1.

Which among the following is/are the member

ANALYSE YOURSELF 5
6. Correct statements regarding Pradhan Mantri
countries of the Eurasian Economic Union (EEU)? LPG Panchayat -
1. Belarus 2. Russia (a) Pradhan Mantri LPG Panchayat’ will focus on
3. Kazakhstan 4. China spreading awareness among LPG users about the
Select the correct answer using the codes given below proper use and benefits of LPG.
(a) 1 and 3 (b) 1, 3 and 4 (b) This Panchayat will act as an interactive forum for
(c) 1, 2 and 3 (d) All of these Pradhan Mantri Ujjwala Yojana beneficiaries, officials,
LPG distributors and NGOs (Non-Governmental
2. Consider the following statements
Organisations).
1. Scheduled Banks are those banks which are included in (c) Under one Panchayat, around 100 LPG customers
the second Scheduld of the Reserve Bank Act, 1934. will be clubbed.
2. There are 10 Non-scheduled Commercial Banks (d) All are true
operating in the country.
3. Co-operative banks are organised and managed on the
7. Consider the following statements
principle of co-operation, self-help and mutual help. 1. The INC established National Planning commission
Which of the statement(s) given above is/are correct? under the chairmanship of JL Nehru.
(a) 1 and 3 (b) Only 2 2. A Plan of Economic Development of India was put
(c) 2 and 3 (d) All of these forward by leading businessmen and industrialists in
1944 was also called as the ‘Bombay plan’.
3. The Sex Ratio at Birth (SRB) saw a declined in 17 out of 3. Indicative plan is operated under and planned
21 Large State of the country, with ...... recording an economy, but not command economy.
alarming dip of 53 points, a report released by the NITI
Which of the statement(s) given above is/are correct?
Aayog.
(a) Only 2
(a) Bihar (b) Jharkhand (b) 1 and 3
(c) Gujrat (d) Haryana (c) 2 and 3
4. Consider the following statements (d) All of the above
1. The state is called the Laissez faire state in the Market 8. Arrange the events in chronological order regarding
Economy. The French word Laissez faire means ‘Let do’. Indian economy.
2. Command economy do not create wealth sustainably 1. 1st phase of nationalisation of 16 banks.
and are not conducive for innovation and efficiency. 2. Establishment of Narashimhan committee on the
3. The Bombay plan was made by J L Nehru. Banking system.
Which of the statement(s) given above are correct? 3. Enactment of FEMA Act in India.
(a) 1 and 2 (b) 2 and 3 4. Establishment of EXIM Bank in India.
(c) All of these (d) None of these Codes
5. In context of the present ceiling on investment for (a) 1, 3, 4, 2
categorisation of various enterprises as Micro, Small (b) 1, 4, 2, 3
and Medium Enterprises (MSMEs). (c) 1, 3, 2, 4
1. A micro-enterprise is an enterprise where the investment (d) 1, 4, 3, 2
in equipment does not exceed ` 25 lakh. 9. Which one of the following is the composition of
2. A small enterprise is an enterprise where the investment Liquidity aggregate-2 (L2) other than Liquidity
Practice Set 5

