Civil Service Preliminary Paper-1 Previous Year Questions on Economics & Indian Economy- 2013

1. An increase in the Bank Rate generally indicates that the
  1. Market rate of interest is likely to fall
  2. Central Bank is no longer making loans to commercial banks
  3. Central Bank is following an easy money policy
  4. Central Bank is following a tight money policy

2. The Reserve Bank of India regulates the commercial banks in matters of
  1. liquidity of assets
  2. branch expansion
  3. merger of banks
  4. winding-up of banks
Select the correct answer using the codes given below.
  1. 1 and 4 only
  2. 2, 3 and 4 only
  3. 1, 2 and 3 only
  4. 1, 2, 3 and 4

3. Which of the following grants/ grant direct credit assistance to rural households?
  1. Regional Rural Banks
  2. National Bank for Agriculture and Rural Development
  3. Land Development Banks
Select the correct answer using the codes given below:
  1. 1 and 2 only
  2. 2 only
  3. 1 and 3 only
  4. 1, 2 and 3

4. Consider the following liquid assets:

  1. Demand deposits with the banks
  2. Time deposits with the banks
  3. Savings deposits with the banks
  4. Currency
The correct sequence of these decreasing order of Liquidity is
  1. 1-4-3-2
  2. 4-3-2-1
  3. 2-3-1-4
  4. 4-1-3-2

5. In the context of Indian economy, Open Market Operations refers to
  1. borrowing by scheduled banks from the RBI
  2. lending by commercial banks to industry and trade
  3. purchase and sale of government securities by the RBI
  4. None of the above

6. Priority Sector Lending by banks in India constitutes the lending to
  1. Agriculture
  2. Micro and small enterprises
  3. Weaker sections
  4. All of the above

7. Supply of money remaining the same when there is an increase in demand for money, there will be
  1. a fall in the level of prices
  2. an increase in the rate of interest
  3. a decrease in the rate of interest
  4. an increase in the level of income and employment

8. The balance of payments of a country is a systematic record of
  1. all import and export transactions of a country during a given period of time, normally a year
  2. goods exported from a country during a year
  3. economic transaction between the government of one country to another
  4. capital movements from one country to another

9. Which of the following constitute Capital Account?

  1. Foreign Loans
  2. Foreign Direct Investment
  3. Private Remittances
  4. Portfolio Investment

10. Which one of the following groups of items is included in India’s foreign-exchange reserves?
  1. Foreign-currency assets, Special Drawing Rights (SDRs) and loans from foreign countries
  2. Foreign-currency assets, gold holdings of the RBI and SDRs
  3. Foreign-currency assets, loans from the World Bank and SDRs
  4. Foreign-currency assets, gold holdings of the RBI and loans from the World Bank


11. Consider the following statements:
  1. Inflation benefits the debtors.
  2. Inflation benefits the bond-holders.
Which of the statements given above is/are correct?
  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

12. A rise in general level of prices may be caused by
  1. an increase in the money supply
  2. a decrease in the aggregate level of output
  3. an increase in the effective demand
Select the correct answer using the codes given below.
  1. 1 only
  2. 1 and 2 only
  3. 2 and 3 only
  4. 1, 2 and 3


13. Which one of the following is likely to be the most inflationary in its effect?
  1. Repayment of public debt
  2. Borrowing from the public to finance a budget deficit
  3. Borrowing from banks to finance a budget deficit
  4. Creating new money to finance a budget deficit


14. The national income of a country for a given period is equal to the
  1. total value of goods and services produced by the nationals
  2. sum of total consumption and investment expenditure
  3. sum of personal income of all individuals
  4. money value of final goods and services produced

15. Disguised unemployment generally means
  1. large number of people remain unemployed
  2. alternative employment is not available
  3. marginal productivity of labour is zero
  4. productivity of workers is low


16. Economic growth in country X will necessarily have to occur if
  1. there is technical progress in the world economy
  2. there is population growth in X
  3. there is capital formation in X
  4. the volume of trade grows in the world economy

17. In India, deficit financing is used for raising resources for
  1. economic development
  2. redemption of public debt
  3. adjusting the balance of payments
  4. reducing the foreign debt


18. To obtain full benefits of demographic dividend, what should India do?
  1. Promoting skill development
  2. Introducing more social security schemes
  3. Reducing infant mortality rate
  4. Privatization of higher education
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