Principles of Economics and Markets

Question 1

______involves the application of different economic tools, theories and

methodologies for scrutinising business problems and decision making.
Correct answer: Managerial economics

Question 2

Issues faced related to the selection of investment project can be solved by using
the:
Correct answer: Capital theory

Question 3

Which branch of economics primarily studies the determination of price in individual

markets?
Correct answer: Microeconomics

Question 4

Due to scarcity, every choice involves:

Correct answer: An opportunity cost

Question 5

When a country produces more houses and fewer computers, it is answering

the_______question.
Correct answer: “What to produce”

Question 6
 If you wish to purchase a car, but purchasing your own house has become a
necessity for you, it will create a problem of:
Correct answer: Choice

Question 7

Macroeconomics includes all the following key principles except:

Correct answer: Production theory

Question 8

Which of the following is the neo-classical standpoint of economics?

Correct answer: Welfare viewpoint

Question 9

Which of the following factors does the economic environment of a country

comprise?
Correct answer: The type of economic system of country
The functioning of the financial sector of the country
The pattern of national income, employment, saving and investment of the country
All of these

Question 10

________ science refers to the science that deals with the question of what is.
Correct answer: Positive

Question 11

The problem of ‘how to produce’ is the problem of:

Correct answer: Choice of technique

Question 12

Paul Samuelson is the contributor of of economics.

Correct answer: Growth viewpoint

Question 13

Which of the following theory helps managers to determine the factors that affect the
buying decisions of consumers and their needs and requirements?
Correct answer: Demand theory

Question 14

According to______, “Political economy or economics is a study of mankind in the

ordinary business of life; it examines that part of individual and social action which is
most closely connected with the attainment and with the use of the material
requisites of wellbeing.”
Correct answer: Alfred Marshall

Question 15

The question, ‘Should Britannia produce more bread or more biscuits?’ is an

example of the:
Correct answer: ‘What to produce’ question

Question 16

The ________ deals with maximisation of output (when the resources are limited)
and determination of optimum size of output.
Correct answer: Production theory
Question 17

“All goods and services have different values in the eyes of consumers from the
perspective of utility. Some goods and services give them more satisfaction (utility)
than others.” The statement is related to:
Correct answer: What to produce

Question 18

Which of the following subject attempts to study how people allocate their limited
resources to their alternative uses to produce and consume goods to satisfy their
unlimited wants and maximise their gains?
Correct answer: Economics

Question 19

Who defined economics as a science of scarcity or choice in his book “An Essay on
the Nature and Significance of Economic Science”, which was published in 1932?
Correct answer: Lionel Robbins

Question 20

Economics studies how organisations make their decisions regarding:

Correct answer: The selection of a product to be produced
Production technique
Plant location
All of these

Question 21

On a Sunday morning, you rank your choices in the following order:

Clean the house, go to the mall, watch a movie and sleep late.
Suppose you decide to clean the house. What will be your opportunity cost?
Correct answer: Going to the mall
Question 22

Which is not a basic economic question?

Correct answer: How to stop its production?

Question 23

Which of the following statements are correct?

Correct answer: The problem ‘how to produce’ also arises because a specific
quantity of a good or a service can be produced with alternative combination of
inputs.
The root of the economic problem is the scarcity of resources while our wants are
infinite.

Question 24

Microeconomic answers:
Response: How do their choices affect the demand and supply of goods and
services?
Correct answer: How do their choices impact the prices of goods and services in
the market?
How do their choices affect the demand and supply of goods and services?
How do individuals and businesses make choices?
All of these

Question 25

Which of the following are the fundamental economic reasons?

Correct answer: Human wants are infinite or unlimited
There are only scarce resources to satisfy human wants
Humans want to maximise their gains
All of these
Question 26

According to the law of supply, more goods will be supplied at:

Correct answer: Higher price

Question 27

Rahul is a self-made millionaire. In a mall, he sees an expensive pair of Italian

designer shoes. When he checked the price tag, he moved on. This is not a real
demand for the shoes because Rahul does not have the:
Correct answer: Willingness to pay

Question 28

Which factor will increase the demand for a premium brand of Biryani masala?
Correct answer: Increase in the consumers’ income

Question 29

The cross-elasticity of demand for petrol and car is:

Correct answer: Always less than zero

Question 30

During the festival of Diwali, the demand for sweets goes up. Consequently, the
demand for sugar will:
Correct answer: Increase

Question 31

Demand for labour is always a(n)______demand.

