banking habit of the people
(d) Increase in the population of the country

Question 14: With reference to Indian economy, demand-pull inflation can be caused/increased by which of the following?

1. Expansionary policies
2. Fiscal stimulus
3. Inflation-indexing wages
4. Higher purchasing power
5. Rising interest rates

Select the correct answer using the code given below.
(a) 1, 2 and 4 only
(b) 3, 4 and 5 only
(c) 1, 2, 3 and 5 only
(d) 1, 2, 3, 4 and 5

Question 15: With reference to India, consider the following statements :

1. Retail investors through demat account can invest in 'Treasury Bills' and 'Government of India Debt Bonds' in primary market.
2. The 'Negotiated Dealing System-Order Matching' is a government securities trading platform of the Reserve Bank of India.
3. The 'Central Depository Services Ltd'. is jointly promoted by the Reserved Bank of India and the Bombay Stock Exchange.

Which of the statements given above is/are correct?
(a) 1 only
(b) 1 and 2
(c) 3 only
(d) 2 and 3

Question 16: In India, the central bank's function as the 'lender of last resort' usually refers to which of the following?

1. Lending to trade and industry bodies when they fail to borrow from other sources
2. Providing liquidity to the banks having a temporary crisis
3. Lending to governments to finance budgetary deficits

Select the correct answer using the code given below.
(a) 1 and 2
(b) 2 only
(c) 2 and 3 only
(d) 3 only

Question 17: What is the importance of the term "Interest Coverage Ratio" of a firm in India?   [2020-I]
1. It helps in understanding the present risk of a firm that a bank is going to give a loan to.
2. It helps in evaluating the emerging risk of a firm that a bank is going to give a loan to.
3. The higher a borrowing firm's level of Interest Coverage Ratio, the worse is its ability to service its debt.
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

Question 18: With reference to the Indian economy, consider the following statements:    [2020-I]
1. 'Commercial Paper' is a short-term unsecured promissory note.

2. 'Certificate of Deposit' is a long-term instrument issued by the Reserve Bank of India to a corporation.
3. 'Call Money' is a short-term finance used for interbank transactions.
4. 'Zero-Coupon Bonds' are the interest bearing shortterm bonds issued by the Scheduled Commercial Banks to corporations.
Which of the statements given above is/are correct
(a) 1 and 2 only
(b) 4 only
(c) 1 and 3 only
(d) 2, 3 and 4 only

Question 19: In the context of the Indian economy, non-financial debt includes which of the following ?    [2020-I]
1. Housing loans owed by households
2. Amounts outstanding on credit cards
3. Treasury bills
Select the correct answer using the code given below :
(a) 1 only
(b) 1 and 2 only
(c) 3 only
(d) 1, 2 and 3

Question 20: Which of the following is not included in the assets of a commercial bank in India?   [2019-I]
(a) Advances
(b) Deposits
(c) Investments
(d) Money at call and short notice

Question 21: In the context of India, which of the following factors is/ are contributor/contributors to reducing the risk of a currency crisis?    [2019-I]
1. The foreign currency earnings of India's IT sector.
2. Increasing the government expenditure.
3. Remittances from Indians abroad.
Select the correct answer using the code given below.
(a) 1 only
(b) 1 and 3 only
(c) 2 only
(d) 1, 2 and 3 only

Question 22: The Chairman of public sector banks are selected by the   [2019-I]
(a) Banks Board Bureau
(b) Reserve Bank of India
(c) Union Ministry of Finance
(d) Management of concerned bank

Question 23: Consider the following statements:   [2019-I]
1. Petroleum and Natural Gas Regulatory Board (PNGRB) is the first regulatory body set up by the Government of India.
2. One of the tasks of PNGRB is to ensure competitive markets for gas.
3. Appeals against the decisions of PNGRB go before the Appellate Tribunals of Electricity.
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

Question 24: The Reserve Bank of India's recent directives relating to 'Storage of Payment System Data', popularly known as data diktat command the payment system providers that:   [2019-I]
1. They shall ensure that entire data relating to payment systems operated by them are stored in a system only in India.

