This article makes an analysis on the questions asked in Previous year UPSC Civil services from Banking and Monetary Policy Section of Economics. This analysis will help you in getting an idea of type and depth of questions that are asked in Civil services prilims.
Q 1. Consider the following liquid assets:
1. Demand deposits with the banks
2. Time deposits with the banks
3. Saving deposits with the banks
4. Currency
The correct sequence of these assets in the decreasing
order of liquidity is
(a) 1-4-3-2
(b) 4-3-2-1
(c) 2-3-1-4
(d) 4-1-3-2
Q 2. In the context of Indian economy, ‘Open Market
Operations’ refers to
(a) borrowing by scheduled banks from the RBI
(b) lending by commercial banks to industry and trade
(c) purchase and sale of government securities by
the RBI
(d) None of the above
Q 3. Priority Sector Lending by banks in India constitutes
the lending to
(a) agriculture
(b) micro and small enterprises
(c) weaker sections
(d) All of the above
Q 4. 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.
(a) 1 and 2 only
(b) 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Q 5. 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.
(a) 1 and 4 only
(b) 2, 3 and 4 only
(c) 1, 2 and 3 only
(d) 1, 2, 3 and 4
Q 6. An increase in the Bank Rate generally indicates that
the
(a) market rate of interest is likely to fall
(b) Central Bank is no longer making loans to
commercial banks
(c) Central Bank is following an easy money policy
(d) Central Bank is following a tight money policy
Q 7. Which one of the following is likely to be the most
inflationary in its effect?
(a) Repayment of public debt
(b) Borrowing from the public to finance a budget
deficit
(c) Borrowing from banks to finance a budget deficit
(d) Creating new money to finance a budget deficit
Q 8. Supply of money remaining the same when there is an
increase in demand for money, there will be
(a) a fall in the level of prices
(b) an increase in the rate of interest
(c) a decrease in the rate of interest
(d) an increase in the level of income and employment
Q 1. If the interest rate is decreased in an economy, it will
(a) decrease the consumption expenditure in the economy
(b) increase the tax collection of the Government
(c) increase the investment expenditure in the economy
(d) increase the total savings in the economy
Q 2. The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’, sometimes appearing in news, are used in relation to
(a) banking operations
(b) communication networking
(c) military strategies
(d) supply and demand of agricultural products
Q 3. What is/are the facility/facilities the beneficiaries can get from the services of Business Correspondent (Bank Saathi) in branchless areas?
1. It enables the beneficiaries to draw their subsidies and social security benefits in their villages.
2. It enables the beneficiaries in the rural areas to make deposits and withdrawals.
Select the correct answer using the code given below.
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Q 4. In the context of Indian economy, which of the following is/are the purpose/purposes of ‘Statutory Reserve Requirements’?
1. To enable the Central Bank to control the amount of advances the banks can create
2. To make the people’s deposits with banks safe and liquid
3. To prevent the commercial banks from making excessive profits
4. To force the banks to have sufficient vault cash to meet their day-to-day requirements
Select the correct answer using the code given below.
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2, 3 and 4
Q 1. With reference to Indian economy, consider the
following
1. Bank rate
2. Open market operations
3. Public debt
4. Public revenue
Which of the above is/are component/ components of
Monetary Policy?
(a) 1 only
(b) 2, 3 and 4
(c) 1 and 2
(d) 1, 3 and 4
Q 2. 'Basel III Accord' or simply 'Basel III', often seen in the
news, seeks to
(a) develop national strategies for the conservation
and sustainable use of biological diversity
(b) improve banking sector's ability to deal with
financial and economic stress and improve risk
management
(c) reduce the green house gas emissions but places a
heavier burden on developed countries
(d) transfer technology from developed Countries to
poor countries to enable them to replace the use
of chlorofluorocarbons in refrigeration with
harmless chemicals
Q 3. When the Reserve Bank of India reduces the Statutory
Liquidity Ratio by 50 basis points, which of the
following is likely to happen?
(a) India's GDP growth rate increases drastically
(b) Foreign Institutional Investors may bring more
capital into our country
(c) Scheduled Commercial Banks may cut their
lending rates
(d) It may drastically reduce the liquidity to the
banking system
Q 1. What is/are the purpose/purposes of the ‘
Marginal
Cost of Funds based Lending Rate (MCLR)’
announced by RBI?
1. These guidelines help improve the
transparency in the methodology followed by
banks for determining the interest rates on
advances.
2. These guidelines help ensure availability of
bank credit at interest rates which are fair to the
borrowers as well as the banks.
Select the correct answer using the code given below.
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
