Q.1 During the time of economic recession :

A) interest rate should be increased

B) taxes should be increased

C) expenditure on public projects should be increased

D) interest rate and taxes should be Increased

Ans. C

Q.2 With reference to the Non- Banking Financial Companies (NBFCs) in India, consider the statements-

1. They cannot engage in the acquisition of securities issued by the Govt.

2. They cannot accept demand deposits like Savings Account.

Codes:

A) Both 1 & 2

B) Only 1

C) Only 2

D) Neither 1 nor 2

Ans. C

DEFINITION OF ‘NON-BANKING FINANCIAL COMPANY – NBFC’

Non-banking financial companies, or NBFCs, are financial institutions that provide banking services, but do not hold a banking license. These institutions are not allowed to take deposits from the public. Nonetheless, all operations of these institutions are still covered under banking regulations.

INVESTOPEDIA EXPLAINS ‘NON-BANKING FINANCIAL COMPANY – NBFC’

NBFCs do offer all sorts of banking services, such as loans and credit facilities, retirement planning, money markets, underwriting, and merger activites. The number of non-banking financial companies has expanded greatly in the last several years as venture capital companies, retail and industrial companies have entered the lending business.

Q.3 Which of the following statements are correct?

In India, taxes on transactions in Stock Exchanges & Futures Markets are

1. levied by the Union.

2. collected by the states.

Codes:

A) Both 1 & 2

B) Only 1

C) Only 2

D) Neither 1 nor 2

Ans. B

Q.4 Disguised employment in India is mainly related to:

1. Agricultural sector

2. Rural area

3. Factory sector

4. Urban area

Codes:

A) 1,2,3

B) 1,2,3,4

C) 1,3,4

D) 1&2

Ans. D

Q.5 Which of the following statements are correct?

1. Debtors are most benefitted from inflation.

2. Holders & real assets suffer most from inflation.

Codes

A) Both 1 & 2

B) Only 1

C) Only 2

D) Neither 1 nor 2

Ans. A

Q.6 Which of the following can be used for checking inflation temporarily?

A) Increase in wages.

B) Decrease in money supply.

C) Decrease in taxes.

D) None of these.

Ans. B

Q.7 Inflation can be contained by:

I. Surplus budget

II. Increase in taxation

III. Reduction in public expenditure

Codes:

A)  II & III

B)  III only

C)  I & II

D) All are correct

Ans. D

Q.8 Among the remedies of inflation we can include:

1. Better capacity utilization.

2. Lowering bank rate.

3. Reducing budgetary deficit.

4. An efficient public distribution system.

Which of the following are correct?

Codes:

A) 1,2,3

B) 1,2,3,4

C) 1,3,4

D) 1&2

Ans. C

Q.9 How do we define the terms bull & bear with regard to stock markets?

A) A bull is an optimistic operator who first buys & then sells shares in expectation of the price going up; a bear is a pessimistic market operator who sells the share in expectation of buying them back at a lower price.

B) There is nothing significantly different as both operate in the capital market.

C) Bull is one who first sells a share & then buys it at a lower price; bear means one who first buys & then sells it in expectation of prices going up.

D) A bull is ready to buy any share; a bear only deals in govt. securities.

Ans. A

Q.10 Non development expenditure involves:

1. Interest payment

2. Subsidies

3. Defence

4. Irrigation

Codes:

A) 1,2,3

B) 1,2,3,4

C) 1,3,4

D) 1&2

Ans. A

Q.11 Which of the following are correct?

I. Decrease in cash reserve ratio injects higher liquidity in the system.

II. Higher liquidity in the system may soften interest rates.

III. Higher market borrowing by the Govt. leads to a rise in interest rates.

Codes:

A)  II & III

B)  III only

C)  I & II

D) All are correct

Ans. D

Q.12 Which of the following measures is likely to help in improving India’s balance of payments position?

1. Devaluation of the rupee

2. Encouragement of import substitution

3. Imposition of higher duty on imports.

4. Imposition of higher duty on exports.

Codes:

A) 1,2,3

B) 1,2,3,4

C) 1,3,4

D) 1&2

Ans. D

Q.13 Statements:

1) National Equity Fund are to be maintained by the RBI

2) Effective Revenue Deficit is the difference between the revenue deficit & grants

for creation of capital assets

3) Overheating generally happens during the growth & boom period

Codes:

A) 1,2,3

B) 1 & 3

C) 2 & 3

D) 1 & 2

Ans. C

Under National Equity Fund Scheme equity support is available to entrepreneurs for setting up new projects in tiny/small scale sector, for undertaking expansion, modernisation, technology upgradation and diversification by existing tiny, SSI and service enterprises and for rehabilitation of viable sick units in the SSI sector which fulfill the specified eligibility criteria.

Assistance from NEF helps the small scale units in strengthening their equity base and thereby improving their acceptability for term financing by primary lending institutions (PLIs).

Project cost (including margin money for working capital) should not exceed Rs. 50 lakhs in case of new projects. To meet the gap in equity as per prescribed debt equity norm, after taking into account promoters’ contribution, subject to a maximum of 25% of project cost or Rs. 10.00 lakhs per project, which is lower is available under the scheme. No interest is charged o¬n the soft loan component except service charge of 5% p.a.

Q.14 Which of the following correct denotes to the Demand driven scheme ?

1) Planning will be decentralized

2) It will be driven by the institutions like Panchayat Raj Institutions, Self help groups

Codes:

A) Only 1

B) Only 2

C) Both are correct

D) Both are incorrect

Ans. C