2. They shall ensure that the systems are owned and operated by public sector enterprises.
3. They shall submit the consolidated system audit report to the comptroller and Auditor General of India by the end of the calendar year.
Which of the statements given above is/are correct
(a) 1 only
(b) 1 and 2 only
(c) 3 only
(d) 1, 2 and 3 only

Question 25: Which one of the following best describes the term "Merchant Discount Rate" sometimes seen in news?    [2018 - I]
(a) The incentive given by a bank to a merchant for accepting payments through debit cards pertaining to that bank.
(b) The amount paid back by banks to their customers when they use debit cards for financial transactions for purchasing goods or services.
(c) The charge to a merchant by a bank for accepting payments from his customers through the bank's debit cards.
(d) The incentive given by the Government, to merchants for promoting digital payments by their customers through Point of Sale (PoS) machines and debit cards

Question 26: With reference to digital payments, consider the following statements: [2018-I]
1. BHIM app allows the user to transfer money to anyone with a UPI-enabled bank account.
2. While a chip-pin debit card has four factors of authentication, BHIM app has only two factors of authentication.
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

Question 27: Which one of the following links all the ATMs in India ?   [2018-I]
(a) Indian banks' Association
(b) National Securities Depository Limited
(c) National Payments Corporation of India
(d) Reserve Bank of India

Question 28: Consider the following statements: [2018-I]
1. Capital Adequacy Ratio (CAR) is the amount that banks have to maintain in the form of their own funds to offset any loss that banks incur if the account-holders fail to repay dues.
2. CAR is decided by each individual bank.
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

Question 29: Consider the following statements [2018-I]
1. The Fiscal Responsibility and Budget Management ( FRBM) Review Committee Report has recommended a debt to GDP ratio of 60% for the general (combined) government by 2023, comprising 40% for the Central Government and 20% for the State Governments.
2. The Central Government has domestic liabilities of 21% of GDP as compared to that of 49% of GDP of the State Governments.
3. As per the Constitution of India, it is mandatory for a State to take the Central Government's consent for raising any loan if the former owes any outstanding liabilities to the latter.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Question 30: Consider the following items:    [2018-I]
1. Cereal grains hulted
2. Chicken eggs cooked
3. Fish processed and canned
4. Newspaper containing advertising material
Which of the above items is/are exempted under GST (Goods and Services Tax)?
(a) 1 only
(b) 2 and 3 only
(c) 1, 2 and 4 only
(d) 1, 2, 3 and 4

Question 31: With reference to India's decision to levy an equalization tax of 6% on online advertisement services offered by non-resident entities, which of the following statements

is/are correct?   [2018-I]
1. It is introduced as a part of the Income Tax Act.
2. Non-resident entities that offer advertisement services in India can claim a tax credit in their home country under the "Double Taxation Avoidance Agreements".
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

Question 32: Despite being a high saving economy, capital formation may not result in significant increase in output due to    [2018-I]
(a) weak administrative machinery
(b) illiteracy
(c) high population density
(d) high capital-output ratio

Question 33: With reference to Indian economy, consider the following statements:  [2015-I]
1. The rate of growth of Real Gross Domestic Product has steadily increased in the last decade.
2. The Gross Domestic Product at market prices (in rupees) has steadily increased in the last decade.
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

Question 34:  The main objective of the 12th Five-Year Plan is   [2014 - I]
(a) inclusive growth and poverty reduction
(b) inclusive and sustainable growth
(c) sustainable and inclusive growth to reduce unemployment
(d) faster, sustainable and more inclusive growth

Question 35: The terms 'Marginal Standing Facility Rate' and 'Net Demand and Time Liabilities', sometimes appearing in news, are used in relation to    [2014 - I]
(a) banking operations
(b) communication networking
(c) military strategies
(d) supply and demand of agricultural products

Question 36: In India, deficit financing is used for raising resources for
(a) economic development    [2013 - I]
(b) redemption of public debt
(c) adjusting the balance of payments
(d) reducing the foreign debt

Question 37: Priority Sector Lending by banks in India constitutes the lending to  [2013 - I]
(a) agriculture
(b) micro and small enterprises
(c) weaker sections
(d) All of the above

Question 38: Which one of the following groups of items is included in India's foreign-exchange reserves?   [2013 - I]
(a) Foreign-currency assets, Special Drawing Rights (SDRs) and loans from foreign countries
(b) Foreign-currency assets, gold holdings of the RBI and SDR's
(c) Foreign-currency assets, loans from the World Bank and SDRs
(d) Foreign-currency assets, gold holdings of the RBI and loans from the World Bank

Question 39: The national income of a country for a given period is equal to the   [2013 - I]
(a) total value of goods and services produced by the nationals
(b) sum of total consumption and investment expenditure
(c) sum of personal income of all individuals
(d) money value of final goods and services produced

Question 40: Which of the following constitute Capital Account?   [2013 - I]
1. Foreign Loans
2. Foreign Direct Investment
3. Private Remittances
4. Portfolio Investment
Select the correct answer using the codes given below.
(a) 1, 2 and 3
(b) 1, 2 and 4
(c) 2, 3 and 4
(d) 1, 3 and 4

Question 41: In the context of Indian economy, 'Open Market Operations' refers to    [2013 - I]
(a) borrowing by scheduled banks from the RBI
(b) lending by commercial banks to industry and trade
(c) purchase and sale of government securities by the RBI
(d) None of the above