Correct answer: Derived
Question 32

As the price of a commodity will increase, its quantity demanded will:

Correct answer: Decrease

Question 33

Which of the following determinants result in a fall in the demand of a commodity?

Correct answer: Fall in the price of substitute goods

Question 34

Varun is a salaried employee from a middle-class family. Being a man of modest

means, however, did not prevent him from dreaming big. Since he saw the latest
model of the Harley Davidson bike in an auto show, he wants to purchase it. He is
even willing to pay for it. However, this is not a demand for the bike because Varun
does not have the:
Correct answer: Purchasing ability

Question 35

The relationship between the income of individuals and the demand for normal
goods is:
Correct answer: Positive.

Question 36

All of the following are the reasons for the negative slope of the demand curve,
except:
Correct answer: Complementary effect

Question 37
 Ram Guha is a watchman. He supports a family of six people— his wife, two
children, and his elderly parents. Every next day, the family eats a breakfast of bread
omelette. The price of the bread has increased by ` 2. The family has reduced its
consumption of eggs but increased its demand of bread. What is the reason for this
exception to the law of demand?
Correct answer: Bread is a Giffen good

Question 38

The price of mutton increases. The people buy more of chicken. Therefore, chicken
and mutton are:
Correct answer: Substitutes

Question 39

Demand for house is demand, while demand for bricks is demand.

Correct answer: Direct, derived

Question 40

People demand certain goods at higher prices not because of their worth but
because of their prestige value. This effect is called:
Correct answer: Veblen effect

Question 41

When the demand for printers increases, people start buying more of ink cartridges.
This is due to:
Correct answer: Complementary effect

Question 42

Supply is the specific quantity of a good that a producer is and to offer for sale to
consumers.
Correct answer: Willing, able

Question 43

What does the elasticity of demand measure?

Correct answer: The responsiveness of the quantity demanded to change in price

Question 44

The price of the Ariel detergent goes up. Consequently, people start to buy more of
Tide detergent. This is due to:
Correct answer: Substitution effect

Question 45

Demand for water used in beverages like Coca-Cola is demand.

Correct answer: Derived demand

Question 46

In which production has all factors of production variable?

Correct answer: Long-run production

Question 47

Accounting costs are also called:

Correct answer: Money costs

Question 48
 In a short-run production, _________ factors of production are in___________
supply.
Correct answer: Some, fixed

Question 49

The line that shows various combinations of factors that yield a given output is
called:
Correct answer: Isoquant curve

Question 50

The following equation represents which expression?

C = PL × L + PK × K
Correct answer: Iso-cost line

Question 51

The period of time during which a firm can change only some factors of production
(such as labour) is called:
Correct answer: Short run

Question 52

For the producer’s equilibrium, isoquants must be________ to the origin.

Correct answer: Convex

Question 53

When total product increases at a diminishing rate, the marginal product will:
Correct answer: Decrease
Question 54

The technological relationship between physical inputs and the maximum producible
output is:
Correct answer: Production function

Question 55

In which of the following stages of production, the total product starts declining with
an increase in the number of workers?
Correct answer: Stage of negative returns

Question 56

Which of the following options is true with respect to the graphical representation of
the Total Fixed Cost (TFC) curve?
Correct answer: It is parallel to the horizontal axis.

Question 57

If L units of labour and K units of capital are utilised to produce X units of output
then the inputs are tripled, the output will increase by_________under decreasing
returns to scale.
Correct answer: 2X

Question 58

Total physical product is derived by___________ the marginal physical product.

Correct answer: Summing up

Question 59

In the short-run production, the slope is zero at___________ .

Correct answer: Maximum TPL

Question 60

Which expression below defines the production function?

(X – level of output, L – labour, K – capital, S – land, T – state of technology)
Correct answer: X = f (L,K,S)

Question 61

Which law exclusively applies to long-run production?

