Chapter Wise Indian Economy MCQ’s With Explanation

Today’s Topic: Money and Banking-1

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Today’s Topic: Money and Banking-1

Q1. Match List – I and List –II correctly and select your answer using the codes given below.

List – I                                                 List – II

a) Narasimhan committee        1. Performing assets

b) P Selvam Committee            2. Mutual funds

c) Dave Committee                   3. Leading banking system

d) Gadgil Committee                 4. Financial system

Codes:

A         B          C          D

a) 1        2          3          4

b) 1        2          4          3

c) 4        1          2          3

d) 4        1          3          2

Ans:     D

Explanation:    The correct match is:

Narasimhan committee            –           Financial system

P Selvam Committee               –           Performing assets of banks

Dave Committee                      –           Mutual funds

Gadgil Committee                    –           Leading banking system

Q2. Consider the following terms and their explanations:

  1. Closed economy – Economy having no import and export.
  2. Cheap money – A Situation when bank rate and other rates of interest are low.
  3. Commercial paper – Shares and debentures.

Which pair/pairs is/are correctly matched?

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

Ans:     A

Explanation: the Closed economy is such an economy in which there is no foreign trade (i. e. export and import). So statement 1 is correct. Cheap money is the situation when the loans and debts are available at low-interest rate. Commercial paper is debt instruments issued by companies to meet short-term financial needs. So statement 3 is not correct.

Q3. Consider the following statements with regard in Capitalism:

  1. This system is based on ‘Laissez-faire system’ i. e. no state intervention.
  2. It is an economic system in which all means of production are owned by private individuals.
  3. It is a state guided is regulated economic order.

Select the correct statements with the help of the codes given below.

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

Ans:     A

Explanation:    Capitalism is an economic system in which all means of production area owned by private individuals. It is based on free enterprise and private profit. This system is free the regulation of the state.

Q4. Consider the following statements with the regard of ‘brain drain’:

  1. It is a medical technique through which mental illness is cured.
  2. It means the drift of intellectual of a country to another country.
  3. Brain drain deprives a country of its genius capabilities

Select the correct statements with the help codes given below:

a) 1 and 2               b) 2 and 3               c) 1 and 3                    d) All of these

Ans:     C

Explanation:    When the intellectual section of a country. Like scientists, doctors and technology expert go to other countries to better their lot are earn huge money, this process is called Brain drain. It deprives a country of it’s genius and capabilities.

Q5. Consider the following statements with regard to ‘blue chip’ share:

  1. They are the most reliable industrial shares on a stock exchange.
  2. It is risky investment.
  3. It is concerned with such equity shares whose purchase is extremely safe.

Select the correct statements with the help of given codes:

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

Ans:     D

Explanation:    Blue chip shares are the most reliable industrial shares in a stock exchange. It is a safe investment and involves no risk. So blue-chip shares are concerned with such equity shares whose purchase is extremely safe. In this regard statement, 2 is not correct and statement 1 and 3 are correct.

Q6. Consider the following statements with regard to ‘black money’:

  1. Makes the economy more productive.
  2. Ensure a better distribution on income and wealth.
  3. It is unaccounted money which is concealed from tax authorities.
  4. It puts an adverse pressure on equitable distribution of wealth

Select the correct statements with the help of codes given below:

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

Ans:     B

Explanation:    Black money is unaccounted money which is concealed from tax authorities. All illegal economic activities are dealt with by this black money. Black money creates a parallel economy. It puts an adverse pressure on equitable distribution of wealth and income in the economy.

Q7. The term ‘plastic money’ applies to:

a. Bank Draft made of plastic coated paper.

b.Currency notes impregnated with plastic thread.

c.Currency notes printed on plastic coated paper.

d.Credit cards mainly issued by the banks.

Ans:     D

Explanation:    Plastic money – it refers to use of instruments like ‘credit cards’ instead of cash in business transactions. It is called plastic money because it is made up of plastic. It has coded information about the card holder which makes it theft proof. Except card holder no one can use it.

Q8. Consider the following statements:

  1. PAN card is issued by the income tax department of India
  2. PAN card can be used for the purpose of proof of address.
  3. PAN card can be used as a proof of date of birth for some purposes.

Select the correct statements using the codes given below:

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

Ans:     C

Explanation:    The statement (1) is correct PAN (Permanent Account Number) is issued by the Income Tax Department of India. Statement 2 is incorrect because PAN card is not used for the purpose of proof of address. PAN card can be used as a proof of date of birth for some purpose.

Q9. Consider the following statements:

  1. The first bank managed by Indians was Oudh Bank.
  2. The bank account is called Real Account.
  3. Monopoly is when there are many sellers.
  4. Depreciation account is called Nominal account.

Which statements are correct? Select your answer using the codes given below.

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

Ans:     D

Explanation:    Oudh bank was the Bankfirst bank that was fully managed by India A bankaccount is also called real account. Monopoly is when there is a single seller, not many seller. So statement 3 is not correct. Depreciation account is called nominal account. Thus statement 1 2 and 4 are correct.

Q10. Match the list-I with list-II correctly and select your answer using the codes given below:

List – I (Book)                                                 List-II

a) The wealth of nation                              1. A R Rodon

b) Big Push Theory                                    2. Irwin Fisher

c) Planned economy for                             3. India Adam smith

d) Money illusion                                        4. M Vishveshwaraiya

Codes:

A         B          C          D

a) 3      1          4           2

b) 3      1          2           4

c) 1       2          3          4

d) 1       2          4          3

Ans:     A

Explanation:    The correct match is:

Book                                                    Writer

The wealth of Nation               –           Adam smith

Big push Theory                      –           A R Rodon

Planned economy for India     –           M Vishveshwaraiya

Money Illusion                        –           Irwin Fisher

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