[Solutions]
Q.1 Consider the following statements.
1.Bharat Bill Payment system works only online
2.Bharat Bill Payment Central Unit (BBPCU) will be a single authorized entity operating the BBPS
Which of the statement/s given above is/are correct?
a)1 only
b)2 only
c)Both 1 and 2
d)Neither 1 nor 2
Ans-[B]
Explanation-Bharat Bill Payment System (BBPS) is an integrated bill payment system which will offer interoperable bill payment service to customers online as well as through a network of agents on the ground. The system will provide multiple payment modes and instant confirmation of payment. Bharat Bill Payment Central Unit (BBPCU) will be a single authorized entity operating the BBPS. The BBPCU will set necessary operational, technical and business standards for the entire system and its participants, and also undertake clearing and settlement activities. As indicated in the circular dated November 28, 2015 National Payment Corporation (NPCI) has been identified to act as BBPCU. It will be an authorized entity under the Payment and Settlement Systems Act, 2007.
Q.2 Consider the following statements. Which of them is/are correct?
1.Refinance facilities is an instrument of Monetary Policies.
2.Open market operations have objective of injection/absorption of liquidity
Select the answers from the codes given below:
a)1 only
b)2 only
c)Both 1 and 2
d)Neither 1 nor 2
Ans-[C]
Explanation-Sector-specific refinance facilities aim at achieving sector specific objectives through provision of liquidity at a cost linked to the policy repo rate. The Reserve Bank has, however, been progressively de-emphasising sector specific policies as they interfere with the transmission mechanism. As OMO includes both, outright purchase/sale of government securities, it works to inject/absorb liquidity from the market
Q.3 When the Reserve Bank of India buy back government securities from the open market, which of the following is likely to happen?
a) GDP tends to decrease
b) Liquidity in the market contracts
c)There is a probability of rise in inflation
d) None of the above
Ans-[C]
Explanation-In case of buy back of Government Securities by RBI, there is an increased liquidity in the market. Increased liquidity has the high probability to bring in inflation.
Q.4 Consider the following statements regarding fiscal consolidation:
1. Increasing the indirect taxes is a better approach towards fiscal consolidation as compared to increasing the direct taxes.
2. Disinvestment of PSUs leads to fiscal consolidation.
3. Increased public spending by the government leads to fiscal consolidation
Which of the above statement(s) is/are true?
a) 1 and 2 only
b) 2 and 3 only
c) 2 only
d) 1, 2 and 3
Ans-[C]
Explanation- Increase taxes are paid equally by the rich and the poor i.e. there is no slab as per income. In such a case poor feel the burden more than the rich due to their inability to pay higher taxes. So it is a bad approach.
Increased public spending by the government means that outgoing money is more and govt might be taking loans for this. Hence, it does not lead to fiscal consolidation.
Statement 2 is correct.
Q.5 Which of the following can be reasons for WPI being in negative territory ?
2. Fall in prices of services
Select the correct answer using the codes given below:
a) 1 only
b) 2 only
c) Both 1 and 2
d) None of these
Ans-[A]
Explanation-Wholesale Price Index (WPI) has been in negative territory since November 2014 because of large falls in international commodity prices, especially oil. WPI does not include services
Q.6 Presence of large number of inefficient firms can indicate the following:
1. Crowding out of private sector
2. Less tax revenue for the government
Select the correct answer using the codes given below:
a) 1 only
b) 2 only
c) Both 1 and 2
d) None of these
Ans-[C]
Explanation-Firms which are inefficient will get less profit which would mean less tax revenue for the Government and then the government will have to resort to borrowing to meet the shortfalls. This would mean greater deficits via greater interest costs and reduced Private sector investment as government borrowing would mean that less money for borrowing would be available for the private sector which increase the interest rates and reduce the private investment.
Q.7 Which of the following may adversely affect a bank’s capacity to lend?
1. Increasing levels of NPAs
2. High interest rate on small saving schemes
3. Increase in CRR and SLR ratios by RBI
Select the correct answer using the codes given below:
a) 1 and 3 only
b) 1 and 2 only
c) 2 and 3 only
d) 1, 2 and 3
Ans-[D]
Explanation- Due to increasing NPAs , banks become more reluctant to lend.
Since banks have to give high interest rates on small saving schemes, lesser money is left for lending.
Increasing the CRR and SLR means less money is left for the banks to lend.
Hence all the statements are correct.
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