in equipment is more than ` 25 lakh, but does not exceed aggregate-1 (L1) in the Indian Monetary system?
` 5 crore. (a) Term deposits with Term Lending Institutions and
3. A medium enterprise is an enterprise where the Refinancing Institutions
investment in equipment is more than ` 5 crore but does (b) Term Borrowing by Refinancing Institutions
not exceed ` 10 crore. (c) Certificates of Deposit issued by Refinancing
Which of the statement(s) given above is/are correct? Institutions
(a) Only 1 (b) Only 2 (d) All of the above
(c) Only 3 (d) All of these
 198 Magbook ~ Indian Economy
10. The Central Nodal Agency for implementing the price 4. MODVAT implies rationalisation of excise duty only
support operations for commercial crops is while VAT implies rationalisation of excise, sales and
(a) NAFED (b) NABARD turnover taxes etc.
(c) TRIFED (d) FCI Which of the statements given above are correct?
(a) 2, 3 and 4 (b) 1, 2 and 3
11. Which of the following are the provisions of SARFAESI (c) 2 and 3 (d) 3 and 4
Act which enables banks to reduce their
Non-Performing Assets (NPAs) ? 16. With regards to Scheduled Commercial banks
1. Enforcement of Security Interest by secured creditor consider the following statements about Regional
(Banks and Financial Institutions). Rural Banks (RRBs) in India.
2. Transfer of non-performing assets to asset reconstruction 1. RRBs are limited to a specific region comprising one
company, which will then dispose of those assets and or more districts of a State.
realise the proceeds. 2. RRBs grant direct loans and advances only to small
3. To provide a legal framework for securitisation of assets. and marginal farmers.
4. Assisting banks in making the credibility track record of 3. The lending rate of the RRBs are always less than the
customers under Credit Information Bureau of India prevailing rates of Indian Commercial banks.
Limited (CIBIL). 4. RRBs are functioned under the Supervision of
Select the correct answer using the codes given below Security Exchange Board of India.
(a) 1 and 2 (b) 1, 2 and 3 Which of the statement(s) given above are correct?
(c) 2, 3 and 4 (d) All of these (a) 3 and 4 (b) 1, 2 and 3
(c) 2 and 3 (d) All of these
12. The Laffer curve is the graphical representation of
(a) the relationship between tax rates and absolute revenue 17. Consider the following statements
these rates generate for the government 1. Integrated Rural Development Programme (IRDP)
(b) the inverse relationship between the rate of unemployment was launched to lift the target groups above the
and the rate of inflation in an economy below poverty line.
(c) the inequality in income distribution 2. The IRDP was started as an initiative of the Lead Bank
(d) the relationship between environmental quality and scheme to create additional employment
economic development opportunities in rural areas.
13. Consider the following statements Which of the statement(s) given above is/are correct?
(a) Only 1 (b) Only 2
1. Bulk of employment in India is in rural areas.
(c) Both 1 and 2 (d) Neither 1 nor 2
2. The disguised unemployment in agricultural sector is
perennial. 18. Banks of India are required to maintain a certain
3. Industrialisation has rendered several people jobless in ratio between their risky assets and capital which is
India. known as
Which of the statements given above are correct? (a) Capital Adequacy Ratio (CAR)
(a) 1 and 2 (b) 1 and 3 (b) Statutory Liquidity Ratio (SLR)
(c) 2 and 3 (d) All of these (c) Reserve Bank of India (RBI)
(d) Capital to Risk Weighted Assets Ratio (CRAR)
14. The non-votable charges or ‘charged expenditure’
included in the Union Budget include 19. A financial intermediary is stronger than an
1. salary and allowances of the Presiding Officers of the
individual investor due to
Houses of Parliament. (a) economies of scale (b) asymmetry of information
2. salary and allowances of the Judges of the Supreme (c) portfolio diversification (d) All of the above
Court and High Courts. 20. Consider the following statements
3. salary and allowances of the CAG. 1. Swabhiman scheme provides banking facilities in
4. pension of the retired Judges of the Supreme Court. remote rural areas.
5. pension of the retired Judges of High Courts. 2. Swavalamban scheme provides subsidy on NPS
Which of the statements given abvoe are correct? accounts for the unorganised sector.
(a) 1 and 2 (b) 1, 2 and 3
Practice Set 5

Which of the statement(s) given above is/are correct?

