Economics GK Quiz-22

51. The smaller the Cash Reserve
Ratio, the scope for lending by
banks is :
(1) greater (2) smaller
(3) weaker (4) lesser
Answer:
51. (1) Cash Reserve Ratio is a regulation set by Central
bank (RBI in India) which dictates the minimum
amount (reserves) that a commercial bank must be
held to customer notes and deposits. A decrease in
CRR will make it mandatory for the banks to hold a
lesser proportion of their deposits in the form of deposits with the RBI. This will increase the amount of
Bank deposits and they will lend more as they have
more amount as their reserve.


(SSC Combined Matric Level (PRE)
Exam. 05.05.2002 (Ist Sitting)
(Eastern Zone, Guwahati)
52. For channelising the unaccounted money for productive purposes the Government Introduced the scheme of :
(1) Special Bearer Bonds
(2) Resurgent India Bonds
(3) Provident Funds
(4) Market Loans
Answer:
52. (1) The Special Bearer Bonds (Immunities And Exemptions) Act, 1981 laid down the purpose of such
bonds as necessary to canalize for productive purposes black money which has become a serious threat
to the national economy. With a view to such canalization, the Central Government decided to issue at
par certain bearer bonds to be known as the Special
Bearer Bonds, 1991.


(SSC Combined Matric Level (PRE)
Exam. 05.05.2002 (IInd Sitting)
(North Zone, Delhi)
53. Funds which flow into a country
to take advantage of favourable
rates of interest in that country
is called
(1) Cold Money (2)Black Money
(3) Hot Money (4) White Money
Answer:
53. (3) Hot money is a term that is most commonly used
in financial markets to refer to the flow of funds (or
capital) from one country to another in order to earn
a short-term profit on interest rate differences and/
or anticipated exchange rate shifts. These speculative capital flows are called "hot money" because they
can move very quickly in and out of markets, potentially leading to market instability.


(SSC Combined Matric Level (PRE)
Exam. 05.05.2002 (IInd Sitting)
(North Zone, Delhi)
54. Legal Tender Money is
(1) accepted only by Government
(2) accepted by people and
Government as per the law
(3) not accepted for business
purposes by law
(4) not accepted by Government
Answer:
54. (2) Legal tender is a medium of payment allowed by
law or recognized by a legal system to be valid for
meeting a financial obligation. So it is accepted by
people and government on a legal basis. Paper currency and coins are common forms of legal tender in
many countries.


(SSC Combined Matric Level (PRE)
Exam. 05.05.2002 (IInd Sitting)
(North Zone, Delhi)
55. Commercial banks create credit
(1) on the basis of their securities
(2) on the basis of their assets
(3) on the basis of their reserve
fund
(4) on the basis of their deposits
Answer:
55. (4) Commercial banks create credit on the basis of
their deposits. Credit creation is the multiple expansions of banks demand deposits. Whenever, customer
deposits sum of money, a part of that money is kept
by the commercial banks with the credit bank of the
country which is obligatory by the law. The amount
of credit that can be created by the bank will depend
on the primary deposits and also on the amounts of
minimum legal resource requirement.


(SSC Combined Matric Level (PRE)
Exam. 12.05.2002 (Ist Sitting)
56. Bank money refers to
(1) currency notes
(2) coins
(3) gold bullions
(4) cheques
Answer:
56. (4) There are two types of money in a fractional-reserve banking system, currency originally issued by
the central bank, and bank deposits at commercial
banks: (a) central bank money (all money created by
the central bank regardless of its form, e.g. banknotes, coins, electronic money); and (b) commercial
bank money (money created in the banking system
through borrowing and lending) - sometimes referred
to as chequebook money.


(SSC Combined Matric Level (PRE)
Exam. 12.05.2002 (Ist Sitting)ECONOMICS
SGAE–589
57. A speculator who sells stocks,
in order to buy back when price
falls, for gain is a
(1) Bull (2) Bear
(3) Boar (4) Bison
Answer:
57. (2) A bear is a speculator who is wary of fall in prices
and hence sells securities so that he may buy them
at cheap price in future. He does not have securities
at present but sells them at higher prices in anticipation that he will supply them business purchasing
at lower prices in the future. If the prices move down
as per the expectations of the bear he will earn profits out of these transactions.


(SSC Combined Matric Level (PRE)
Exam. 12.05.2002 (IInd Sitting)
58. Inflation can be checked by
(1) increasing exports
(2) increasing money supply
(3) increasing Government expenditure
(4) decreasing money supply
Answer:
58. (4) The technical and most often used way to control
inflation is by tightening the money supply. The logic
goes that when people do not have excess money, they
will buy lesser quantity of goods and services and postpone luxurious expenses. This will reduce the demand
for the products and thus lead to reduction in prices.
Most central banks use high interest rates as the traditional way to fight or prevent inflation.


