1. Which of the following is/are Money Market Instruments?
[A] Treasury Bills
[B] Commercial Papers
[C] Certificate of Deposits
[D] All of the above
Show Answer
Correct Answer: D [All of the above]
Notes:
Money market securities are debt issues with maturities of one year or less. Treasury Bills, Certificate of Deposit as well as Commercial papers are money market instruments.
2. Who among the following Indian Economists played a crucial role in inception of MNREGA?
[A] Amartya Sen
[B] Jean Dreze
[C] Jagdish Natwarlal Bhagwati
[D] Dr. Vijay Kelkar
Show Answer
Correct Answer: B [Jean Dreze]
Notes:
Jean Dreze is an Economist of Indian Origin born in Belgium. He conceptualized and drafted the first version of MGNREGA. He was the member of National Advisory Council and has coauthored “An Uncertain Glory: India and its Contradiction” with noted economist Amartya Sen.
3. If the people prefer to keep cash with them rather than deposits, which among the following impacts will be seen on the Money Supply of the country?
[A] The money supply of the country will increase
[B] The money supply of the country will decrease
[C] The money supply of the country will not change
[D] The money supply of the country may increase or decrease
Show Answer
Correct Answer: B [The money supply of the country will decrease]
Notes:
If people prefer to keep cash with them rather than making deposits in banks, the impact on the Money Supply of the country will be as follows:
[B] The money supply of the country will decrease.
The reason for this is that money supply is typically categorized into different measures, with M1 and M2 being common examples. M1 includes currency (physical cash) in circulation and demand deposits (checking accounts). When people hold more cash and make fewer deposits, it reduces the amount of money in demand deposits, which are considered a part of the money supply. Therefore, if people choose to keep more cash on hand, it reduces the overall money supply in the country, leading to a decrease.
4. Economic Planning comes under which of the following lists ?
[A] Union List
[B] Concurrent list
[C] State List
[D] None of them
Show Answer
Correct Answer: B [Concurrent list]
Notes:
Economic planning is listed in the Concurrent List, or List III, of the Seventh Schedule of the Constitution of India. The Concurrent List is a list of 52 items that both the central and state governments can make laws on. The Concurrent List includes topics such as criminal law, marriage and divorce, bankruptcy, and economic and social planning.
5. Which among the following is NOT an instrument of qualitative control in India ?
[A] Regulation of the Consumer Credit
[B] Rationing of the Credit
[C] Margin Requirements
[D] Variable Costs and Reserves
Show Answer
Correct Answer: D [Variable Costs and Reserves]
Notes:
For example OMO, CRR, Bank rate and SLR are Variable Reserves & Costs and are instruments of quantitative control in India, Regulation of the Consumer Credit, Rationing of the Credit and margin Requirements do NOT affect the total credit in the system. Thus they are called qualitative control measures
6. Which among the following is a correct definition of the “Inflationary gap”?
[A] The difference between total spending at full employment level and total spending above that level.
[B] The difference between the price of a product at a time and price of that product at some different time
[C] Difference between the national expenditure and total expenditure
[D] Difference between Estimated fiscal deficit and actual fiscal deficit
Show Answer
Correct Answer: A [ The difference between total spending at full employment level and total spending above that level. ]
Notes:
The “inflationary gap” refers to the difference between total spending at full employment and total spending above that level. This occurs when demand exceeds the economy’s capacity to produce goods and services, leading to upward pressure on prices. Historically, inflationary gaps can result from excessive government spending or rapid economic growth, often leading to inflation. For example, during the 1970s, many economies experienced inflationary gaps due to oil price shocks and increased demand.
7. Which among the following is a money market instrument of shortest tenure?
[A] Notice money
[B] Call money
[C] Near Money
[D] Term Money
Show Answer
Correct Answer: B [ Call money ]
Notes:
The call money is the short-term money market instrument where money is borrowed or lent on demand for a day. It is also known as overnight money market instrument. Intervening holidays and/or Sunday are excluded for this purpose. Thus, it is money borrowed on a day and repaid on the next working day (irrespective of the number of intervening holidays).
8. The time period between jobs when a worker is transitioning from one job to another is known as__:
[A] Turnover unemployment
[B] Cyclical unemployment
[C] Structural unemployment
[D] Frictional unemployment
Show Answer
Correct Answer: D [ Frictional unemployment ]
Notes:
Frictional unemployment is the time period between jobs when a worker is searching for, or transitioning from one job to another. It is sometimes called search engine and can be voluntary based on the circumstances of the unemployed individual.
9. Which of the following would ‘tighten’ the liquidity situation of banks?
[A] Increased sales of government securities to individuals or institutions who pay for them from their bank
[B] Regulations requiring the banks to maintain positive end-of-day balances with the Bank of England
[C] Both 1 and 2
[D] Lower levels of taxation and reductions in tax receipts to the Treasury
Show Answer
Correct Answer: C [Both 1 and 2]
Notes:
Increased sales of government securities to individuals or institutions who pay for them from their bank accounts and Regulations requiring the banks to maintain positive end-of- day balances with the Bank of England would ‘tighten’ the liquidity situation of banks.
10. Which of the following is component of capital market?
[A] Equity market
[B] Debt market
[C] Derivative market
[D] All of the above
Show Answer
Correct Answer: D [All of the above]
Notes:
There are three component of capital market are:- EQUITY MARKET, DEBT MARKET and DERIVATIVE MARKET.
