ROY’S INSTITUTE OF COMPETITIVE EXAMINATION

WBCS
ut SECOND YEAR
Hando
ECONOMICS
MISC. SET

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1. Which of the following measures would result in an increase in the money supply in the economy?
1. Purchase of Govt. securities from the public by the Central Bank.

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2. Deposit of currency in commercial bank by the Public.
3. Borrowing by the Govt. from the central bank.
4. Sale of Govt. securities to the public by the central bank.
Select the correct answer using the codes given below.
Codes :
a) Only 1 b) Only 2 and 4 c) Only 1 and 3 d) Only 2, 3 and 4
2. Which one of the following is the composition of liquidity aggregate –2 (L2) other than liquidity aggregate – 1
(L1) in the Indian Monetary System?
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a) Term deposit with term Lending Institution and Refinancing Institution.
b) Term Borrowing by Refinancing Institution.
c) Certificate of Deposit issued by Refinancing Institution.
d) All of these
3. The RBI regulates the commercial banks in matters of –
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1. Liquidity of Assets 2. Branch expansion 3. Merger of banks 4. Winding up of banks
Select the correct answer using the codes given below.
Codes :
a) 1 & 4 only b) 2, 3 and 4 only c) 1, 2 and 3 only d) all 1, 2, 3 and 4
4. With reference to inflation in India which of the following statement is correct?
a) Controlling the Inflation in India is the responsibility of the Govt. of India only.
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b) The RBI has no role in controlling the Inflation

c) Decreased money circulation helps in controlling Inflation.
d) Increases money circulation helps in controlling Inflation.
5. When the RBI reduces the SLR by 50 basis point which of the following is likely to happen?
a) India’s GDP growth rate increases drastically.
b) Foreign Institutional Investors may bring more capital into our country.
c) Scheduled Commercial Banks may cut their lending rates.
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d) It may drastically reduces the liquidity to the banking system.

6. Which of the following issues the currency notes and coins of one rupees and lower denomination in India?
a) SBI b) RBI c) Govt of India d) Ministry of Finance
7. Consider the following objectives.
1. To restrict the expansion of bank credit.
2. To augment the investment of the banks in Govt. securities.
3. To ensure solvency of banks.
Which of the objectives given above are the main objectives of SLR?
Codes :
a) only 1 and 2 b) Only 1 and 3 c) Only 2 and 3 d) All of these

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 WBCS ECONOMICS HANDOUT—SECOND YEAR 2
8. The Govt. of India & RBI have decided to introduced 1 billion pieces of Rs. 10 notes in Polymer/ plastic on a
field trial basis. Which of the following is/are the objectives behind this motive.
1. Increase of the life time of the notes
2. Combating counter-feiting
3. Reducing cost of minting of currency
Select the correct answer using the codes given below.
Codes :

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a) 1 and 2 only b) 2 only c) 3 only d) All of these
9. The RBI is regularly revising upwards the repo and the reverse repo rates. Why is this being resorted to?
a) To check inflationary pressures in the economy

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b) To curb growth of black month
c) To encourage rise in interest rate on deposit
d) To make bank loan costlier.
10. Financial Inclusion means –
a) Retail banking
b) Financial Date
c) Whole sale banking

c) Granting new bank licenses

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d) Bringing all poor people under banking net at a affordable cost
11. Which of the following is not an initiative taken by RBI & GoI towards Financial inclusion ?
a) Swabhimaan Scheme b) Banking correspondent model
d) Pradhan Mantri Mudra Yojana
12. Which of the following statements is/are true about Green Banking?
a) It stresses on environmental friendly practices.
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b) It aims at reducing carbon footprint from banking activities
c) It promotes deployment of clean energy technologies.
d) All of these
13. A centralised database with online connectivity to branches to interest as well as ATM network which has been
adopted by all major banks of India.
a) Core banking b) Mobile banking c) Specialised banking d) Investment banking
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14. What are main functions of a commercial bank?

a) Accept deposit, provide loans and export goods
b) Accept deposit, provide loans and control foreign exchange
c) Issue currency, create deposit money and provide loan
d) Accept deposit, create deposit money and provide loan
15. Banking services delivered to a customer by means of a computer control system that does not directly involve
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banks branch is called –

a) Narrow banking b) Universal banking c) Virtual banking d) Brick & Mortar banking
16. Which of the following guidelines by the RBI does not hamper the profitability of commercial banks in India?
a) CRR b) SLR c) Margin requirement d) Bank Rate
17. To Finance its deficit, the Govt. prefers borrowing from the public over the RBI. What can be the best reason
for this?
a) Rate of interest charged by the RBI is higher.
b) The Govt. has to return the sum to the RBI within a fixed period of time.
c) Public borrowing does not affect the money supply in the market.
d) It increases the sale of Govt. bonds.