(SSC Combined Matric Level (PRE)
Exam. 16.06.2002 (Re-Exam)
59. “Bad money will drive out good
money from circulation.” This is
known as :
(1) Engle’s Law
(2) Gresham’s Law
(3) Say’ Law
(4) Wagner’s Law
Answer:
59. (2) Gresham's law is an economic principle that states:
"When a government compulsorily overvalues one
type of money and undervalues another, the undervalued money will leave the country or disappear from
circulation into hoards, while the overvalued money
will flood into circulation." It is commonly stated as:
"Bad money drives out good.”


(SSC Combined Matric Level
(PRE) Exam. 30.07.2006
(Ist Sitting) (East Zone)
60. If the Central Bank wants to
encourage an increase in the
supply of money and decrease
in the cost of borrowing money, it should
(1) lower cash reserve ratio
(2) raise discount rates
(3) sell government securities
(4) All of the above
Answer:
60. (1) When the Central Bank of a country intends to
increase money supply, it should lower the Cash
Reserve Ratio. A decrease in CRR helps the commercial banks to hold a lesser proportion of their
deposits in the form of deposits with the RBI. This
increases the amount of Bank deposits and they will
lend more as they have more amount as their reserve


(SSC Combined Matric Level (PRE)
Exam. 30.07.2006 (Ist Sitting)
(East Zone)
61. Regulated markets aim at the
development of the marketing
structure to
(1) widen the price spread between the producer and the
consumer
(2) narrow down the price
spread between the producer and the consumer
(3) increase the non-functional margins of the traders
(4) maximise the non-functional margins of the commission agents
Answer:
61. (2) Regulated markets aim at the development of
marketing structures to ensure remunerative prices
to the producers and to narrow down the price spread
between the producer and the consumer. It also aims
at reducing the non-functional margins of the commission agents.


(SSC Combined Matric Level (PRE)
Exam. 30.07.2006 (IInd Sitting)
(Central Zone)
62. Stagflation is a situation of
(1) stagnation and deflation
(2) stagnation and recession
(3) stagnation and inflation
(4) stagnation and recovery
Answer:
62. (3) Stagflation is a situation of stagnation in which
the inflation rate is high, the economic growth rate
slows down, and unemployment remains steadily
high. Stagflation occurs when the economy isn't growing but prices are, which is not a good situation for a
country to be in


(SSC Data Entry Operator
Exam. 02.08.2009)
63. Which one of the following is
an example of optional money?
(1) Currency note (2) Coins
(3) Cheque (4) Bond
Answer:
63. (3) On the basis of acceptability, money has been
classified into legal tender and optional money. Legal
tender money is enforced by law. Optional money is
that money which may or may not be accepted as a
means of payment; it has no legal sanction. Different
credit instruments, like, cheques, bank drafts, etc.,
are the examples of optional money.


(SSC Stenographer (Grade 'C' & 'D')
Exam. 09.01.2011)
64. ‘Money’ is an example of
(1) Sunk capital
(2) Floating capital
(3) Concrete capital
(4) Social capital
Answer:
64. (2) Money is something which is widely accepted in
payment for goods and services and in setting debts.
Money is an example of Floating Capital.


(SSC Multi-Tasking Staff
Exam. 24.03.2013, Ist Sitting)
65. Deflation is a situation in which
(1) The value of money is falling.
(2) The price of goods is increasing.
(3) The value of money is increasing.
(4) The price level is stagnant.
Answer:
65. (3) Deflation is a situation where the prices of goods
and commodities in a country go down. i.e., there is
negative inflation. This is caused due to reduced supply of money/credit. Inflation reduces the real value
of money over time; conversely, deflation increases
the real value of money – the currency of a national
or regional economy.


(SSC Constable (GD)
Exam. 12.05.2013)
66. Stagflation refers to a situation
which is characterised by
(1) stagnant employment and
deflation
(2) deflation and rising unemployment
(3) inflation and rising employment.
(4) inflation and rising unemployment
Answer:
66. (4) Stagflation describes a situation where an inflation rate is high, the economic growth rate slows down,
and unemployment remains steadily high. It raises a
dilemma for economic policy since actions designed
to lower inflation may exacerbate unemployment, and
vice versa.


