CA Practice questions for Economics Part 7

Which of the following statements is/are correct regarding Monetary Transmission?

1. It refers to the process by which a central bank’s monetary policy decisions are passed on to the financial markets

2. Rising Non-Performing Assets (NPAs) and higher returns on small savings schemes may hinder effective monetary transmission.

3. Lowering of CRR and SLR requirements may help ensure effective monetary transmission

Select the correct answer using the code given below

(a) 1 and 3 only

(b) 2 and 3 only

(c) 1 and 2 only

(d) 1, 2 and 3

Answer: D

Which of the following are the components of Balance of Payments (Bop)?

1. Financial capital transfers

2. External loan and investment

3. Foreign Institutional Investment

4. Issuing of external bonds

5. Export and Imports of Goods and Services

Select the correct answer using the code giving below

(a) 1, 2 and 3 only

(b) 2, 3 and 4 only

(c) 1, 4 and 5 only

(d) 1, 2, 3, 4 and 5

Answer: D

Which of the following measures can be used to reduce inflation?

1. Increasing Cash Reserve Ratio (CRR)

2 Increasing Statutory Liquidity Ratio (SLR)

3. Reducing fiscal deficit

4. Reducing Reverse Repo Rate

Select the correct answer using the code below

(a) 1 and 2 only

(b) 1, 2 and 3 only

(c) 3 and 4 only

(d) 1, 2, 3 and 4

Answer: C

Which of the following best explains the advantage of name-coated urea over normal urea?

(a) Neem checks the loss of nitrogen by slowing nitrate formation

(b) Neem coated urea enhances the rate of absorption of nitrogen

(c) Neem coated urea increases soil’s capacity to remain nitrogen

(d) Presence of Neem increases the life span of plants

Answer: A

Which reference to Bay of Bengal Initiative for Multi-Sectorial Technical and Economic Cooperation (BIMST-EC). Consider the following statements:

1. All the member countries share coastal boundaries with Bay of Bengal

2. Myanmar was the last country to join this initiative

3. The last summit took place in New Delhi

Select the correct answer using the code given below

(a) 1 and 2 only

(b) 3 only

(c) 1, 2 and 3

(d) None

Answer: D

With reference to International Solar Alliance (ISA) consider the following statements:

1. It was launched by India and France.

2. It invites countries which are located between Tropic Cancer and Tropic of Capricorn

3. It will work under International which of the statements given above is/are correct?

(a) 1 only

(b) 1 and 2 only

(c) 2 and 3 only

(d) 1, 2 and 3

Answer: B

With reference to Minimum Alternate Tax consider the following statements:

1. It is a direct tax that facilitates the taxation of ‘zero tax companies’

2. It is also levied on high net worth individuals whose income exceeds a certain limit

3. It can be levied on portfolio investors and corporations with FDI in India

Which of the statements given above is/are correct?

(a) 1 only

(b) 1 and 3 only

(c) 2 and 3 only

(d) 1, 2 and 3

Answer: A

Which of the following services are accounted in the Gross Domestic Product of a country?

1. Services rendered by a domestic help

2. Services rendered by a worker from unorganized sector

3. Services produced in Indian embassies located abroad

4. Services produced in military establishments located abroad

Select the correct answer using the codes given below

(a) 1 and 2 only

(b) 1, 2 and 3 only

(c) 2, 3 and 4 only

(d) 1, 2, 3 and 4

Answer: D

In the context of management of liquidity consider the following pairs:

Type of deal Management

Liquidity Technique

1, Short term: Repo Auctions

(Volatile)

2. Medium term: Open Market operations

3. Long Term Cash Reserve Ratio which of the pairs given above is/are correctly matched?

(a) Only

(b) 1 and 2 only

(c) 2 and 3 only

(d) 1, 2 and 3

Answer: D

With reference to Effective Revenue Deficit; consider the following statements: 1. It was introduced on the recommendation of 13th Finance Commission

2. It includes all the revenue expenditure done in the form of grants for creation of capital assets

3. Grants given under MNREGA to build capital assets like roads and ponds forms part of it

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 and 3 only

(c) 3 only

(d) None

Answer: D