Correct answer: Law of returns to scale

Question 62

In________ cost, there is no fixed cost and all the costs are variable.
Correct answer: Long run

Question 63

Which of the following factors does not result in the economies of scale?
Correct answer: Diminishing managerial expertise

Question 64

Which of the following costs are not recorded in the books of accounts?
Correct answer: Implicit cost

Question 65

Total product divided by the amount of variable factor is:

Correct answer: Average product

Question 66

Complete the following formula:

AC= /________ Output
Correct answer: TC

Question 67

Complete the following formula:

_______= Price (P) × Total output (Q)
Correct answer: TR

Question 68

Which of the following represents the correct formula for calculating the H-H Index?
Correct answer: The squared values of the percentage market shares of each firm
operating in the oligopoly market are added together.

Question 69

Which of the following is not a characteristic of a monopoly?

Correct answer: Free entry and exit for other sellers

Question 70

Which of the following is not a type of product differentiation under the monopolistic
competition market structure?
Correct answer: Price variation

Question 71
Which of the following is not a feature of perfect competition?
Correct answer: Unidentical products

Question 72

The monopolistic competition market structure for firm forms a ________ demand
curve.
Correct answer: Elastic

Question 73

__________ represents a market structure where there are many buyers and sellers
and goods or services are identical.
Correct answer: Perfect competition

Question 74

TC also changes with the changes in the level of output as there is a change in
_________ .
Correct answer: TVC

Question 75

Which of the following is/are (an) example(s) of a perfect competition market

structure?
Correct answer: Share market, Oil and Petrol, Agricultural produce, All of these

Question 76

In a monopoly market, there is/are_________ seller(s).

Correct answer: One
Question 77

In the oligopoly market structure, there are/is________.

Correct answer: Few firms

Question 78

When a monopoly decides to supply output at different prices to different consumers

or groups of consumers, it is called__________ .
Correct answer: Price discrimination

Question 79

Which of the following is not a characteristic of a monopolistic competition market

structure?
Correct answer: Every product is identical

Question 80

A monopoly does not engage in price discrimination in order to___________ .

Correct answer: Create barriers for customers

Question 81

Which condition requires that Marginal Revenue (MR) should be equal to Marginal
Cost (MC)?
Correct answer: First order condition

Question 82

The profit would be maximised when the difference between the _________
and_________ is maximum.
Correct answer: Total revenue, total cost

Question 83

According to__________, “The Revenue of a firm is its sales receipts or money

receipts from the sale of a product.”
Correct answer: Dooley

Question 84

According to modern economists, ____________ are the rewards of purely

entrepreneurial functions.
Correct answer: Profits

Question 85

State which of the following comes under monopolistic competition.

Correct answer: Automobile servicing industry

Question 86

The term oligopoly has been derived from which language:

Correct answer: Greek

Question 87

Oligopoly market form is a system which is:

Correct answer: Price searcher

Question 88
 What is the name of the method by which the overall price of items bought is
lowered when increased quantities of the same item are purchased?
Correct answer: Volume pricing

Question 89

____________ takes place when there is only one dominant organisation in the
industry, which sets the price and others follow it.
Correct answer: Price leadership

Question 90

In the market economics, a__________ is a person or a business that sells

products, goods or services and therefore influences the price of the commodity in
the market based on the number of units of that item sold:
Correct answer: Price searcher

Question 91

In India, the_________ and ___________ industries are the perfect examples of the
oligopoly market form:
Correct answer: Aviation and telecommunication

Question 92

Is flexibility important for any business cartel?

Correct answer: Yes, flexibility is important.

Question 93

A ____________ is an organisation of independent firms, whose purpose is to

control and limit production and maintain or increase prices and profits:
Correct answer: Cartel
Question 94

What are the characteristics of an oligopoly market form?

Correct answer: Barriers to entry and exit, Homogeneous or differentiated products,
Few sellers and many buyers, All of these

Question 95

If one firm or individual in an oligopoly reduces the prices of their good then prices of
other firms:
Correct answer: Decrease

Question 96

Pricing strategy where firms in an oligopoly or a monopolist may use to discourage

entry of new firms/individuals into their market is known as__________ .
Correct answer: Limit pricing

Question 97

___________ denotes a situation in which two or more firms jointly set their prices
or output, divide the market among them or make other business decisions.
Correct answer: Collusion

Question 98

What happens to the slope of a kinked demand curve?

Correct answer: It differs in different conditions.

