Test: Indian Economy and Indian Financial System - 2 - Bank Exams MCQ

# Test: Indian Economy and Indian Financial System - 2 - Bank Exams MCQ

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## 30 Questions MCQ Test - Test: Indian Economy and Indian Financial System - 2

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

### If the consumption expenditure increases to Rs. 35,000, gross investment increases to Rs. 45,000, government spending remains at Rs. 20,000, exports remain at Rs. 68,000 and imports increase to Rs. 65,000, what would be the new GDP using the expenditure approach?

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

GDP = C+I+G+(X-M) = 35000+45000+20000+(68000-65000) = 103,000

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

### What is the impact of determining GDP at the production stage, income generation stage, or final use stage on its valuation?

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

The value of output, revenue flows, and final expenditure will be the same. GDP is the same regardless of whether it is measured at the point of production, income generation, or final utilization.

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Test: Indian Economy and Indian Financial System - 2 - Question 3

### What is the correlation between volatility and risk in the context of price discovery?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 3

Some traders actively seek out volatile markets as they offer the potential for larger profits, but they also carry a higher risk of loss.

Test: Indian Economy and Indian Financial System - 2 - Question 4

What does the "New Age 24×7 banking" theme of EASE 4.0 aspire to achieve?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 4

The "New Age 24×7 banking" theme of EASE 4.0 aims to ensure uninterrupted availability of banking services by ensuring 24×7 availability of select banking channels, improving the reliability of technology platforms, and aligning internal processes in the PSBs to deliver such services.

Test: Indian Economy and Indian Financial System - 2 - Question 5

Among the following options what was the primary concern of Adam Smith in his work "The Wealth of Nations"?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 5

In The Wealth of Nations, Adam Smith studied the determination of prices of land, labour and capital, and inquired into the strengths and weaknesses of the market mechanism.

Test: Indian Economy and Indian Financial System - 2 - Question 6

Which one of the following statements about the Special Drawing Facility (SDF) is inaccurate?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 6

The SDF is extended against the collateral of the government securities held by the State Government. To encourage the State's participation in the Consolidated Sinking Fund and Guarantee Redemption Fund, incremental investments in these funds are also eligible for availing SDF.

Test: Indian Economy and Indian Financial System - 2 - Question 7

Which regulatory authority is empowered to call for periodical returns and inspect books and accounts of a bank under the Banking Regulation Act, 1949?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 7

Reserve Bank of India The Reserve Bank of India is empowered under the Banking Regulation Act, 1949 to call for periodical returns and inspect books and accounts of a bank.

Test: Indian Economy and Indian Financial System - 2 - Question 8

What amount of funds were allocated to the first presidency bank of India, the Bank of Calcutta, during its inception?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 8

Rs 50,00,000 The first 'Presidency Bank'—the Bank of Calcutta was established in Calcutta on June 2, 1806 with a capital of Rs 50 lakhs.

Test: Indian Economy and Indian Financial System - 2 - Question 9

Which of the following is the purported role of the National Asset Reconstruction Company (NARCL)?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 9

NARCL has been set up by the government to aggregate and consolidate stressed assets for subsequent resolution.

Test: Indian Economy and Indian Financial System - 2 - Question 10

Which of the following are the primary methods of implementing protectionist policies?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 10

The main forms of protectionism are tariffs, import quotas, and non-tariff barriers. Protectionist measures attempt to protect home producers and workers from foreign competition, resulting in decline in trade, price rise, and subsidies for protected industries.

Test: Indian Economy and Indian Financial System - 2 - Question 11

In India, which legal statute is not-permissible for the registration of not-for-profit microfinance institutions (MFIs)?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 11

Companies Act, 1956. Not for profit MFIs can be registered under societies registration act or Indian Trust Act, but not under Companies Act.

Test: Indian Economy and Indian Financial System - 2 - 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
How is the Digital Assistance Zone in a DBU serving as a novel approach to providing customer support and enhancing the overall banking experience?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 12

It assists customers in opening savings and current accounts. The Digital Assistance Zone is meant to assist customers in undertaking various services, including opening of savings account, current account, etc.

Test: Indian Economy and Indian Financial System - 2 - 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
Which of the following entities are not eligible to set up a DBU as per the RBI guidelines?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 13

Only SCBs (excluding Regional Rural Banks, Payments Banks, and Local Area Banks) with past digital banking experience can set up DBUs.

Test: Indian Economy and Indian Financial System - 2 - Question 14

Which individual among the following choices is credited with characterizing Economics as a discipline that focuses on human welfare?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 14

According to Prof. Alfred Marshall, the ultimate purpose or objective of Economics is to promote well-being or welfare. Hence, his definition is known as welfare definition.

