Fiscal Policy

Question 1

If the aggregate supply curve is vertical in the long-run, _______ has (have) an effect on the aggregate output in the long run

a) sometimes monetary and/or fiscal policy (i.e. it depends)
b) monetary policy does but fiscal policy does not
c) monetary policy does not but fiscal policy does
d) neither monetary policy nor fiscal policy

Answer 1

d) neither monetary policy nor fiscal

Question 2

Employment tends to _______ when aggregate output ______

a) rise, falls
b) rise; rises
c) falls; rises
d) not change; falls

Answer 2

b) rise; rises

Question 3

A bond is

a) a promise to pay back a loan over an unspecified period
b) allows the firm to access funds with no liabilities
c) the only way a firm can raise funds
d) a document that promises to pay back a loan under specified terms over a specified period of time

Answer 3

d)

Question 4

According to the supply-side model, a reduction in the tax rate

a) could reduce the size of any budget deficit
b) would have no effect on output
c) would have no effect on consumption
d) none of the above

Answer 4

a)

Question 5

The national (or federal) debt is:

a. the same thing as the federal deficit.
b. the accumulation of all past deficits and surpluses.
c. less than it was in 1946 if adjusted for inflation.
d. held entirely by U.S. firms and households

Answer 5

B. The deficit how much we borrow in a given year. The total of the deficits adds up to the national debt

Question 6

When the unemployment rate increases the federal deficit

a. decreases.
b. increases.
c. is not affected
d. none of the above

Answer 6

b) Recessions bring about an increase in deficits for two reasons, first government receipts go down because unemployed people do not pay taxes, second, government spending increases as benefits increase

Question 7

According the budget philosophy known as functional finance

a. the budget should be balanced annually.
b. surpluses should be run during periods of prosperity and deficits should be run during recessions.
c. the government should not worry about whether the budget is balanced and worry instead about reaching the potential output level.
d. None of the above

Answer 7

C. Functional finance is a budget philosophy aiming fiscal policy at achieving potential GDP rather than balancing budgets either annually or over the business cycle.

Question 8

Which one of the following is not one of the concerns most often expressed about the effectiveness of fiscal policy?

a. The difficulty of estimating the natural rate of unemployment.
b. The time lags involved in implementing fiscal policy. c. An increase in aggregate demand tends to worsen unemployment.
d. None of the above

Answer 8

C. An increase in aggregate demand will cause an increase in employment.

Question 9

Whenever RBI does some open market operation transactions, actually it wishes to regulate which of the following?

Answer 9

Inflation

Question 10

In economics, it is generally believed that the main objective of a public sector financial company like bank is to:

a) Employ more and more people;
b) Maximize the total profits;
c) Maximize total production;
d) Provide financial services to the people of the nation of its origin across the country;
e) sell the goods at subsidized rates

Answer 10

b) Maximize the total profits;

Question 11

In a company by the use of price sensitive corporate information about the company, people closer to the company try to adopt the technology to make gains or cover losses in share market dealings and such process is known as:

Answer 11

Insider Trading

Question 12

Bharat Nirman does not cover which of the following areas?

a) Rural employment;
b) Rural housing
c) Rural water supply;
d) Irrigation facilities;
e) It covers all the above areas

Answer 12

e) All the above are covered

Question 13

Which of the following committee has given its recommendations on “Financial inclusions”?

Answer 13

Sinha committee;

Question 14

The actual return of an investor is reduced sometimes when the prices of the commodities go up all of a sudden and in financial sector this type of phenomenon is known as

Answer 14

Probability Risk

Question 15

An industry which is fighting hard to increase its market share in existing market(with new popular products) is known as:

a) Market vendor;
b) Market operator;
c) Market leader;
d) Market follower;
e) Market challenger

Answer 15

e) Market challenger

Question 16

Which of the following products launched by most of the banks help farmers in getting instant credit for various agricultural purposes?

Answer 16

Kisan Credit Card

Question 17

Which of the following products of a bank is specifically designed to provide financial help to children in their higher studies in India or in a foreign country?

Answer 17

Educational Loan

Question 18

Which of the following policies of the financial sectors is basically designed to transferring local financial assets into foreign assets freely and at market determined exchange rates?

a) Capital account convertibility;
b) Financial deficit management;
c) Minimum support price;
d) Restrictive trade practices

Answer 18

a) Capital account convertibility;

Question 19

13. A customer is willing to purchase some US dollars in the country. He/she should go to:
    a) Public Debt Division of the RBI only;
    b) American Express Bank only;
    c) RBI or any branch of a bank which is authorized for conducting such business;
    d) Ministry of Foreign affairs;

Answer 19

c) RBI or any branch of a bank which is authorized for conducting such business;

Question 20

Which of the following is not a social assistance program launched by the Government of India?

a) National old age pension scheme;
b) Annapurna scheme;
c) National family benefit scheme;
d) Indira Gandhi National Disability Pension Scheme;
e) All are social assistance programs

Answer 20

c) National family benefit scheme;

Question 21

Many times we see in newspapers that some projects are launched by the Government authorities on PPP basis. What is the full form of PPP?

a) Preferential Payment Plan;
b) Public Private partnership;
c) Partial payment project;
d) Popular private project
e) Public private plan

Answer 21

b) Public Private partnership;

Question 22

The ratio of the cash reserves that the banks are required to keep with RBI is known as:

a) Liquidity ratio;
b) Statutory liquidity ratio;
c) Cash Reserve Ratio;
d) Net demand and time liabilities

Answer 22

c)CRR

Question 23

In which year, Indian Rupee was devalued for the first time?
[A] 1965
[B] 1966
[C] 1968
[D] 1971

Answer 23

b)1966

Question 24

9. On which date, RBI started working?
[A] 1 January 1934
[B] 1 January 1935
[C] 1 April 1935
[D] 31 March 1934

Answer 24

[C] 1 April 1935

Question 25

8. In which year, Paper Currency Act was enacted by British Government of India?

[A] 1862
[B] 1861
[C] 1852
[D] 1875

Answer 25

[B] 1861

Question 26

7. Original headquarters of RBI were located at \_\_\_?
[A] Calcutta
[B] Bombay
[C] Madras
[D] New Delhi

Answer 26

[A] Calcutta

Question 27

In which year, the first bank of India “Bank of Hindustan” was established?
[A] 1870
[B] 1770
[C] 1795
[D] 1880

Answer 27

[B] 1770

Question 28

5) Which of the following methods is currently used in India to issue note?
a) Percentage Reserve System
b) Fixed Fiduciary System
c) Minimum Reserve System
d) Proportional Reserve System

Answer 28

c) Minimum Reserve System

Question 29

9. Which among the following statement is incorrect about SEBI?
   a) Capital market regulator
   b) Mutual fund regulator
   c) Regulates the credit rating agencies in India
   d) None

Answer 29

None