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Chapter:

60+ Currency and Inflation Solved MCQs

in Indian Economy

These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Business Administration (BBA) , Bachelor of Arts (BA) , Bachelor of Arts in Economics (BA Economics) , Union Public Service Commission (UPSC) .

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Chapter: Currency and Inflation
51.

A high rate of inflation tends to worsen balance of payments because:

A. prices of imported goods rise
B. prices of exported goods rise making exports less competitive
C. prices of imported goods fall and hence more is imported
D. prices of exported goods fall and hence less amount is obtained in terms of foreign exchange
Answer» B. prices of exported goods rise making exports less competitive
discuss
52.

The effect of inflation on tax revenue results in a situation known as :

A. stagflation
B. fiscaldrag
C. reflation
D. disinflation
Answer» B. fiscaldrag
discuss
53.

The sum of which of the following constitutes Broad Money in India? [IAS 1997]
1. Currency with the public
2. Demand deposits with banks
3. Time deposits with banks
4. Other deposits with RBI
Choose the correct answer using the codes given below:

A. 1 and 2
B. 1, 2 and 3
C. 1, 2, 3 and 4
D. 1, 2 and 4
Answer» C. 1, 2, 3 and 4
discuss
54.

Rising prices lead to all but one of the following:

A. promotion of inequalities
B. generation of black money
C. adverse effect on balance of payments
D. adverse effect on speculation
Answer» D. adverse effect on speculation
discuss
55.

Consider the following statements about Wholesale Price Index (WPI) :
1. It captures the price movement extensively and is, therefore, taken as an indicator of inflation.
2. The office of the Economic adviser (OEA) is entrusted with the function of compilation and publication of the weekly wholesale price index number in India.
Which of the statements given above is/are correct? [CDS 2009]

A. I only
B. II only
C. Both I and II
D. Neither I nor II
Answer» C. Both I and II
discuss
56.

In the last one decade, which one among the following sectors has attracted the highest Foreign Direct Investment inflows into India? [IAS 2004]

A. Chemicals other than fertilizers
B. Services sector
C. Food processing
D. Telecommunication
Answer» D. Telecommunication
discuss
57.

Under the Constitution, the power to raise and disburse public funds:

A. has been vested in Union Government
B. has been divided between the Union and State Governments
C. has been given to the Finance Commission
D. has not been given to anyone
Answer» B. has been divided between the Union and State Governments
discuss
58.

There are three major groups of commodities in the Wholesale Price Index. These are:
1. primary articles
2. fuel, power, light and lubricants
3. manufactured products
4. food articles and industrial raw materials

A. 1, 2 and 3
B. 2, 3 and 4
C. 1, 3 and 4
D. 1 and 3
Answer» A. 1, 2 and 3
discuss
59.

Rupee was devalued by what percent in July 1991 ? [MP PCS 1990]

A. 18
B. 20
C. 22
D. 25
Answer» B. 20
discuss
60.

When was decimal coinage introduced in India? [CDS 2005]

A. 1947
B. 1950
C. 1957
D. 1960
Answer» C. 1957
discuss
61.

Amongst the currency quotes USD/JPY, USD/Euro and USD/CAD, which one of the following is referred as the base currency for quotes? [Punjab & Sindh Bank 2011]

A. US $
B. JPY
C. Euro
D. CAD
Answer» A. US $
discuss
62.

Which of the following is/are treated as artificial currency? [IAS 2010]

A. ADR
B. GDR
C. SDR
D. Both ADR and SDR
Answer» C. SDR
discuss
63.

Which of the following measures should be taken when an economy is going through inflationary pressures?
1. The direct taxes should be increased.
2. The interest rate should be reduced.
3. The public spending should be increased
Select the correct answer using the code given below: [CDS 2012] Code:

A. 1 only
B. 2 only
C. 2 and 3
D. 1 and 2
Answer» B. 2 only
discuss
64.

The terms of economics, the recession occurring two times with a small gap in between is known as [Bank of India PO 2010]

A. Double Deflation
B. Deflation
C. Deep Recession
D. Double Dip Recession
Answer» C. Deep Recession
discuss
65.

M1 includes:

A. currency with public
B. demand deposit with bank
C. other deposits with RBI
D. all of the above
Answer» D. all of the above
discuss
66.

M3 includes:

A. M1 + T.D
B. M1 + post office saving deposit
C. M1 +- post office total deposit
D. M1 + national saving certificate
Answer» A. M1 + T.D
discuss
67.

Consider the following statements: Full convertibility of the rupee may mean: [IAS 2002]
1. its free float with other international currencies.
2. its direct exchange with any other international currency at any prescribed place inside and outside the country.
3. it acts just like any other international currency.
Which of these statements are correct?

A. 1 and 2
B. 1 and 3
C. 2 and 3
D. 1, 2 and 3
Answer» A. 1 and 2
discuss
68.

Which of the following Mahatma Gandhi series of currency notes issued by the RBI has a drawing of the 'Parliament House' depicted on it? [SSC Graduate 2003]

A. Rs. 500
B. Rs. 100
C. Rs. 50
D. Rs. 10
Answer» C. Rs. 50
discuss
69.

Which of the following Mahatma Gandhi series of currency notes issued by the RBI has "ecology" depicted on it? [SSC Graduate 2003]

A. Rs. 500
B. Rs. 100
C. Rs. 50
D. Rs. 5
Answer» B. Rs. 100
discuss

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