(SSC Graduate Level Tier-I
Exam. 19.05.2013)
67. Which one is not a function of
money ?
(1) Transfer of value
(2) Store of value
(3) Price stabilisation
(4) Value measurement
Answer:
67. (3) Generally, economists have defined four types of
functions of money which are as follows: (i) Medium
of exchange (transfer of value) (ii) Measurement of value, (iii) Standard of deferred payments, and (iv) Store
of value. Price stabilization is a function of monetary
policy.


(SSC CAPFs SI & CISF ASI
Exam. 23.06.2013)
68. Inflation is caused by
(1) increase in money supply and
decrease in production
(2) increase in money supply
(3) increase in production
(4) decrease in production
Answer:
68. (1) Economists generally agree that in the long run,
inflation is caused by increases in the money supply.
According to the theory of Demand-Pull Inflation, if
demand grows faster than supply, prices will increase.
There is too much money chasing too few goods. The
increase in money supply is not matched by the equivalent production of goods.


(SSC (10+2) Level Data Entry
Operator & LDC Exam. 20.10.2013)
69. Variation in Cash Reserve Ratio
and Open Market Operations are
instruments of
(1) Budgetary policy
(2) Trade policy
(3) Fiscal policy
(4) Monetary policy
Answer:
69. (4) Bank Rate Policy, open market operations and
variation of Cash Reserve Ratios, etc. are instruments
of monetary policy. With the help of these instruments, the Reserve Bank of India controls the supply
of money, often targeting a rate of interest for the
purpose of promoting economic growth and stability.


(SSC (10+2) Level Data Entry
Operator & LDC Exam.
10.11.2013, IInd Sitting)
70. The purpose of devaluation is to :
(1) be little foreign currencies
(2) encourage exports
(3) discourage exports
(4) encourage import
Answer:
70. (2) Devaluation in modern monetary policy is a reduction in the value of a currency with respect to those
goods, services or other monetary units with which
that currency can be exchanged. It makes exports
more competitive and imports more expensive.


(SSC Multi-Tasking (Non-Tech.)
Staff Exam. 16.02.2014)
71. Who benefits the most during the
inflationary period ?
(1) corporate servants
(2) creditors
(3) entrepreneurs
(4) government servants
Answer:
71. (3) Inflation has the effect of redistributing income
because prices of all factors do not decline in the
same proportion. Entrepreneurs stand to gain more
than wage earners or fixed income groups. Speculators, hoarders, black marketers and smugglers gain
on account of windfall profits.


(SSC CGL Tier-I
Re-Exam–2013, 27.04.2014)
72. Pegging up of a currency means,
fixing the value of a currency
(1) at a constant level
(2) at a lower level
(3) at a higher level
(4) leaving it to market forces
Answer:
72. (1) Currency pegging is the idea of fixing the exchange
rate of a currency by matching its value to the value
of another single currency or to a basket of other
currencies, or to another measure of value, such as
gold or silver. A fixed exchange rate is usually used to
stabilize the value of a currency, with respect to the
currency or the other valuable it is pegged to.


(SSC CGL Tier-I
Re-Exam–2013, 27.04.2014)
73. Which of the following is not
helpful in controlling money supply ?
(1) Free market policy
(2) CRR
(3) Bank Rate
(4) Change in margin requirement
Answer:
73. (1) The Central Bank of a country regulates money
supply with the help of open market operations, changing the reserve requirements (CRR) and changing discount rate (bank rate). Besides, banks are required
to maintain liquid assets in the form of gold, cash and
approved securities (margin requirements); also
known as Statutory Liquidity ratio. In India, the Reserve Bank of India has recently been resorting more
to open market operations.


(SSC CGL Tier-I
Re-Exam–2013, 27.04.2014)
74. Which term is not related to
banking ?
(1) C.R.R. (2) N.E.E.R.
(3) S.L.R. (4) Fixed Deposits
Answer:
74. (2) NEER stands for Nominal Effective Exchange Rate
which represents the relative value of a home country’s currency compared to the other major currencies being traded (U.S. dollar, Japanese yen, euro,
etc.). It also represents the approximate relative price
a consumer will pay for an imported good.


(SSC CAPFs SI, CISF ASI & Delhi
Police SI Exam. 22.06.2014)
75. Capital market deals with
(1) Short term fund
(2) Long term fund
(3) Cash
(4) Both long and short term
funds
Answer:
75. (2) Capital markets are financial markets for the buying and selling of long-term debt or equity-backed
securities. These markets channel the wealth of savers to those who can put it to long-term productive
use, such as companies or governments making longterm investments.


