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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Total Questions

Practice Questions

Page 47 of 111
Question #921
Deficit financing means:
A. financing government expenditure through borrowing or money creation
B. financing government expenditure through taxation
C. repayment of public debt
D. reducing government expenditure
Discuss
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Correct Answer: Option A

Explanation:
Deficit financing involves financing a budget deficit through borrowing or creation of money.
This question belongs to: Economy GK Economy Set 1
Question #922
Monetization of deficit refers to:
A. increasing foreign aid
B. reducing fiscal deficit
C. government selling securities to banks and public
D. RBI directly purchasing government securities, increasing money supply
Discuss
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Correct Answer: Option D

Explanation:
Monetization of deficit occurs when the central bank directly purchases government securities, creating money.
This question belongs to: Economy GK Economy Set 1
Question #923
An expansionary fiscal policy consists of:
A. raising the repo rate
B. reducing money supply
C. increasing taxes and reducing government expenditure
D. reducing taxes or increasing government expenditure
Discuss
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Correct Answer: Option D

Explanation:
Expansionary fiscal policy increases aggregate demand through lower taxes or higher government expenditure.
This question belongs to: Economy GK Economy Set 1
Question #924
A contractionary fiscal policy consists of:
A. increasing money supply
B. lowering interest rates
C. increasing government spending and cutting taxes
D. reducing government spending or increasing taxes
Discuss
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Correct Answer: Option D

Explanation:
Contractionary fiscal policy reduces aggregate demand by cutting spending or raising taxes.
This question belongs to: Economy GK Economy Set 1
Question #925
M0 in India is also known as:
A. reserve money
B. narrow money
C. broad money
D. high-powered money plus time deposits
Discuss
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Correct Answer: Option A

Explanation:
M0 is reserve money or high-powered money, comprising currency in circulation plus bankers' deposits with RBI and other deposits.
This question belongs to: Economy GK Economy Set 1
Question #926
The Reserve Bank of India acts as lender of last resort by:
A. issuing currency against gold
B. providing funds to banks when they cannot obtain funds from other sources
C. lending only to the central government
D. giving loans to the public at low interest
Discuss
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Correct Answer: Option B

Explanation:
The RBI as lender of last resort provides funds to banks facing liquidity crises when other sources are unavailable.
This question belongs to: Economy GK Economy Set 1
Question #927
Moral suasion by the RBI refers to:
A. persuasion and advice to banks to follow monetary policy objectives
B. raising reserve requirements
C. legal penalties on banks
D. buying securities from banks
Discuss
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Correct Answer: Option A

Explanation:
Moral suasion is a non-statutory instrument of persuasion by the RBI to influence bank behaviour.
This question belongs to: Economy GK Economy Set 1
Question #928
Which of the following is a permitted asset for Statutory Liquidity Ratio?
A. Mutual fund units
B. Corporate bonds
C. Equity shares
D. Gold and government securities
Discuss
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Correct Answer: Option D

Explanation:
SLR assets include cash, gold and approved government securities.
This question belongs to: Economy GK Economy Set 1
Question #929
Real Time Gross Settlement is a payment system that:
A. settles transactions in batches
B. settles only retail transactions
C. settles high-value transactions individually in real time
D. does not require a bank account
Discuss
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Correct Answer: Option C

Explanation:
RTGS settles high-value transactions individually and in real time.
This question belongs to: Economy GK Economy Set 1
Question #930
National Electronic Funds Transfer is used mainly for:
A. international remittances
B. batch-wise electronic transfer of retail funds
C. high-value real-time transfers only
D. stock market trading
Discuss
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Correct Answer: Option B

Explanation:
NEFT settles retail fund transfers in batches, unlike RTGS.
This question belongs to: Economy GK Economy Set 1
Question #931
Unified Payments Interface enables:
A. only government payments
B. only credit card payments
C. instant interbank transfer using a virtual payment address
D. only cheque clearing
Discuss
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Correct Answer: Option C

Explanation:
UPI enables instant interbank transfers through virtual payment addresses using mobile devices.
This question belongs to: Economy GK Economy Set 1
Question #932
The Negotiable Instruments Act was enacted in which year?
A. 1872
B. 1949
C. 1934
D. 1881
Discuss
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Correct Answer: Option D

Explanation:
The Negotiable Instruments Act was enacted in 1881 and governs cheques, bills of exchange and promissory notes.
This question belongs to: Economy GK Economy Set 1
Question #933
The Banking Ombudsman is appointed by:
A. President
B. Indian Banks' Association
C. Finance Minister
D. Reserve Bank of India
Discuss
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Correct Answer: Option D

Explanation:
The RBI appoints Banking Ombudsmen to resolve customer complaints against banks.
This question belongs to: Economy GK Economy Set 1
Question #934
The Insolvency and Bankruptcy Code was enacted in which year?
A. 2016
B. 2019
C. 2013
D. 2015
Discuss
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Correct Answer: Option A

Explanation:
The Insolvency and Bankruptcy Code was enacted in 2016.
This question belongs to: Economy GK Economy Set 1
Question #935
Under NPA classification, a substandard asset is one that has remained NPA for:
A. 12 months or less
B. less than 6 months
C. more than 5 years
D. only 30 days
Discuss
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Correct Answer: Option A

Explanation:
A substandard asset is one that has remained NPA for up to 12 months.
This question belongs to: Economy GK Economy Set 1
Question #936
A doubtful asset is one that has remained NPA for:
A. up to 12 months
B. up to 6 months
C. more than 12 months
D. less than 90 days
Discuss
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Correct Answer: Option C

Explanation:
A doubtful asset has remained NPA for more than 12 months.
This question belongs to: Economy GK Economy Set 1
Question #937
Loss assets are those where:
A. loss has been written off fully
B. assets are standard
C. no loss has been identified
D. loss has been identified but the amount has not been written off
Discuss
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Correct Answer: Option D

Explanation:
Loss assets are assets where a loss has been identified but not yet fully written off.
This question belongs to: Economy GK Economy Set 1
Question #938
Which of the following is not a priority sector category?
A. Education
B. Housing loans above Rs 50 crore
C. Agriculture
D. Micro enterprises
Discuss
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Correct Answer: Option B

Explanation:
Very large housing loans above prescribed limits are not part of priority sector lending.
This question belongs to: Economy GK Economy Set 1
Question #939
Regional Rural Banks are sponsored by:
A. NABARD only
B. RBI only
C. State governments only
D. scheduled commercial banks
Discuss
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Correct Answer: Option D

Explanation:
Regional Rural Banks are sponsored by scheduled commercial banks along with central and state governments.
This question belongs to: Economy GK Economy Set 1
Question #940
The apex institution for agricultural and rural credit in India is:
A. EXIM Bank
B. NABARD
C. SIDBI
D. RBI
Discuss
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Correct Answer: Option B

Explanation:
NABARD is the apex institution for agricultural and rural credit.
This question belongs to: Economy GK Economy Set 1
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