(c) 1, 2, 3 and 4 (d) All of these (a) Only 1 (b) Only 2
15. MODVAT is different from VAT in the sense that (c) Both 1 and 2 (d) Neither 1 nor 2
1. under MODVAT, tax is levied only on value addition while 21. Which among the following statements is true about
under VAT, excise is imposed on final value and then the HRIDAY scheme?
rebate is given on inputs. (a) It is a scheme for conserving and preserving the
2. MODVAT is only at the production stage while VAT heritage characters of 12 cities
extends both to production and distribution stage. (b) It is a scheme for conserving the ancient medicines of
3. under MODVAT excise is levied on final value and then India
rebate is given on inputs while under VAT, tax is levied (c) It is a scheme for conserving the wetlands
only on value addition. (d) It is a scheme for rehabilitation of tribal people
Magbook ~ Practice Set 5 199
22. Consider the following statements Which of the credit controls given above are used by RBI
1. Certificates of deposits are the very important as a selective credit control measures?
instrument of the Indian money market. (a) 1 and 2 (b) 1 and 3 (c) 2 and 3 (d) All of these
2. Certificates of deposits are generally issued by the Union 28. With reference to Indian Capital Market, consider the
Government with collaboration with certain states. following statements
Which of the statement(s) given above is/are correct? 1. CRISIL was set-up in the eighth Five Year Plan.
(a) Only 1 (b) Only 2 2. CRISIL rates the debt instruments of the public
(c) Both 1 and 2 (d) Neither1 nor 2 sectors.
23. Which one of the following is correct about the Which of the statement(s) given above is/are correct?
Commercial Papers (CPs) in the Indian money market? (a) Only 1 (b) Only 2
(a) It is issued by Indian Commercial banks (c) Both 1 and 2 (d) Neither 1 nor 2
(b) It is issued by the Central Government 29. Consider the following about the Lead Banks role in
(c) It is issued by the companies with a net worth more than the Lead Bank scheme.
` 4 crore
1. To co-ordinate the co-operative banks. Commercial
(d) It is issued by the companies with a net worth less than
banks and other financial institutions in their allotted
` 50 lakh
districts.
24. Consider the following about the Banking Financial 2. To survey and identify the unbanked districts and take
Supervision (BFS) in India. initiatives to open bank branches.
1. The RBI performs financial supervision function under 3. To estimate the deposits potential and the credit gaps
the guidance of the Board for Financial Supervision and fill the vacuum in the districts.
(BFS). Which of the roles given above is/are correct?
2. Primary objective of BFS is to undertake consolidate (a) Only 1 (b) 1 and 3 (c) 2 and 3 (d) All of these
supervision of the financial sector comprising
30. Which of the following union ministries have jointly
commercial banks, financial institutions and
launched a new scheme “SAATHI”?
non-banking finance companies.
(a) Ministries of Finance and Defense
Select the correct answer using the codes given below
(b) Ministries of Power and Science & Technology
(a) Only 1 (b) Only 2
(c) Ministries of Minority Affairs and Human Resource
(c) Both 1 and 2 (d) Neither 1 nor 2
Development
25. The G-8 countries include (d) Ministries of Power and Textiles
1. France 2. Germany 31. Which one of the following committee was
3. Canada 4. Italy constituted by the RBI to study issues and concerns
5. Netherlands 6. UK in the micro-finance sector?
7. US 8. Russia (a) M Narasimhan committee
9. Japan (b) S Janikiraman committee
Select the correct answer using the codes given below (c) Chakravarti committee
(a) 1, 2, 3, 4, 5, 6, 8 and 9 (d) YH Malegam committee
(b) 1, 2, 4, 5, 6, 7, 8 and 9
32. Consider the following statements
(c) 1, 2, 3, 4, 6, 7, 8 and 9
(d) 1, 2, 3, 4, 5, 6, 7 and 9 1. Money supply measures M 0 , M1 and M 3 are widely
used in India.
26. Choose the correct statements 2. Money supply measures M 2 and M 4 are rarely used in
1. The Reserve Bank of India (RBI) announced that Masala India.
bonds will be treated as External Commercial Which of the statement(s) given above is/are correct?
Borrowings (ECB). (a) Only 1 (b) Only 2
2. Considering Masala bonds as ECBs will free up more (c) Both 1 and 2 (d) Neither 1 nor 2
investments by FPIs (Foreign Portfolio Investors). 33. Which of the following are among the taxes levied
3. Masala bonds are rupee-denominated overseas bonds. exclusively by the Central Government and are
Practice Set 5

Which of the above statement(s) is/are correct? mentioned in the Union list of the seventh Schedule
(a) 1 , 2 and 3 (b) Only 3 of the Constitution of India?
(c) Both 2 and 3 (d) Both 1 and 2 1. Corporation tax.
2. Taxes on advertisement in the newspapers.
27. Consider the following kinds of credit controls
3. Taxes on agricultural income.
1. Minimum margins for lending against specific
4. Taxes on consumption or sale of electricity.
securities.
Select the correct answer using the codes given below
2. Ceiling on the amount of credit for certain purposes.
(a) Only 2 (b) Only 4
3. Discriminatory rate of interest charged on certain types
(c) 1 and 2 (d) 3 and 4
of advances.
 200 Magbook ~ Indian Economy
34. Consider the following statements 40. Consider the following types of income
1. The Direct Taxes code proposes a Corporate rate tax of 1. Personal income 2. Private income
30% as against the current effective rate of 33.2%. 3. Disposable income 4. National income
2. The direct taxes code incorporates taxation mechanisms The correct sequence in descending order of their
to deal with the international issue of ‘transfer pricing’. magnitude is
Which of the statement(s) given above is/are correct? (a) 4, 2, 3, 1 (b) 2, 4, 3, 1
(a) Only 1 (b) Only 2 (c) 4, 2, 1, 3 (d) 2, 4, 1, 3
(c) Both 1 and 2 (d) Neither 1 nor 2
41. Micro-finance of the provision of financial services
35. The government has powers under the Essential to people of low income groups. This includes both
Commodities Act, 1955 (EC Act) to declare a commodity the consumers and the self-employed.
as an essential commodity to ensure its availability to The service/services rendered under micro-finance
people at fair price. The commodities covered under the is/are
act include 1. credit facilities 2. saving facilities
1. paper 3. insurance facilities 4. fund transfer facilities
2. hank Yarn Select the correct answer using the codes given below
3. fertilizers (a) Only 1 (b) 1 and 4
4. petroleum and petroleum products (c) 2 and 3 (d) All of these
5. cotton and jute seeds 42. Economic development may be defined as a process
Select the correct answer using the codes given below whereby the real per-capita income of a country
(a) 1, 2 and 3 (b) 1, 3 and 4 increases
(c) 3, 4 and 5 (d) 2, 3, 4 and 5 (a) subject to the condition that the number below an
36. Global capital flows to developing countries increased absolute poverty line does not increase
significantly during the 90s. In view of the East Asian (b) over a long period of time
financial crisis and Latin American experience, which (c) object to the condition that the stribution of income
type of inflow is good for the host country? does not become more unequal
(a) Commercial loans (d) All of the above
(b) Foreign Direct investment 43. Consider the following objectives
(c) Foreign Portfolio investment 1. To restrict the expansion of bank credit.
(d) External Commercial borrowings
2. To augment the investment of the banks in
37. Why is Reserve Bank of India (RBI) also known as Government decurities.
Bankers' Bank and lender of last resort? 3. To ensure solvency of banks.
(a) Reserve Bank of India maintains the security of the Which of the objectives given above are the main
commercial banks and appointment of its officials objectives of the Statutary-Liquidity Requirements
(b) Commercial banks need to keep some amount in the (SLRs)?
custody of the RBI and can borrow from the RBI at the (a) 1 and 2 (b) 1 and 3
times of need and stringency (c) 2 and 3 (d) All of these
(c) RBI acts as an agent of the government to regulate the
day-to-day functions of the commercial banks and
44. Consider the following components
maintain the liquidity of the banks 1. New Broad Money (NM 3 ).
(d) Both ‘a’ and ‘c’ 2. New Narrow Money.
3. All Deposits with the post office savings banks.
38. Which one of the following agencies of the Indian
4. National Savings Certificates.
Government publishes the narrow Money (M1) and
Broad money (M3) on fortnightly basis? Which of the components given above is/are correct
included in the Liquidity Aggregates (L1) in the Indian
(a) State Bank of India
economy?
(b) Security Exchange Board of India
(a) 2 and 4 (b) 2 and 3
(c) Reserve Bank of India
(c) 1 and 3 (d) All of these
(d) Central Statistical Organisation
Practice Set 5