(SSC CGL Tier-I Re-Exam. (2013)
20.07.2014, Ist Sitting)ECONOMICS
SGAE–590
76. Debenture holders of a company are its
(1) Shareholders (2) Creditors
(3) Debtors (4) Directors
Answer:
76. (2) Companies issue debentures instead of shares to
extend their business. These debentures are issue to
borrow loan from general public; interest is paid on
the borrowed money to the debenture holders. So a
debenture holder is essentially a creditor who simply
gives loan to the company.


(SSC CHSL (10+2) DEO & LDC
Exam. 16.11.2014,
Patna Region : Ist Sitting)
77. The terms ‘Bull’ and ‘Bear’ are
associated with
(1) Banking
(2) Foreign Trade
(3) Stock Market
(4) Internet Trade
Answer:
77. (3) The terms ‘bull’ and ‘bear’ describe upward and
downward trends respectively of the stock market. A
bear market refers to a decline in prices, usually for
a period of a few months, in a single security or asset, group of securities or the securities market as a
whole. A bull market is when prices are rising.


(SSC CHSL (10+2) DEO & LDC
Exam. 16.11.2014,
Patna Region : Ist Sitting)
78. A currency whose exchange rate
is influenced by the government
is a/an
(1) Unmanaged Currency
(2) Managed Currency
(3) Scarce Currency
(4) Surplus Currency
Answer:
78. (2) Managed currency refers to currency whose exchange rate is not determined by the free-market forces of demand and supply but instead by the government’s intervention through the country’s central
bank. The majority of major world currencies are
managed at least to some degree.


(SSC CHSL (10+2) DEO & LDC
Exam. 16.11.2014,
Patna Region : Ist Sitting)
79. What does the letter ‘e’ denotes
in the term ‘e - banking ’ ?
(1) Essential Banking
(2) Economic Banking
(3) Electronic Banking
(4) Expansion Banking
Answer:
79. (3) ‘e-banking’ stands for electronic banking which
involves the use of computers to carry out banking
transactions such as withdrawals through cash dispensers or transfer of funds at point of sale. It is also
known as online or interne banking.


(SSC CGL Tier-I Exam. 19.10.2014
TF No. 022 MH 3)
80. The Cash Reserve Ratio is a tool
of :
(1) Monetary policy
(2) Tax policy
(3) Agricultural policy
(4) Fiscal policy
Answer:
80. (1) Cash Reserve Ratio (CRR) is a specified minimum
fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash
or as deposits with the central bank. CRR is a crucial
monetary policy tool and is used for controlling money
supply in an economy.


(SSC Constable (GD)
Exam, 04.10.2015, Ist Sitting)
81. The major objective of monetary
policy is to
(1) increase government’s tax
revenue
(2) revamp the Public Distribution System
(3) Promote economic growth
with price stability
(4) weed out corruption in the
economy
Answer:
81. (3) The main objective of monetary policy is to control
the supply of money, often targeting an inflation rate
or interest rate to ensure price stability and general
economic growth. Further goals of a monetary policy
are usually to contribute to lower unemployment, and
to maintain predictable exchange rates with other currencies.


(SSC CGL Tier-I (CBE) Exam.
27.08.2016 (Ist Sitting))
82. The rate of tax increase as the
amount of the tax base increases is called
(1) Proportional tax
(2) Progressive tax
(3) Regressive tax
(4) Degressive tax
Answer:
82. (2) A progressive tax is a tax in which the tax rate
increases as the taxable amount increases. The term
“progressive” refers to the way the tax rate progresses from low to high, with the result that a taxpayer’s
average tax rate is less than the person’s marginal tax
rate.


(SSC CGL Tier-I (CBE) Exam.
30.08.2016 (Ist Sitting))
83. Money market is a market for
(1) Short term fund
(2) Long term fund
(3) Negotiable instruments
(4) Sale of shares
Answer:
83. (1) The money market is where financial instruments
with high liquidity and very short maturities are traded.
It is used by participants as a means for borrowing and
lending in the short term, with maturities that usually
range from overnight to just under a year. Some of the
common money market instruments are: commercial
paper, municipal notes, interest rate swaps, etc.


(SSC CGL Tier-I (CBE) Exam.
31.08.2016 (Ist Sitting))
84. MUDRA Bank has been launched
to help
(1) Small business
(2) Marginal farmers
(3) Poor women
(4) Rural sector
Answer:
84. (1) Micro Units Development and Refinance Agency
Bank (or MUDRA Bank)is a new institution setup by
the Government of India to provide the funding to the
non-corporate small business sector. It will provide
its services to small entrepreneurs outside the service area of regular banks, by using last mile agents.