Question 99
Setting the price below average cost to force the rivals out of business is known as:
Correct answer: Predatory pricing

Question 100

A market that is dominated by 2 or more than 2 sellers having control over the
market is called:
Correct answer: Oligopoly

Question 101

In an oligopoly market, the sellers operating are:

Correct answer: Mutually interdependent

Question 102

What does a firm in an oligopoly market following the price leader called?
Correct answer: Price follower

Question 103

Price leadership works when:

Correct answer: None of these

Question 104

In oligopoly, the price and output are:

Correct answer: Indeterminate

Question 105
Volume pricing is also called as ___________ .
Correct answer: Volume discounting

Question 106

In HPI, the indicators to measure the deprivations are normalised between:

Correct answer: 0 and 100

Question 107

___________ is a relative measure of life expectancy, learning, education and

standards of living for every country.
Correct answer: HDI

Question 108
GDI adjusts the average achievement to show the disparities between men and
women to which of the following dimensions?
Correct answer: A long and healthy life, as measured by life expectance at birth, A
decent standard of living as measured by estimated earned income, Knowledge as
measured by the adult literacy rate and combined primary secondary and higher
gross enrolment ration. All of these

Question 109

Fundamental factors of economic growth include:

Correct answer: The quantity and quality of national resources, The quantity and
quality of labour force and, The quantity and quality of real capital. All of these

Question 110

Socio-economic factors of economic growth include:

Correct answer: The distribution of income and wealth, The legal structure of the
country and, The sociological and cultural structure. All of these
Question 111

Economic development implies that the share of agriculture in _____________

should decline and the share of industrial sector and services should increase.
Correct answer: GDP

Question 112

Which of the following is not a measure suggested by the World Bank to developing
countries?
Correct answer: Reduction of income

Question 113

The World Bank’s environmentally sustainable development division has

established a new index called:
Correct answer: Green Index

Question 114

_______________ assigns economic value to land, water, woods, minerals and all
natural resources.
Correct answer: Green Index

Question 115

In the UN’s development program, the ____________ says, “While geography can
pose challenges, it does not define a country’s destiny.”
Correct answer: World Bank
Question 116

An increase in CRR:
Correct answer: Decreases credit and money supply

Question 117

Base rate includes:

Correct answer: Cost of deposits, cost of complying with the CRR and SLR
requirements and general overhead costs

Question 118

____________ is the rate at which the RBI buys or rediscounts bills of exchange or
other commercial papers.
Correct answer: Bank rate

Question 119

The CRR is the reserve which commercial banks have to keep with .
Correct answer: RBI

Question 120

Monetary policy refers to the use of monetary policy instruments which are at the
disposal of the central bank to regulate the availability, cost and use of money and
credit. The objectives served by monetary policy include which of the following?
Correct answer: Facilitate balance of payments equation, Promote economic
growth, Maintain price stability, optimum levels of output and employment. All of
these
Question 121

________________ refers to the average daily balance that a bank is required to

maintain with the RBI as a proportion of its Net Demand and Time Liabilities (NDTL).
Correct answer: CRR

Question 122

Which of the following is not an objective of the fiscal policy?

Correct answer: Increasing public spending

Question 123

Monetary policy instruments are the various tools that a central bank can use to
influence money market and credit conditions and pursue its monetary policy
objectives. Such instruments include which among the following?
Correct answer: Liquidity reserve ratios, Open market operations, Cash reserve
rations. All of these

Question 124

The important quantitative instruments for controlling inflation are:

Correct answer: CRR and SLR

Question 125

Which of the following is the component of the fiscal policy?

Correct answer: Automatic stabilisers, Changes in tax rate, Changes in public
spending. All of these

Question 126
What is the main feature of the fiscal policy of India?
Correct answer: Controlling taxes and public expenditure

Question 127

Monetary policy should aim primarily at:

Correct answer: Inflation control

Question 128

Public borrowing is desirable in the situation of:

Correct answer: Inflation

Question 129

Monetary policy influences:

Correct answer: Both a. and b.

Question 130

Repo/reverse repo are from the side of

Correct answer: Buyer/selle

Question 131

For budgetary deficits, the government may like to use

Correct answer: Treasury withdrawal, Bank Borrowings.
Question 132

OMOs consist of two types of operations:

Correct answer: Outright purchase/sale and repo/reverse repo of government
securities

Question 133

Which of the following is/are the instruments of fiscal policy?

