Fiscal Policy & Monetary Policy in India UPSC Questions

Economics

Fiscal Policy & Monetary Policy in India MCQ Questions


1.
The lowering of Bank Rate by the Reserve Bank of india leads to
UPSC - 2011
A.
More liquidity in the market.
B.
Less liquidity in the market
C.
No change in the liquidity in the market.
D.
Mobilization of more deposits by commercial banks.
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ANSWER :
A. More liquidity in the market.
2.
Which one of the following statements appropriately describes the "fiscal stimulus"?
UPSC - 2011
A.
It is a massive investment by government in manufacturing sector to ensure the supply of goods to meet the demand surge caused by rapid economic growth.
B.
It is an intense affirmative action of the government to boost economic activity in the country.
C.
It is the government intensive action on financial institutions to ensure dis- bursement of loans to agriculture and allied sectors to promote greater food production and contain food inflation.
D.
It is an extreme affirmation action by the government to pursue its policy of financial inclusion.
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ANSWER :
B. It is an intense affirmative action of the government to boost economic activity in the country.
3.
The rapid increase in the rate of inflation is sometimes attributed to the "base effect".What is "base effect"?
UPSC - 2011
A.
It is the impact of drastic deficiency in supply due to failure of crops.
B.
It is the impact of surge in demand due to rapid economic growth.
C.
It is the impact of the price levels of previous year on the calculation of inflation rate.
D.
None of the statements (a),(b) and © givn above is correct in this context.
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ANSWER :
C. It is the impact of the price levels of previous year on the calculation of inflation rate.
4.
Which one of the following is likely to be the most inflationary in its effect?
UPSC - 2013
A.
Repayment of public dept
B.
Borrowing from the bublic to finance a budget deficit
C.
Borrowing from banks to finance a budget deficit
D.
Creating new money to finance a budget deficit
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ANSWER :
D. Creating new money to finance a budget deficit
5.
A rise in general level of prices may be caused by
1. an increase in the money supply
2. a decrease in the aggregate level of output
3. an increase in the effective demand
Select the correct answer using the codes given below.
UPSC - 2013
A.
1 only
B.
1 and 2 only
C.
2 and 3 only
D.
1, 2 and 3
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ANSWER :
D. 1, 2 and 3
6.
In the context of Indian economy, 'Open Market Operations' refers to
UPSC - 2013
A.
borrowing by scheduled banks from the RBI
B.
lending by commercial banks to industry and trade
C.
purchase and sale of government securities by the RBI
D.
None of the above
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ANSWER :
C. purchase and sale of government securities by the RBI