Chapter Wise Indian Economy MCQ’s With Explanation

Today’s Topic:Money and Banking-1

These are most-important and most-expected Questions for IAS Prelims General Studies paper-1 (ECONOMY) of UPSC Civil Service exam.

Every day Himalai is coming with different subjects questions and answers with explanation analysis, these Questions will be both theoretical and fact based. Every day preparation will make a way for success, keep up your daily IAS Exam preparation with Himalai subject wise, chapter wise and topic wise Mcq’s with answers and analysis. We are providing our daily program list so that aspirant can note it and keep a watch on Himalai Mock test blogs for updated questions and get prepare for the Exam.

Every Day Program List

Sunday- Indian and world Geography

Monday-General issues on Environmental Ecology, bio-diversity and Climate Change

Tuesday- General Science

Wednesday- Indian Polity and Governance

Thursday- History of India and Indian National Movement

Friday- Economic and Social Development

Saturday-Current Affairs Concepts

Today’s Topic:Money and Banking-1

 

 

Q1. Consider the following statements:

  1. Main source of National Income in India is industrial sector.
  2. National income at constant price is called monetary income

Which of the statement is/are correct?

a) 1 only         b) 2 only         c) 1 and 2         d) None of these

Ans:     D

Explanation:     Neither statement 1 nor 2 is correct. Main source of national income in India is service sector, not Agriculture sector. Service sector contributes about 58% in GDP. National income at constant price is known as real national income, not monetary income. So the correct answer is (d)

 

Q2. Consider the following statements:

  1. In India one rupee coins and notes and subsidiary are issued by the reserve Bank
  2. Devaluation of currency leads to expansion of export trade.
  3. Inflation is caused by increase in money supply.
  4. Which of the statement is/are correct?

a) 1 and 2 only                 b) 2 and 3 only                 c) 1, 2 and 3                 d) None of these

Ans:     B

Explanation:     One rupee notes and coins and subsidiary coins are issued by the finance ministry not by RBI. So statement 1 is incorrect. Devaluation of currency leads to expansion of export trade and inflation is caused by the increase in money supply. So statement 2 and 3 are correct.

 

Q3. Consider the following statements regarding “inside Trading”:

  1. It is related to international trade.
  2. It is considered illegal
  3. Inside trading is to provide the secret information of any company so that the price of it’s shares may be affected.

Which of the statement is/are correct?

a) 1 and 2                     b) 2 and 3                     c) 1 and 2                     d) 1, 2 and 3

Ans:     B

Explanation:     Statement 1 is not correct because inside trading is not related with international trade. It is related with the share market. It is banned and declared illegal. So statement 2 is correct. Statement

 

Q4. Consider the following statements:

  1. Decimal coinage system was introduced in India in 1950.
  2. In India currency notes issue system is based on proportional reserve system.
  3. The one rupee note bears the signature of RBI governer.

Which of the statement is/are correct?

a) 1 only                     b) 3 only                     c) 1 and 2                     d) None of these

Ans:     D

Explanation:     All the given statements are in correct. The correct statements are-

Decimal coinage system was introduced in India in 1957.

In India currency notes issue system is based on minimum Reserve system.

The one rupee note bears the signature of secretary ministry of finance.

 

Q5. Consider the following statements with references to ‘call money’

  1. Money borrowed or lent for day or overnight.
  2. Money borrowed for more than one day but upto 3 days.
  3. Money borrowed for more than one day but upto 7 days.
  4. Money borrowed for more than one day but upto 14 days.

Which of the statement is/are correct?

a) Only 1              b) Only 2              c) 1, 2, 3 and 4              d) None of these

Ans:     A

Explanation:     Call money is the money which is borrowed or lent for a day or overnight. It carries a low rate of interest. So call money is the amount of money which is borrowed or lent for a very short period.

 

Q6. Consider the following statements:

  1. Currently only five banks are associated with State Bank of India
  2. Narasimhan committee was appointed for banking and financial set up reforms.
  3. In 1969, 20 banks were nationalized.

Which of the statement is/are correct?

a) 1 and 2                 b) 2 and 3                 c) 1, 2 and 3                 d) None of these

Ans:     A

 

Q7. Select the correctly matched pair.

  1. Kelkar committee – Tax structure reforms
  2. Khusaro committee – Agriculture credit system
  3. Malhotra committee – Insurance credit system
  4. G V Ramakrishna committee – Banking reforms.

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

Ans:     C

Explanation:     Correct matched pair-

  1. Kelkar committee –           Tax structure reforms
  2. Khusaro committee –           Agriculture credit system
  3. Malhotra committee –           Insurance sector
  4. G V Ramakrishna committee – Disinvestment

 

Q8. Which of the following is not a measure to control inflation adopted by the government and or the RBI:

a) Monetary policy               b) Fiscal policy               c) Financial Policy                d) Price control

Ans:     C

Explanation:     The government and RBI adopt various measures to control inflation. These measures are monetary policy, fiscal policy, price control ect. Financial inclusion s not related to control of inflation. Financial inclusion indicates that the poor and economically and socially backward section of the society should be provided financial aid for their socioeconomic development.

 

Q9. Consider the following statements with regard to Reserve Bank of India:

  1. It is central bank of the country.
  2. It was established on April 1, 1935 with a capital of Rs. Crore
  3. It was nationalized on January 1, 1955
  4. It regulates the flow of liquidity in economy

Select the correct answer with the help of given codes.

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

Ans:     D

Explanation:     Reserve Bank is the central bank of the counrty. It was established on April 1, 1993 with capital of Rs. 5 crore not on jan 1, 1955. So statements (3) is not correct. Statement (4) is correct because RBI regulates the flow of liquidity in Economy.

 

Q10. Consider the following statements with regards to the function of Reserve Bank of India (RBI):

  1. Banker to the government of India
  2. Controller of credit
  3. Custodian of foreign Reserves
  4. It drafts fiscal policy

Which of the following statements can be included in the function of RBI?

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

Ans:     C

Explanation:     RBI was established in 1935 with a capital of Rs. 5crore. It’s functions include-

1.Issue of notes, 2. Banker to the government 3. Controller of credit, 4.Banker’s bank, 5. Custodian of foreign reserves etc.

So statement 1, 2 and 3 are correct statement 4 is drafted by the Government.

 

HIMALAI ONLINE TEST COMING SHORTLY

Chapter wise mock test series with analysis and explanation.
With this exam oriented MCQ’S and explanation one can know the depth of the topic and make themselves understand the strengths and corrective areas where they are standing in that topic preparation, One can learn and pass the exam with the help of Himalai test series with the standards of UPSC and exam oriented preparation. For more information register to Himalai.

Leave a Reply

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>