Correct answer: Printing of money, Borrowing from a bank, Treasury withdrawal. All
of these

Question 134

RBI’s policy has the main objectives of:

Correct answer: Price stability with growth

Question 135

Monetary policy objectives include:

Correct answer: Price stability and credit availability

Question 136

According to the _________________ , the less developed countries are characterised by a

number of rigidities that inhibited or prevented these countries from undergoing any change.
Correct answer: Structuralist view

Question 137
The Finance Commission was constituted by the President under article____________ of the
Constitution.
Correct answer: 280

Question 138

Who chairs the Governing Council of NITI Aayog?

Correct answer: Prime Minister

Question 139

The real beginning of planning in India was made in March 1950 when the Indian Planning
Commission was set up with_____________ as its chairman.
Correct answer: Pt. Jawaharlal Nehru

Question 140

NITI Aayog’s entire gamut of activities can be divided into:

Correct answer: Foster Cooperative Federalism, Design Policy & Programme Framework,
Monitoring & Evaluation. All of these

Question 141

The Directive Principles laid down in the Indian Constitution aim at creating a society in
which:
Correct answer: There is right to work, There is equal opportunity, There is no
exploitation of the economically weak by the strong, All of these.

Question 142

_____________ means the allocation of limited resources among different uses in such a
way that it would bring about the maximum welfare for the people.
Correct answer: Economic planning

Question 143

Which of the following are the major objectives of economic planning in India?
Correct answer: To reduce inequalities in income and wealth distribution, To achive
industrialisation with special reference to basic and heavy industries, To provide more
employment opportunities, All of these

Question 144

The first attempt at systematic planning in India was made by Sh. M. Visvesvaraya when he
published his book Planned Economy for India in_____________ .
Correct answer: 1934

Question 145

In NITI Aayog, the word NITI stands for:

Correct answer: National Institution for Transforming India

Question 146

In the_________ phase, there is an increase in various economic factors, such as

production, employment, output, wages, profits, demand and supply of products, and
sales.
Correct answer: Expansion

Question 147

Value added = value of final output – value of_____________ goods.

Correct answer: Intermediate goods
Question 148

National product less________ is equal to domestic product.

Correct answer: Net factor income earned from abroad

Question 149

Which of the following is not a phase of business cycle?

Correct answer: Decline

Question 150

Capital_____________ are excluded from GDP figures.

Correct answer: Gains and losses

Question 151

Gross product minus_________ equals net product.

Correct answer: Depreciation

Question 152

According to___________ ,“Trade Cycle is composed of periods of good trade

characterized by rising price and low unemployment percentage altering with periods
of bad trade characterized by falling price and high unemployment percentage.”
Correct answer: Keynes

Question 153

National income is important because

Correct answer: it indicates the economic development of a country

Question 154

Market product minus__________ equals factor cost.

Correct answer: Indirect taxes

Question 155

How many phases does a business cycle have?

Correct answer: 5

Question 156

Gross less__________ gives net figures.

Correct answer: Depreciation

Question 157

National product minus____________ equals domestic product.

Correct answer: Net factor income from abroad

Question 158

____________ refers to the phase of business cycle in which the growth rate starts
decreasing.
Correct answer: Recession
Question 159

National income is defined as the

Correct answer: sum total of the values of all goods and services produced in a
country during a year

Question 160

Appreciation or depreciation in the market value of ___________ goods will not be

recorded for the purpose of national income accounts.
Correct answer: Final goods

Question 161

__________ includes both tangible goods (food, clothing, furniture) and intangible
services.
Correct answer: Total Output

Question 162

Market prices less____________ gives us factor costs.

Correct answer: Indirect taxes

Question 163

Personal income less___________ is equal to personal disposable income.

Correct answer: Personal taxes

Question 164
Which of the following is an example of transfer payment?
Correct answer: Old age pensions

Question 165

Nominal GDP figures of a particular year may not be comparable to the GDP of
previous years because of the influence of
Correct answer: Inflation

Question 166

What was replaced by FEMA?

