Economy Set 1 MCQs

Economy GK

Economy Set 1 MCQs

Practice Economy GK MCQs on basic economic concepts including economy, economics, microeconomics, macroeconomics, goods and services, demand and supply, factors of production, opportunity cost, economic activities, sectors of economy and other fundamental concepts frequently asked in SSC, Railway, Banking, UPSC, JKSSB, JKPSC, Police, Defence and other competitive examinations.

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Practice Questions

Page 4 of 111
Question #61
The Reserve Bank of India was established in 1935 under the:
A. Negotiable Instruments Act, 1881
B. Companies Act, 1956
C. Banking Regulation Act, 1949
D. Reserve Bank of India Act, 1934
Discuss
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Correct Answer: Option D

Explanation:
The RBI was established under the Reserve Bank of India Act, 1934.
This question belongs to: Economy GK Economy Set 1
Question #62
The Reserve Bank of India was nationalized in the year:
A. 1955
B. 1935
C. 1947
D. 1949
Discuss
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Correct Answer: Option D

Explanation:
The RBI was nationalized in 1949.
This question belongs to: Economy GK Economy Set 1
Question #63
Bank rate is the rate at which the RBI:
A. lends overnight against SLR securities
B. rediscounts bills and provides long-term funds to banks
C. lends short-term funds against government securities
D. borrows from commercial banks
Discuss
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Correct Answer: Option B

Explanation:
Bank rate is the rate at which the RBI rediscounts bills and provides longer-term funds.
This question belongs to: Economy GK Economy Set 1
Question #64
Repo rate is the rate at which the Reserve Bank of India:
A. borrows money from commercial banks
B. accepts deposits from public
C. lends short-term funds to commercial banks against government securities
D. lends to the government
Discuss
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Correct Answer: Option C

Explanation:
Repo rate is the rate at which the RBI lends short-term funds to banks against government securities.
This question belongs to: Economy GK Economy Set 1
Question #65
Reverse repo rate is the rate at which the RBI:
A. lends to banks
B. borrows funds from commercial banks
C. rediscounts bills
D. lends to the central government
Discuss
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Correct Answer: Option B

Explanation:
Reverse repo rate is the rate at which the RBI borrows funds from commercial banks.
This question belongs to: Economy GK Economy Set 1
Question #66
Cash Reserve Ratio is the percentage of net demand and time liabilities that banks must:
A. invest in gold
B. invest in government securities
C. keep as cash with the RBI
D. lend to the priority sector
Discuss
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Correct Answer: Option C

Explanation:
CRR requires banks to keep a prescribed percentage of NDTL as cash reserves with the RBI.
This question belongs to: Economy GK Economy Set 1
Question #67
Statutory Liquidity Ratio is the percentage of NDTL that banks must maintain in:
A. cash with RBI only
B. loans to government
C. gold, cash and approved securities
D. foreign exchange only
Discuss
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Correct Answer: Option C

Explanation:
SLR requires banks to maintain liquid assets such as cash, gold and approved securities.
This question belongs to: Economy GK Economy Set 1
Question #68
Open Market Operations refer to:
A. sale and purchase of government securities by the RBI
B. issue of new currency notes
C. trading in stock exchanges
D. lending by commercial banks to customers
Discuss
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Correct Answer: Option A

Explanation:
Open Market Operations are the sale and purchase of government securities by the RBI to regulate liquidity.
This question belongs to: Economy GK Economy Set 1
Question #69
The Marginal Standing Facility allows banks to borrow overnight from RBI:
A. against foreign currency
B. against approved government securities
C. without any collateral
D. against corporate bonds
Discuss
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Correct Answer: Option B

Explanation:
MSF allows banks to borrow overnight from the RBI against approved government securities.
This question belongs to: Economy GK Economy Set 1
Question #70
The Narasimham Committee was associated with reforms in:
A. labour laws
B. agriculture
C. taxation
D. banking and financial sector
Discuss
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Correct Answer: Option D