(SSC CGL Tier-I (CBE) Exam.
03.09.2016 (2nd Sitting))
85. If a country devalues its currency, its
(1) Exports become cheaper
and imports become costlier
(2) Exports become costlier and
imports become cheaper.
(3) Exports value is equivalent
to imports value
(4) No effect on exports and imports
Answer:
85. (1) Devaluation means official lowering of the value of
a country’s currency within a fixed exchange rate system, by which the monetary authority formally sets a
new fixed rate with respect to a foreign reference
currency.Devaluation causes a country’s exports to
become less expensive, making them more competitive in the global market. This, in turn, means that
imports are more expensive, making domestic consumers less likely to purchase them.


(SSC CGL Tier-I (CBE) Exam.
06.09.2016 (Ist Sitting))
86. ‘Residex’ is associated with
(1) Share prices
(2) Price inflation
(3) Mutual fund prices
(4) Land prices
Answer:
86. (4) The RESIDEX was first launched in 2007 by the
National Housing Bank (NHB) to provide an index of
residential prices in India across cities and over time.
It is the first housing price index in India. It was
launched in order to fill price information gap and to
streamline the process of development of property in
various cities across the country.


(SSC CGL Tier-I (CBE) Exam.
30.08.2016 (2nd Sitting))
87. Open Market Operations refer to
__________ .
(1) Borrowings by Scheduled
banks from RBI
(2) Lending by Commercial
banks to industry
(3) Purchase and sale of Government securities by RBI
(4) Deposit mobilisation
Answer:
87. (3) Open Market Operation (OMO) refers to the buying and selling of government securities in the open
market in order to expand or contract the amount of
money in the banking system. A central bank uses
OMO as the primary means of implementing monetary policy.


(SSC CGL Tier-I (CBE) Exam.
02.09.2016 (2nd Sitting))
88. ”Smart Money” term is used for
(1) Credit Card
(2) Internet Banking
(3) eBanking
(4) Cash with Public
Answer:
88. (1) Credit cards are sometimes considered as smart
money since they enable transactions without the need
for physical cash and that, too, in a convenient manner. It is plastic money that is used to pay for products and services at over 20 million locations around
the world. In pure economic terms, Smart Money refers to investments made by people experienced in
matters of finance.


(SSC CGL Tier-I (CBE) Exam.
30.08.2016 (IIIrd Sitting))
89. Which of the following brings out
the ‘Consumer Price Index Number’ for Industrial workers?
(1) RBI
(2) The Labour Bureau
(3) Commerce Department
(4) NITI Aayog
Answer:
89. (2) The Consumer Price Index Numbers for Industrial
Workers CPI (IW) are being compiled, maintained and
disseminated by the Labour Bureau since its inception in October, 1946. These index numbers are being utilized for fixation and revision of wages and determination of variable Dearness Allowances payable
to workers in organized sectors of the economy. These
index numbers are compiled by the Bureau on month
to month basis.


(SSC CGL Tier-I (CBE) Exam.
09.09.2016 (IIIrd Sitting))
90. ‘Green Banking’ means :
(1) Banks financing agriculture
(2) Banks financing irrigation
projects
(3) Banks financing farmers
(4) Banks financing proenvironmental projects
Answer:
90. (4) Green Banking refers to practices and guidelines
that make banks sustainable in economic, environment, and social dimensions. Green banking is also
known as environment-friendly banking, ethical banking or sustainable banking. A conventional bank becomes a green bank by directing its core operations
towards the betterment of the environment.


(SSC CGL Tier-I (CBE) Exam.
06.09.2016 (IInd Sitting))
91. Saving is that portion of money
income that is
(1) spent for development of Industries
(2) not spent on consumption
(3) spent on health and education
(4) spent for consumer durables
Answer:
91. (2) Saving is income not spent, or deferred consumption. In economics, it refers to any income not used
for immediate consumption– consuming less out of a
given amount of resources in the present in order to
consume more in the future. Saving, therefore, is the
decision to defer consumption and to store this deferred consumption in some form of asset.


(SSC CGL Tier-I (CBE) Exam.
08.09.2016 (IInd Sitting))
92. What is the role of “Ombudsman”
in a bank?
(1) To provide quality and speedy
redressal of grievances of
customers.
(2) To provide suggestions for
innovative schemes in the
banks.
(3) To inspect the internal working of the branches.
(4) To monitor the poverty alleviation programmes undertaken by or implemented by
the bank.
Answer:
92. (1) The Banking Ombudsman Scheme enables an expeditious and inexpensive forum to bank customers
for resolution of complaints relating to certain services rendered by banks. The Banking Ombudsman
Scheme was introduced under Section 35 A of the
Banking Regulation Act, 1949 by RBI with effect from
1995.

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