Correct answer: The Foreign Exchange Regulation Act (FERA)

Question 167

_____________ along with the utilisation of surplus helps in increasing the

agricultural productivity.
Correct answer: Soil conservation

Question 168

Banking system supports agricultural finance through a multi-agency network

consisting of:
Correct answer: Regional Rural Banks (RRBs), Commercial Banks (CBs),
Cooperatives. All of these

Question 169

Which of the following is the credit function of NABARD?

Correct answer: Framing policies and guidelines for rural financial institutions
Question 170

____________ and sufficient amount of manure and fertilisers not only help in
increasing the productivity of agriculture but also raises the income level of farmers.
Correct answer: Good quality seeds

Question 171

___________ was established in 1973 at the time when India was not earning
enough foreign exchange.
Correct answer: The Foreign Exchange Regulation Act (FERA)

Question 172

5. NABARD stands for:

Correct answer: National Bank for Agriculture and Rural Development

Question 173

The objectives and intentions of the Government of India towards SSEs can be
understood by:
Correct answer: Industrial Policy Resolutions (IPR)

Question 174

Agriculture provides a significant amount of revenue to the state government in the

form of
Correct answer: Agricultural income tax, Irrigation charges, Land revenue. All of
these

Question 175
Which of the following is not the supervisory function of NABARD?
Correct answer: Monitoring the ground level rural credit

Question 176

Financial assets that have long or indefinite maturity are dealt with in which of the
following markets?
Correct answer: Capital Market

Question 177

In the short-term finance, the money is borrowed for_________ .

Correct answer: Less than 1 year

Question 178

Which policy initiatives are undertaken by SEBI to regulate the Indian capital
markets?
Correct answer: Reassurance of safety to undertake transactions in securities,
Investor education and awareness, Management of risks in the market, All of these

Question 179

Which of the following can be classified on several aspects, such as transferability,

associated risks and return?
Correct answer: Financial instruments

Question 180

Which of the following is not a function of the capital market?

Correct answer: Maintenance of business records

Question 181

Which of the following acts as a balancing mechanism for short-term surpluses and
deficiencies?
Correct answer: Money Market

Question 182

A team of financial experts or a professional person who professionally invests

venture capital is called a____________ .
Correct answer: Venture capitalist

Question 183

Which of the following is not a component of the financial market that provides
channels for the exchange of long-term funds?
Correct answer: Money Market

Question 184

The business resources are needed for new projects as well as for existing projects
concerning expansion, modernisation, reorganisation and upgradation. Such
resources are generally obtained through:
Correct answer: New Issues Market

Question 185

Which of the following parties helps in bringing suppliers of funds and suppliers of
securities close for executing several financial transactions?
Correct answer: Financial intermediaries, Merchant Bankers, Brokers All of these

Question 186

Which one of the following is/are not the type(s) of bank credit?
Correct answer: Loans, Bank Overdraft, Cash Credit, None of these

Question 187

Which of the following is a summation of varied institutions and mechanisms

through which medium-term funds and long-term funds are pooled, exchanged and
made available to individuals, corporate associates and government undertakings?
Correct answer: Capital market

Question 188

Which of the following is not a function of a good financial system?

Correct answer: Regulation of internal business policies

Question 189

Which of the following are the functions of PFRDA?

Correct answer: Regulating the applicable NPS and pension schemes, Protecting
the interest of pension fund subscribers, Establishing developing and monitoring
pension funds, All of these

Question 190

_________ sources of finance are those sources of funds that a company pays
back in 1 to 5 years.
Correct answer: Medium-term
Question 191

Which among the following is/are not the purpose of short-term finance?
Correct answer: Carrying out operations on an expansionary scale

Question 192

The categories of participants in the capital market include which of the following?
Correct answer: Investors in securities, Intermediaries, Issuers of securities, All of
these

Question 193

The gilt-edged securities market is another name for:

Correct answer: Government securities market

Question 194

Which of the following is not the main constituent of the financial system?
Correct answer: Financial intermediaries, Financial assets, Financial Markets, None
of these

Question 195

The term ‘securities’ comprises which of the following financial products?

