In the context of Indian banking, the term 'Priority Sector Lending' includes advances to: MCQ with Answer and Explanation

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In the context of Indian banking, the term 'Priority Sector Lending' includes advances to:

A. Agriculture, micro and small enterprises, education and housing

B. Only infrastructure projects by private companies

C. Only large industrial houses

D. Only export-oriented units

Answer: Option A

Solution (By JKSSB Mock Tests)

Priority Sector Lending targets sectors such as agriculture, micro, small and medium enterprises, education, housing, social infrastructure and renewable energy.

This question belongs to: Economy GK Economy Set 1

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Question #1

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In the context of banking regulation, the Capital Adequacy Ratio is prescribed to ensure that:

A. Banks maintain adequate capital relative to their risk-weighted assets

B. Interest rates on deposits are maximised

C. CRR is fixed at a particular level

D. Dividend distribution is unrestricted

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Correct Answer: Option A

Explanation:
The Capital Adequacy Ratio requires banks to hold a minimum amount of capital in proportion to their risk-weighted assets so that they can absorb losses and protect depositors.

This question belongs to: Economy GK Economy Set 1

Question #2

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The concept of 'Financial Repression' refers to:

A. Complete liberalisation of interest rates

B. Only the absence of any credit controls

C. Policies that keep interest rates artificially low and channel credit to preferred borrowers, often the government

D. Only high real interest rates

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Correct Answer: Option C

Explanation:
Financial repression encompasses a set of policies—interest-rate ceilings, high reserve requirements, directed credit and capital controls—that hold real interest rates low and facilitate cheap financing of the government.

This question belongs to: Economy GK Economy Set 1

Question #3

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The concept of 'Time Preference' is central to the theory of:

A. Interest

B. Wages

C. Profit

D. Rent

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Correct Answer: Option A

Explanation:
The time preference theory of interest explains the rate of interest as arising from the preference of individuals for present consumption over future consumption.

This question belongs to: Economy GK Economy Set 1

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