Economics · Banking Financial Awareness

Macroeconomics and Policy

2,833 Questions

Macroeconomics and policy questions assess the understanding of broad economic indicators, government fiscal strategies, and banking regulations. Topics include inflation causes, currency exchange rates, monetary policy tools, and historical economic systems. These are highly tested in banking and civil services examinations.

Inflation FactorsMonetary PolicyExchange RatesFiscal PolicyEconomic IndicatorsBretton Woods System

Macroeconomics and Policy Questions

Multiple choice instruments of monetary policy and the reserve bank of india money and banking economics

Dear money policy means ___________.

  1. giving loan and advances to trade and industry at higher interest rate.

  2. paying less for the same quantity of goods and services

  3. printing high denomination currency

  4. printing money by costly technology
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Dear money policy refers to a monetary policy by the central bank where the central bank sets high interest rates so that credit is not easily available to the general public in order to decrease the real income and hence purchasing power of the people. Such a policy is used by the government at the time of inflation in the economy. 

Multiple choice instruments of monetary policy and the reserve bank of india money and banking economics

Cheap money policy means __________.

  1. making money available to trade and industry at cheaper interest rate.

  2. giving money at discounted price

  3. demanding more money for the same goods than earlier.

  4. printing money by cost efficient printing technology
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Cheap money policy refers to a monetary policy by the central bank where the central bank sets low interest rates so that credit is easily available to the general public in order to bring efficiency in trade and commerce in an economy. Such a policy is used by the government at the time of deflation or recession in the economy. 

Multiple choice instruments of monetary policy and the reserve bank of india money and banking economics

Dear money policy is followed  _________.

  1. to counter inflation

  2. to reverse depression

  3. to appease the public

  4. to increase disposal income of the houeholds
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Dear money policy refers to a monetary policy by the central bank where the central bank sets high interest rates so that credit is not easily available to the general public in order to decrease the real income and hence purchasing power of the people. Such a policy is used by the government at the time of inflation in the economy as it decreases the money supply in the economy which combats inflation. 

Multiple choice instruments of monetary policy and the reserve bank of india money and banking economics

Which of the following policies forms a part of the Monetary Policy?

  1. International Trade Policy

  2. Exchange Rate Policy

  3. Prices and Incomes Policy

  4. Export-Import Policy
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Monetary policy involves managing the money supply and interest rates. Exchange rate policy is a key component of this, as it influences the value of the currency and inflation.

Multiple choice instruments of monetary policy and the reserve bank of india money and banking economics

Raising or lowering of the central bank credit rate is known as __________.

  1. open market operation

  2. cash reserve ratio

  3. bank rate policy

  4. none of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The Bank Rate is the rate at which the central bank lends money to commercial banks. Adjusting this rate is a fundamental tool of monetary policy known as bank rate policy.

Multiple choice economics environment and sustainable development need for sustainable development environmental economics sustainable development

Which of the following is not the reason for the shift in supply and demand of energy away from its economic equilibrium?

  1. Tax hikes

  2. Nationalisation of energy companies

  3. Regulation of the energy sector

  4. None of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Tax hikes, nationalization, and regulation are all government interventions that can shift supply or demand curves away from a free-market equilibrium. Therefore, none of these options represent a reason that is NOT a cause for such a shift.

Multiple choice history industrial sector growth of banks in india nationalisation and privatisation of banks private sector anddifference between public and private sector

Which of the following was a cause for nationalization of Commercial Banks?

  1. Concentration of economic power

  2. Neglect of Priority Sectors

  3. Urban bias

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The decision to nationalize banks was based on several issues, including the concentration of wealth in a few hands, the urban bias of banking services, and the neglect of priority sectors like agriculture.

Multiple choice history industrial sector growth of banks in india nationalisation and privatisation of banks private sector anddifference between public and private sector

The recent global financial turmoil has adverse impact on the Indian financial markets, particularly the equity market and the foreign sector, however, Indian banks have not been significantly impacted by these developments. Which one among the following is the main reason behind this?

  1. Comfortable capital adequacy ratio, asset quality, profitability indicators and lower non-performing assets.

  2. Fiscal stimulation package by the Central Government for some select industries.

  3. Strong foreign exchange reserves of the Reserve Bank of India.

  4. More credit by the banks to the housing and real estate sector.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Indian Banks have strong balance sheets, are well capitalised and well regulated. The capital adequacy ratio of every Indian bank is well above the basel norms and those stipulated by the RBI. Not a single Indian bank has had to be rescued in the aftermath of the crisis. India has a long history of working with Public Sector Banks.

Multiple choice history industrial sector growth of banks in india nationalisation and privatisation of banks private sector anddifference between public and private sector

The effect of increase in CRR will be reduced or nullified if _________.

  1. bank rate is reduced

  2. securities are sold in the open market

  3. SLR is increased

  4. people do not borrow from non-banking institutions
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The effect of increased CRR will be reduced or nullified if bank rate is reduced because both are inverse functions. If CRR will increase it contracts credit and if bank rate reduced it expands credit.

Multiple choice economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

Lower __________ leads to low savings which lead to a lower rate of capital formation.

  1. per capita income

  2. gross domestic product

  3. development plan

  4. economic instability
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Low per capita income limits the ability of individuals to save, which in turn reduces the pool of funds available for investment and capital formation.

Multiple choice economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

Capital formation is highly affected by market conditions of boom and depression.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

During boom market condition, the economy flourishes,investment rises and thus capital formation rises and during depression period , market sinks down and rate of capital formation falls.

Multiple choice economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

What does capital formation mean?

  1. The increase in the stock of real capital in a country

  2. The increase in the supply of money in a country

  3. The decrease in the supply of money in a country

  4. The improvement of technological factors
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Capital formation means the net accumulation of stock in a country during a particular accounting period.

Multiple choice economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

Over the years the rate of gross capital formation has _______.

  1. increased

  2. decreased

  3. remained constant

  4. has not shown any specific trend.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Over the years the rate of accumulation of net capital during a particualar accounting period has increased as the skill and knowledge of labour are increasing day by day ,which in turn is increasing the productive capacity of an economy.