Correct answer: Shares and Stocks, Debentures, Bonds, All of these

Question 196

Which of the following broadly constitutes the most common measure of money
supply or the total money stock of a country?
Correct answer: High-powered money, Credit money, Base money, All of these

Question 197

Which of the following tools are used by a central bank to influence money market
and credit conditions and pursue its monetary policy objectives?
Correct answer: Open market operations, Cash reserve ratios, Liquidity reserve
ratios, All of these

Question 198

Which of the following options has been mapped wrongly?

Correct answer: Market place for money market – Financial institutions come
together for dealing personally in non-monetary assets

Question 199

Refer to List 1 and List 2 and choose the correct option:

L L
i i
s s
t t
1 2

1. Money market i. The RBI sells US dollars to stabilise the rupee-dollar

ex- change rate

2. Money market instruments ii. Evening out short-term liquidity imbalances of the
econo- my

3. Major players in the money market iii. The RBI and financial institutions such as the UTI,
GIC and LIC

4. Foreign exchange market iv. Government bonds, treasury bills, commercial

paper, Cer- tificates of deposit, repos, etc.

Correct answer: 1 – ii; 2 – iv; 3 – iii; 4 – i

Question 200
The procedure for issuing treasury bills in the money market is known as:
Correct answer: Treasury bills auction

Question 201

Treasury bills are issued at a discounted price and are later redeemed at
their____________ value similar to the other money market instruments.
Correct answer: Face

Question 202

Which category of T-bills is sold to the general public and the various banks?
Correct answer: Regular

Question 203

Under which of the following methods of finance banks or financial institutions

purchase a bill or invoice that has been drawn by a creditor (seller or a supplier or
drawer) on his/her debtor (drawee)?
Correct answer: Bill discounting

Question 204

Which of the following conditions should be met for a bill to be discounted?

Correct answer: A bill should be a usance bill, A bill must be drawn by the seller
and endorsed by the drawee, A bill must have been accepted and should bear two
good signatures All of these

Question 205

The transactions of notice money involve the process of borrowing or lending of

funds from 2 days to maximum __________ days.
Correct answer: 14

Question 206

Which amongst the following is/are correct about the concept of call money?
A. It denotes the money lent/borrowed for an overnight or maximum period of 14
B. No collateral is required in call money
C. It denotes the money lent/borrowed for a maximum period of 30
D. Banks borrow primarily from the inter-bank (call money) Choose the correct
answer:
Correct answer: A, B and D

Question 207

The issuing company of commercial paper must seek prior permission from the RBI
and such RBI approval is valid for which of the following?
Correct answer: 2 weeks

Question 208

The maturity of ___________ days characterises the transactions of call koney.

Correct answer: A day

Question 209

Which amongst the following is/are correct about the concept of money market?
A. Money market is a market for short-term
B. Maturity in the money market usually ranges between overnight to one
C. The primary objective of money market is to facilitate efficient liquidity position
for commercial banks, financial institutions, mutual funds, insurance
companies, business corporates,
D. Maturity in the money market is above one year.
Choose the correct answer:
Correct answer: A, B and C

Question 210

Treasury bills are issued by the __________ to raise funds for the Government.
Correct answer: RBI

Question 211

While the fixed deposits are non-transferable, ____________ are transferable and,
therefore, it can be traded in the secondary market.
Correct answer: Certificate of deposits

Question 212

Which of the following objectives are served by monetary policy?

Correct answer: Maintain price stability, optimum levels of output and employment,
Facilitate balance of payments equilibrium, Promote economic growth, All of these

Question 213

Which of the following banks are eligible to issue the Certificate of deposits in India?
Correct answer: All scheduled banks (barring Regional Rural Banks and
Cooperative banks)

Question 214

The CRR is the reserve which commercial banks have to keep with __________ .
Correct answer: RBI
Question 215

__________ are typically short-term transactions, often literally overnight.

Correct answer: Repurchase agreements

Question 216

_____________ is made by a listed company to issue shares or convertible

securities to selected individuals, venture capitalists, corporates, or other persons on
a preferential basis.
Correct answer: Preferential Allotment

Question 217

In primary markets, the first-time issued securities to be traded publicly in stock

markets are covered under:
Correct answer: Initial public offering

Question 218

Which of the following is an individual or entity, who charges a fee or commission for
exercising buying and selling orders submitted by an investor in the stock market?
Correct answer: Broker