39. Which of the following situations does not result due to 45. Consider the following statements
the depreciation of the rupee with respect to foreign 1. Housing Development Finance Corporation Limited
currencies? (HDFC) is a National Level Housing Finance
institution set-up in 1977.
(a) Exports become competitive in the global market
(b) Import substitution becomes impossible 2. HDFC was established as a subsidiary company of
(c) Costlier imports results into higher prices propelling the ICICI.
further depreciation Which of the statement(s) given above is/are correct?
(d) Both ‘a’ and ‘b’ (a) Only 1 (b) Only 2
(c) Both 1 and 2 (d) Neither 1 nor 2
Magbook ~ Practice Set 5 201
46. Consider the following statements 48. With reference to the institution of Banking
1. A Commercial bank is a type of financial intermediatory Ombudsman in India, which one of the statements is
because it mediates between the savers and borrowers. not correct?
2. Commercial bank and assist companies in raising funds (a) The Banking Ombudsman is appointed by the Reserve
in the capital markets (both equity and debt). Bank of India
3. Investment bank is also known as the merchant bank. (b) The Banking Ombudsman can consider complaints
Which of the statement(s) give above is/are correct? from non-resident Indians having accounts in India
(a) Only 2 (c) The orders passed by the Banking Ombudsman are
(b) 1 and 3 final and binding on the parties concerned
(c) Only 1 (d) The service provided by the Banking Ombudsman is
(d) All of the above free of any fee
47. Which of the following states is/are have 100% bank 49. Changes in the prices of goods in India is measured
accounts in every household? by which of the following index numbers ?
1. Gujarat (a) Wholesale Price Index (WPI)
2. Kerala (b) Consumer Price Index (CPI)
3. Madhya Pradesh (c) Both ‘a’ and ‘b’
4. Goa (d) None of the above
Select the correct answer using the codes given below 50. Which of the following remedies are adopted to
(a) 2 and 4 control price rise in the economy?
(b) 2 and 3 (a) Monetary measures
(c) 2, 3 and 4 (b) Fiscal measures
(d) All of the above (c) Administered price mechanism
(d) All of the above

Answers
1. (c) 2. (c) 3. (c) 4. (a) 5. (d) 6. (d) 7. (d) 8. (b) 9. (d) 10. (a)
11. (b) 12. (a) 13. (a) 14. (d) 15. (a) 16. (b) 17. (c) 18. (d) 19. (d) 20. (c)
21. (a) 22. (a) 23. (c) 24. (c) 25. (c) 26. (a) 27. (d) 28. (b) 29. (d) 30. (d)
31. (d) 32. (c) 33. (c) 34. (c) 35. (d) 36. (b) 37. (b) 38. (c) 39. (b) 40. (c)
41. (d) 42. (d) 43. (d) 44. (c) 45. (c) 46. (b) 47. (d) 48. (c) 49. (c) 50. (d)

Practice Set 5