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Prelims-IAS – ECONOMICS MCQ-30

1..Consider the following statements regarding the interbank rates like LIBOR and MIBOR:

  1. A high interbank rate reported by the loan availing bank implies its financial robustness
  2. If a bank is reporting lower interbank rates then it shows that the investors have lost faith in it.
  3. Interbank rate is the rate at which a commercial bank borrows from a central bank.

Which of the above statements are correct?

(a) All of the above
(b) 1, 3
(c) 2 only
(d) None of the above


2.. Which is the correct description of Laffer curve?

(a)  Relationship between tax rate and tax revenue collection
(b)  Balance of payment under the condition of devaluation of domestic currency
(c)  Relationship between two parameters as derivation from line of perfect equality
(d)  None of the above


3.. Which is the correct description of J curve?

(a) Relationship between tax rate and tax revenue collection
(b) Balance of payment under the condition of devaluation of domestic currency 
(c )Relationship when a firm has limited capital to decide about various combinations of two inputs
(d) None of the above


4..India’s foreign exchange reserve comprises:

  1. Foreign currency
  2. Gold
  3. SDRs
  4. Reserve Tranche Position (RTP) in the IMF

Code:

(a)  Only 1, 2 and 4
(b)  Only 2, 3 and 4
(c)  Only 1, 2, 3
(d)  1, 2, 3, 4


5.. Tobin Tax is imposed to:

(a) discourage foreign investments
(b) encourage domestic investment
(c) discourage destabilising speculation
(d) raise money for the government


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