Explanation:
The Narasimham Committee recommended banking and financial sector reforms.
This question belongs to: Economy GK Economy Set 1
Question #71
In 1969, the Government of India nationalized how many major commercial banks?
A. 20
B. 14
C. 6
D. 10
Discuss
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Correct Answer: Option B

Explanation:
In 1969, 14 major commercial banks were nationalized.
This question belongs to: Economy GK Economy Set 1
Question #72
The priority sector lending target for domestic scheduled commercial banks is what percentage of Adjusted Net Bank Credit?
A. 30%
B. 50%
C. 40%
D. 25%
Discuss
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Correct Answer: Option C

Explanation:
Domestic scheduled commercial banks are required to lend 40% of Adjusted Net Bank Credit to the priority sector.
This question belongs to: Economy GK Economy Set 1
Question #73
DICGC provides deposit insurance up to which maximum amount per depositor per bank?
A. Rs 5 lakh
B. Rs 1 lakh
C. Rs 2 lakh
D. Rs 10 lakh
Discuss
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Correct Answer: Option A

Explanation:
DICGC insures deposits up to Rs 5 lakh per depositor per bank.
This question belongs to: Economy GK Economy Set 1
Question #74
The SARFAESI Act, 2002 primarily deals with:
A. recovery of non-performing assets and securitization
B. microfinance regulation
C. payment systems
D. bank nationalization
Discuss
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Correct Answer: Option A

Explanation:
SARFAESI Act enables banks and financial institutions to recover non-performing assets.
This question belongs to: Economy GK Economy Set 1
Question #75
Which of the following is the correct classification of loans under the Pradhan Mantri Mudra Yojana?
A. Shishu, Kishor, Tarun
B. Start-up, Growth, Mature
C. Primary, Secondary, Tertiary
D. Small, Medium, Large
Discuss
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Correct Answer: Option A

Explanation:
MUDRA loans are classified as Shishu, Kishor and Tarun.
This question belongs to: Economy GK Economy Set 1
Question #76
A payment bank in India can accept demand deposits up to a maximum of:
A. Rs 2 lakh
B. Rs 1 lakh
C. Rs 50,000
D. Rs 5 lakh
Discuss
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Correct Answer: Option B

Explanation:
Payment banks can accept demand deposits up to Rs 1 lakh per customer.
This question belongs to: Economy GK Economy Set 1
Question #77
Small finance banks are required to extend what percentage of their Adjusted Net Bank Credit to priority sector?
A. 75%
B. 50%
C. 40%
D. 60%
Discuss
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Correct Answer: Option A

Explanation:
Small finance banks are required to lend 75% of their ANBC to the priority sector.
This question belongs to: Economy GK Economy Set 1
Question #78
The Lead Bank Scheme was introduced in 1969 based on the recommendations of:
A. Rangarajan Committee
B. Narasimham Committee
C. Kelkar Committee
D. Gadgil Study Group
Discuss
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Correct Answer: Option D

Explanation:
The Lead Bank Scheme was introduced on the recommendation of the Gadgil Study Group.
This question belongs to: Economy GK Economy Set 1
Question #79
Basel III norms primarily focus on:
A. priority sector lending
B. interest rate deregulation
C. capital adequacy, leverage and liquidity of banks
D. agricultural credit
Discuss
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Correct Answer: Option C

Explanation:
Basel III norms strengthen capital adequacy, leverage and liquidity requirements for banks.
This question belongs to: Economy GK Economy Set 1
Question #80
An asset is classified as a Non-Performing Asset when interest or principal remains overdue for:
A. 180 days
B. 90 days
C. 30 days
D. 60 days
Discuss
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Correct Answer: Option B

Explanation:
An asset becomes an NPA when interest or principal is overdue for more than 90 days.
This question belongs to: Economy GK Economy Set 1
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