[CSP] Test PT19ST13 – Economics

#1. Which of the following is/are among the activities undertaken as part of ‘Bank Recapitalisation’ plan?

1. Merger of smaller banks with the larger banks

2. Infusion of capital in the banks

3. Expansion of the banking network

Select the correct answer using the codes given below.

(a) 1 only

(b) 2 only

(c) 2 and 3 only

(d) 1 and 3 only

#2. Consider the following statements:

1. Minor Forest Produce are not included in the Minimum Support Price scheme.

2. The Minimum Support Prices are announced by the Commission for Agricultural Costs and Prices for each sowing season.

Which of the above statements is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

#3. Consider the following statements:

1. ‘Angel Investors’ are firms or companies that pool money from groups of investors to invest in businesses.

2. ‘Angel Investors’ generally invest in startups and early-stage businesses.

Which of the above statements is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

#4. Consider the following statements:

1. A Non-Banking Financial Company cannot accept demand deposits.

2. A Non-Banking Financial Company gets license under the Banking Regulation Act.

3. Cash Reserve Ratio and Statutory Liquidity Ratio do not apply to a Non-Banking Financial Company.

Which of the above statements is/are correct?

(a) 1 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

#5. Credit Rating Agencies in India are regulated by

(a) ICRA

(b) RBI

(c) SEBI

(d) None of the above

#6. With which of the following countries did India conclude a Bilateral Currency Swap Agreement for $75 billion in October 2018?

(a) USA

(b) Australia

(c) Japan

(d) Singapore

#7. Which of the following is/are the components of Broad Money in India?

1. Time deposits with the banks

2. Currency with the public

3. Demand deposits with the banks

Select the correct answer using the codes given below.

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

#8. Which of the following is/are the tools of ‘Fiscal Policy’?

1. Open Market Operations

2. Taxation

3. Public Expenditure

Choose the correct alternative using the codes given below.

(a) 3 only

(b) 2 and 3 only

(c) 1 and 2 only

(d) 1, 2 and 3

#9. Which of the following make up the Money Stock of an economy?

1. Demand deposits held with commercial banks

2. Currency notes

3. Deposits of commercial banks with the central bank

Choose the correct alternative using the codes given below.

(a) 1 and 2 only

(b) 2 only

(c) 1 and 3 only

(d) 1, 2 and 3

#10. The Legal reserves of a commercial bank are maintained with the

(a) central bank only

(b) commercial banks and the central bank

(c) central bank and the government

(d) commercial banks only

Solutions:

Ans 1 (b):

Ans 2 (d):

The Union government has declared inclusion of 17 new minor forest produce (MFP) under the government’s minimum support price scheme. The new MFP under the scheme includes Mahua flowers (dried), Tejpatta (dried) and Kokum (dry). In theory, MSP is the minimum price set by the Government at which farmers can expect to sell their produce for the season. When market prices fall below the announced MSPs, procurement agencies step in to procure the crop and ‘support’ the prices. The Cabinet Committee of Economic Affairs announces MSP for various crops at the beginning of each sowing season based on the recommendations of the Commission for Agricultural Costs and Prices (CACP).

Ans 3 (b):

They are individuals looking to invest their own funds.

Ans 4 (a):

NBFCs cannot accept demand deposits (but some can accept Time deposit and such NBFCs are called Deposit taking NBFC). CRR does not apply on any NBFCs while a lower SLR applies only to Deposit taking NBFC. NBFCs get license under Companies Act, 1956.

Ans 5 (c):

The Securities and Exchange Board of India (Credit Rating Agencies) Regulations, 1999 empower SEBI to regulate CRAs operating in India. All the credit agencies need to be registered with SEBI in order to operate in India.

Ans 6 (c):

Ans 7 (d):

Ans 8 (b):

Fiscal: By the Government (Taxes, Public Expenditure)

&

Monetary: By the Central Bank (CRR, Repo, OMO).

Ans 9 (d):

The total stock of money in an economy system has our components:

  • Notes and Coins with Public (other than Banks)
  • Notes and Coins with Commercial Banks
  • Deposits of the Commercial Banks with the Central Bank
  • Demand Deposits with Commercial Banks

Ans 10 (b):

Legal Reserves : CRR (with the Central Bank) + SLR (with the commercial banks)

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