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 WBCS ECONOMICS HANDOUT—SECOND YEAR 3
18. Sterilisation by the RBI is carried through –
a) Open market operation b) Reduction in bank rate
c) Deficit financing operation d) Reduction in SLR
19. Which of the following is/are the possible effects of introducing fresh currency?
1. Increase in money supply with the public.
2. The rise in the nominal income of public.
3. The fall in the general price level.

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

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20. Consider the following statements.
1. Repo rate is the rate at which the RBI lend money to commercial banks for a short period.
2. Reverse Repo rate is the rate which the RBI pays to commercial bank on short-term deposit.
3. Repo is used to reduce liquidity in the economy whereas reverse repo is used to increase liquidity in the
economy.
Which of the statements given above is/are not correct?
a) 1 only b) 1 & 2 only c) 3 only d) 1, 2 and 3 all
21. Which of the following measure would result in an increase in the money supply in the economy?

2. Increase in expenditure by the govt.

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1. Sale of Govt. securities to the public by the central bank.

3. Reduction in Tax collection by the Govt.

4. Purchase of Govt. securities from the public by the central bank.
Select the correct answer using the codes given below.
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Codes :
a) 3 only b) 2 and 4 only c) 1 and 3 only d) 2, 3 and 4 only
22. Broad money in India include which of the following.
1. Currency with the public
2. Demand deposit with bank
3. Time deposit with bank
4. Other deposit with the RBI
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Choose the correct answer using the codes given below.

Codes :
a) 2 and 3 only b) 1, 2 and 3 only c) all 1, 2, 3 and 4 d) 2, 3 and 4 only
23. With reference to Marginal Standing facility consider the following statement.
1. It does not effect the value of currency as it is used for overnight transaction.
2. The purpose of MSF is to reduce volatility in the overnight lending rates in the inter bank Market.
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3. MSF rate is generally lower than repo rate.

Which of the statement given above is /are correct?
Codes :
a) 2 only b) 1 and 3 only c) 1 and 2 only d) all 1, 2 and 3
24. Which of the following measure can be used to reduce inflation?
1. Increase CRR 2. Increase SLR
3. Increase in repo rate 4. Decrease in reverse repo rate
Select the correct answer using the codes given below :
Codes :
a) 1 and 2 only b) 1, 2 and 3 only c) 3 and 4 only d) all 1, 2, 3 and 4

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 WBCS ECONOMICS HANDOUT—SECOND YEAR 4
25. Priority – Sector lending by banks in India constitutes lending to which of the following sectors.
1. Renewable Energy 2. Education 3. Housing 4. Social infrastructure
Select the correct answer using the codes given below.
Codes :
a) 1 and 4 only b) 1, 2 and 3 only c) 2, 3 and 4 only d) all 1, 2, 3 and 4
26. With reference to the institution of Banking ombudsman in India, which one of the statements is not correct?
a) The banking ombudsman is appointed by RBI.

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b) The banking ombudsman can consider complaints from NRI having account in India.
c) The order passed by the Banking ombudsman are final and binding on parties concerned.
d) The service provided by the banking ombudsman is free of any fee.

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27. Consider the following liquid Asset.
1. Demand deposit with the banks.
2. Time deposit with the banks.
3. Saving deposit with the banks.
4. Currency deposit with the banks.
The correct sequence of these assets in the decreasing order of liquidity is –
a) 1-4-3-2 b) 4-3-2-1 c) 2-3-1-4 d) 4-1-3-2
28. Consider the following statement.
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1. Venture Capital (VC) refers to Finance Provided by Investors to Start-up companies & small business.
2. VC are believed have long-term growth potential.
3. Increase of VC, risk is typically high for investors.
Select the correct answer using the codes given below.
Codes :
a) 1 and 2 only b) 2 and 3 only c) all 1, 2 & 3 d) 1 and 3 only
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29. With reference to Green Bonds in India, Consider the following statements.
1. Green Bonds is a debt instrument issued for renewable energy, emission reduction & so on.
2. Both public & private sector banks can issue such bond.
3. It is a low risk-bond
4. Green Bonds were launched by world Bank & European Investment Bank is 2007 for first time.
Which of the statement give above is/are correct?
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Codes :
a) 1 and 2 only b) all 1, 2, 3 and 4 c) 2, 3 and 4 only d) 1 and 3 only
30. What is the difference between primary and secondary market?
1. Primary market help in capital formation while secondary capital provides liquidity to the investor.
2. Initial Public offering are undertaken in primary market.
3. Stock exchange are an example of secondary market.
Select the correct answer using the codes given below.
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Codes :
a) 3 only b) 2 and 3 only c) 1 and 3 only d) all 1, 2 and 3
31. With reference to Bombay Stock Exchange (BSE), consider the following statement.
1. BSE has an indicative Index, called BSE Sensitive Index (SENSEX)
2. SENSEX has constituted in 1978-79 with value of 100.
3. SENSEX is based on the market value of TOP 30 companies listed on BSE.
4. BSE Sensex reflects the overall performance of the Indian Economy.
5. For calculating the SENSEX, all the Sensex stocks are assigned proportional weightage.
Which of the statement given above is /are correct?
Codes :
a) 1, 2 and 3 only b) 2, 3, 4 and 5 only c) all 1, 2, 3, 4 and 5 d) 1, 3 and 4 only