Test: Indian Economy and Indian Financial System - 2 - Question 15

Which of the following is not a factor limiting the role of the bank rate as an instrument of monetary policy in India?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 15

The role of the bank rate as an instrument of monetary policy is limited in India because of the structure of interest rates not being automatically linked to the bank rate, commercial banks enjoying specific refinance facilities, and the bill market being underdeveloped.

Test: Indian Economy and Indian Financial System - 2 - Question 16

What is the most significant difference between a forward contract and a futures contract in the domain of derivatives?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 16

While both futures and forward contracts are agreements to buy or sell an asset at a specified price on a future date, futures contracts trade on exchanges and have standardised terms, while forward contracts are privately negotiated between two parties and are customised to meet their specific needs.

Test: Indian Economy and Indian Financial System - 2 - Question 17

Within the framework of the Indradhanush Plan, which sought to restructure public sector banks (PSBs), what does the fifth component "E" in the acronym ABCDEFG stand for?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 17

7 pronged plan includes appointments, Banks board bureau, capitalisation, de-stressing, empowerment, framework of accountability and governance reforms (ABCDEFG).

Test: Indian Economy and Indian Financial System - 2 - Question 18

Which of the following continue to remain the outstanding or emerging apprehensions related to non-performing assets (NPA)?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 18

Share of unsecured credit in total credit continues to remain the outstanding or emerging apprehensions related to non-performing assets (NPA).

Test: Indian Economy and Indian Financial System - 2 - Question 19

Which terminology is used to denote the rise and fall of the macroeconomic performance of a nation over the course of several months or years?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 19

Business cycles terminology is used to denote the rise and fall of the macroeconomic performance of a nation over the course of several months or years.

Test: Indian Economy and Indian Financial System - 2 - Question 20

If the price is \$45, what is the quantity demanded in the market?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 20

At \$45, the quantity demanded is 30, while the quantity supplied is 90.

Test: Indian Economy and Indian Financial System - 2 - Question 21

If the price is \$50, what is the excess supply in the market?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 21

At \$50, the quantity demanded is 20, while the quantity supplied is 100. The excess supply is 100 - 20 = 80 units.

Test: Indian Economy and Indian Financial System - 2 - Question 22

What was the recommendation of the Narasimhan Committee with regard to interest rates as per Narasimhan Committee-I?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 22

Interest rates should be determined by the market forces. The Narasimha Committee advocated that interest rates should be allowed to be determined by market forces, and since 1992, interest rates were freed, in stages, for deposits as well as for advances.

Test: Indian Economy and Indian Financial System - 2 - Question 23

What is the principal objective of reinsurance?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 23

To enable insurers to focus on their core business. Sol. Reinsurance allows insurers to transfer a portion of risk to reinsurers, freeing them to focus on their primary business.

Test: Indian Economy and Indian Financial System - 2 - 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 country was the first or pioneer in launching a CBDC?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 24

Bahamian Sand Dollar is the first CBDC in the world.

Test: Indian Economy and Indian Financial System - 2 - 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.
What constitutes a Central Bank Digital Currency (CBDC)?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 25

A digital form of a country's fiat currency, which is regulated by its central bank. CBDC is a digital representation of physical money that is issued by a central authority, rather than by a commercial bank or other private entity.

Test: Indian Economy and Indian Financial System - 2 - Question 26

Among the following options, which is the distinguishing feature between a tri-party repo and a market repo?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 26

The presence of a third party known as a tri-party agent. The differentiating factor between a tri-party repo and a market repo is the presence of a third party known as a tri-party agent, which acts as an intermediary between the borrower and lender to facilitate services such as collateral selection, payment and settlement, custody, and management during the life of the transaction.

Test: Indian Economy and Indian Financial System - 2 - Question 27

What are the activities that Merchant Banks extended their operations to, in addition to syndication of long-term/short-term finance?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 27

In addition to syndication of long-term/short-term finance, Merchant Banks extended their activities to negotiating agents for mergers and takeovers, among other things.

Test: Indian Economy and Indian Financial System - 2 - Question 28

The table below provides information on the economy of a country. Use the income approach to calculate the GDP for this country.

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 28

GDP = Wages + Rent + Interest + Profit GDP = 100 + 50 + 20 + 30 = \$200 Therefore, the GDP of the country is \$200.

Test: Indian Economy and Indian Financial System - 2 - Question 29

Which of the following types of NBFCs are excluded under the Ombudsman Scheme?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 29

CIC, IDF-NBFC, and NBFC-IFC are excluded under the Ombudsman Scheme.

Test: Indian Economy and Indian Financial System - 2 - 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.
According to economic theory, Oligopolistic competition refers to a certain type of market structure. Which feature is not a defining characteristic of this structure?

Detailed Solution for Test: Indian Economy and Indian Financial System - 2 - Question 30

Oligopolistic competition refers to a market structure in which a few large firms dominate the market.

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