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Prelims-IAS –ECONOMICS MCQ-09

1..Which of the following terms indicates a mechanism used by commercial banks for providing credit to the government?

(a) Cash Credit Ratio
(b) Debt Service Obligation
(c) Liquidity Adjustment Facility

(d) Statutory Liquidity Ratio


2..RBI have introduced revised priority sector lending norms. Consider the following statements in light of changed norms:

  1. The new norms require banks to ensure that 8% of their loans should go to small and marginal farmers.
  2. Renewable energy sector is now classified as priority sector.
  3. Social infrastructure has been brought under priority sector.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) 1 and 3 only
(d) 1, 2 and 3


3..Which of the following are true about financial indicators used in Basel norms and CAR?

  1. Tier 1 capital can absorb losses in the event of a winding-up.
  2. Tier 2 can absorb losses without a bank being required to cease trading.
  3. Govt. debt are subtracted from total assets for purposes of calculating the CAR.

Select the correct answer using the code given below.
(a) 1, 2
(b) 1, 2, 3
(c) 3 only
(d) 2, 3


4..With respect to various rates, regulated by RBI consider the following statements:

  1. Cash Reserve Ratio is the ratio of total deposits of a bank which is to be maintained by the bank with itself in the form of cash.
  2. The purpose of Cash Reserve Ratio is to ensure that banks do not run out of cash to meet the payment demands of their depositors.
  3. To meet SLR requirements, bank can use cash, gold, various assets owned by bank like bank building, government approved securities.

Which of the statement(s) given above is/are correct?
(a) 2 only
(b) 2 and 3 only

(c) 1 and 3 only

(d) 1 and 2 only


5..Consider the following statements regarding functions of RBI in India:

  1. Only RBI can issue currency notes.
  2. RBI carries out sale and purchase of treasury bills of state as well as central government.
  3. RBI manages the Foreign ExchangeManagement Act, 1999.

Which of the statement(s) given above is/are correct?
(a) 1 and 3 only
(b) 2 only
(c) 2 and 3 only
(d) 1, 2 and 3


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