Economics

10 questions loaded

These are sample questions with their answers. Log in to attempt them, track your accuracy, earn coins and save every session to your history.

Sample questions

A free sample. Log in for your full daily practice.

1.Under which RBI initiative is the 'Pradhan Mantri Jan Dhan Yojana' (PMJDY) primarily supported?

ABanking Regulation Act, 1949
BFinancial Inclusion Policy
CMonetary Policy Framework
DForeign Exchange Management Act

Explanation

PMJDY is a flagship financial‑inclusion program, and the RBI supports it through its Financial Inclusion Policy, promoting access to banking services for the unbanked.

2.Which of the following best captures the concept of 'stagflation'?

AHigh inflation with high economic growth
BLow inflation with low unemployment
CHigh inflation with stagnant output and high unemployment
DDeflation with rapid economic expansion

Explanation

Stagflation denotes the simultaneous occurrence of high inflation, stagnant (or falling) output, and high unemployment, posing a policy dilemma.

3.Which of the following macro‑economic effects is most closely associated with a significant shift from rain‑fed to irrigated agriculture?

AReduction in the agricultural labour share of GDP
BIncrease in the elasticity of agricultural output with respect to rainfall
CHigher volatility in food prices
DDecrease in rural non‑farm employment

Explanation

Irrigation reduces dependence on monsoon, improving productivity and allowing labour to move to non‑farm activities, thereby lowering agriculture's share in GDP.

4.Which of the following incentives is NOT provided to units operating in Special Economic Zones (SEZs) in India?

AExemption from customs duty on imported inputs
B100% income tax exemption for the first five years
CFreedom to import raw material without an import licence
DAutomatic eligibility for the Credit Linked Capital Subsidy Scheme

Explanation

SEZ units enjoy customs duty exemption, income tax holidays, and licence‑free import of inputs. However, eligibility for the Credit Linked Capital Subsidy Scheme (CLCSS) is not an automatic SEZ benefit; it depends on the specific scheme criteria.

5.Which of the following is NOT a characteristic of Non‑Bank Financial Companies (NBFCs) in India?

AThey are not allowed to accept demand deposits.
BThey are subject to the same CRR and SLR norms as banks.
CThey can provide loans and advances.
DThey are regulated by the RBI under the NBFC Act, 1997.

Explanation

NBFCs cannot accept demand deposits and are not bound by CRR and SLR requirements that apply to banks. They can lend, and they are regulated by the RBI under the NBFC (Reserve Bank) Directions, 2016, not a separate NBFC Act.

Which one of the following statements about Unified Payments Interface (UPI) and Central Bank Digital Currency (Digital Rupee) is not correct?

AUPI is a real-time payment system but Digital Rupee is akin to sovereign paper currency.
BIn case of UPI, settlement for end users happens instantly as the money gets immediately debited or credited but in case of Digital Rupee, there is no settlement as the wallet balance gets transferred to another wallet.
CUPI transactions are recorded by banks and reflected in bank statements but in case of Digital Rupee, no data is captured in bank statements as transactions are from one wallet to another.
DIn both the cases (UPI and Digital Rupee), the liability lies with the users and their respective banks.

7.Which of the following statements about the 'price‑level targeting' regime is correct?

AIt aims to keep inflation at zero percent permanently
BIt focuses on stabilising the growth rate of nominal GDP
CIt seeks to keep the price level on a predetermined path, allowing temporary deviations
DIt requires the central bank to fix the exchange rate

Explanation

Price‑level targeting sets a target path for the overall price level; if the level deviates, the central bank will act aggressively to bring it back, unlike pure inflation targeting which focuses only on inflation rate.

Consider the following statements regarding the factors of production described in the

chapter:

I. Land, labour, physical capital, and human capital are together needed to produce any good or service.

II. Human capital refers to the knowledge and enterprise needed to combine land, labour, and capital.

A
1 only
B
2 only
C
Both 1 and 2
D
Neither 1 nor 2

Explanation

Both statements accurately describe the four factors of production as given in the chapter.

Statement I correctly lists all four factors together.

Statement II correctly defines human capital as the knowledge and enterprise required to combine the other three factors.

Option (a) is incorrect because it wrongly excludes the correct Statement II.

Option (b) is incorrect for the same reason in reverse.

Option (d) is incorrect because both statements are, in fact, true.

9.Since 2016, the RBI follows a flexible inflation targeting framework. What is the current inflation target band for CPI (excluding food and fuel) as per the latest monetary policy?

A2‑4 %
B4‑6 %
C3‑5 %
D5‑7 %

Explanation

The RBI’s flexible inflation target is 4 % with a tolerance band of ±2 %, i.e., a target range of 2‑6 % for CPI (excluding food and fuel). The 3‑5 % range was the earlier band, but the latest policy (2023‑24) retains 2‑6 %.

10.The term ‘Cash Reserve Ratio’ (CRR) refers to:

AThe portion of a bank's net demand and time liabilities kept as cash with the RBI
BThe minimum capital a bank must maintain
CThe interest rate at which RBI lends to banks
DThe ratio of foreign assets to total assets of a bank

Explanation

CRR is the percentage of a bank's demand and time liabilities that must be maintained as cash reserves with the RBI. It is a tool for liquidity management.

These are sample questions with their answers. Log in to attempt them, track your accuracy, earn coins and save every session to your history.