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 WBCS ECONOMICS HANDOUT—SECOND YEAR 5
32. In India merger and acquisition of firms are regulated by –
a) National Manufacturing Competitiveness Council
b) Competitive Commission of India
c) SEBI
d) Dept. of Industrial policy and promotion
33. Name Associated with
1. Bear market a. A period of falling stock price

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2. Bull market b. A period of increasing stock price
3. Blue chip stock c. Large companies and sound fiscal management
4. Initial public offering d. The first sale of a stock by a company to the public

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Select the correct answer :
a) 1-a, 2-b, 3-c, 4-d b) 1-c, 2-a, 3-d, 4-b c) 1-d, 2-b, 3-c, 4-a d) 1-a, 2-b, 3-d, 4-c
34. Which of the following is not the Financial regulator?
a) Competition Commission of India b) IRDAI
c) PFRDA d) AMFI
35. In India which of the following is regulated by the Forward Market Commission?
a) Currency Future Trading
b) Commodities Futures Trading
c) Equity Futures Trading
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d) Both Commodities Futures & Financial Futures Trading.
36. Consider the following statements relating to credit rating agencies.
1. CRISIL is the largest credit rating agency in India but is not among the largest three in the world.
2. The three largest credit rating agencies of the world are Moody’s, standards & poor’s and fitch.
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3. SEBI regulates the credit rating agencies under SEBI (Credit Rating Agencies)
Select the correct answer using the codes given below.
Codes :
a) 2 only b) 2 and 3 only c) 1 and 3 only d) all 1, 2 and 3
37. Which among the following is correct about “White Label ATM”?
a) Any non-bank entity with a minimum net worth of Rs. 100 crore can apply for white label ATM.
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b) White label ATM does not carry any bank’s logo.

c) RBI has given license to non-bank entities to open white label ATM.
d) All of these
38. Which among the following is /are tasks of Monetary Policy?
1. Devise policy rate while maintaining price stability
2. Fixing the benchmark policy rate (repo rate)
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3. Containing inflation within the specific target level

4. Devising mechanism for implementing fiscal policy.
Select the correct answer from following options.
Codes :
a) 2 only b) 1, 3 and 4 only c) 1, 2 and 3 only d) All are correct
39. What is the inflation target range set by Monetary policy committee?
a) Target – 3% [Upper tolerance level – 5%, Lower tolerance level – 1%]
b) Target – 4% [Upper tolerance level – 6%, Lower tolerance level – 2%]
c) Target – 6% [Upper tolerance level – 3%, Lower tolerance level – 9%]
d) Target – 4% [Upper tolerance level – 3%, Lower tolerance level – 5%]

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 WBCS ECONOMICS HANDOUT—SECOND YEAR 6
40. Which framework is used by RBI to control Inflation ?
a) Policy Targets Agreement b) Quarterly Monetary Policy announcement
c) Exchange rate mechanism d) Flexible inflation targeting framework
41. Which of the following statement is /are correct about Monetary Policy Committee?
1. There are six members in the Committee

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2. Three membrs are from RBI and other three members are appointed by Central Government.
3. Governor is the ex-officio chairman of the Committee

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4. Not eligible for re-appointment
Select the correct answer from following options.
Codes :

a) Only 2 and 3 b) Only 1, 2 and 4 c) Only 2, 3 and 4 d) All of these
42. Which Price Index is targeted by MPC under its revised frame work to contain inflation?
a) WPI b) CPI
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43. The main components of MCLR (Marginal Cost of Funds based Lending Rate)—
1. Marginal Cost of Funds
2. Negative carry on account of CRR
d) None of these
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3. Operating costs
4. Tenor premium
Select the correct code.
Codes :

a) Only 1 and 2 b) Only 2 and 3 c) Only 3 and 4 d) All 1, 2, 3 and 4
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