Question 219

The underwriters guarantee a particular number of shares which will be sold at the
IPO price and will buy any surplus lying _________ .
Correct answer: Unsubscribed

Question 220
The custodians play a critical role in the secondary market. Which among the
following is not a service provided by them in relation to the safekeeping of investors’
securities?
A. Maintaining accounts of the securities
B. Collecting the benefits accruing to the client in respect of securities
C. Keeping the clients informed about the actions taken by the issuers of
securities
D. Maintaining and reconciling records of custodial services
Choose the correct answer:
Correct answer: None of these

Question 221

With reference to the stock market, __________ is an organisation which holds

securities in electronic form securely and assists in the transfer of ownership of
securities.
Correct answer: Depository

Question 222

Till 1990s and before market reforms, the Indian stock market was suffering from
which of the following drawbacks?
Correct answer: Uncertainty of execution prices, Lack of transparency, High
transaction costs, All of these

Question 223

Which of the following are the constituents of the capital market?

Correct answer: Clearing corporations/clearing houses, SEBI(regulator), Stock
exchanges, All of these

Question 224
 Which of the following are responsible for coordinating the procedure of issue
management by assisting the underwriters, registrars and bankers in activities of
pricing and marketing of the issue?
Correct answer: Merchant bankers

Question 225

In the case of secondary markets, the investor gets securities from the
entities/persons who want to__________ their securities to others.
Correct answer: Dispense

Question 226

In which of the following markets does the company not involve directly as the
transactions take place between investors?
Correct answer: Secondary market

Question 227

Preferential allotment, Qualified Institutional Placement (QIP) and Institutional

Placement Programme (IPP) are kinds of which issue of securities?
Correct answer: Private Placement

Question 228

Which of the following entities cannot be appointed as debenture trustees?

Correct answer: Public financial institutions, Insurance companies, Sheduled banks
carrying on commercial activity, None of these

Question 229

An entity, to perform as a debenture trustee, should be registered with which of the

following?
Correct answer: SEBI

Question 230

Which of the following options has been mapped wrongly?

Correct answer: Registration of brokers with SEBI – Not required before starting
their operations

Question 231

Sub-brokers are persons who are not ___________ members of a stock exchange?
Correct answer: Trading

Question 232

Which of the following tasks are performed by a banker to an issue?

Correct answer: Acceptance of allotment or call money, Acceptance of application
money, Refund of application money, All of these

Question 233

The____________ agreement is to be executed in advance of the opening of public

issue of securities.
Correct answer: Underwriting

Question 234

Under the depository system, the transactions in shares and securities are made
completely on which basis?
Correct answer: Paperless or electronic
Question 235

Under which of the following does an issuer corporation issue shares or securities to
a selected group of investors privately (not exceeding 200 members in a financial
year) and not to the open market?
Correct answer: Private Placement

Question 236

Mr. Kaushik leased his warehouse to a logistics company for 99 years. Identify the
type of lease.
Correct answer: Conveyance type lease

Question 237

Which of the following is not a common feature of operating and financial lease?
Correct answer: Lease term is equal to the economic life of the asset

Question 238

A trader Harish sells certain products to Rajan and allows him to pay the money at a
later date. The credit period is 6 months. On the same day, Harish gets the bill of this
transaction discounted at a bank and he receives an amount of `36,000. The bank
charged `1,500 towards this service. What is the face value of the bill?
Correct answer: `37,500

Question 239

How many parties are involved in a leasing arrangement?

Correct answer: 2

Question 240
Which type of lease is taken commonly in the case of televisions and refrigerators?
Correct answer: Consumer lease

Question 241

Which of the following service is not true in the case of a factoring relationship?
Correct answer: A factor compulsorily assumes the credit risk

Question 242

Which of the following is not true with respect to operating lease?

Correct answer: Recorded in the balance sheet

Question 243

A small-scale organisation Anil Plastics was established in 2017. It had purchased

all expensive and hi-tech machinery, has its land and is operating on thin margins.
The organisation is in a severe financial crunch and needs a lot of money for
furthering its operations. The most economical way for Anil Plastics to get money is
_____________ .
Correct answer: Sale and leaseback

Question 244

In India, the credit rating agency named CARE is headquartered in ____________ .

Correct answer: Mumbai

Question 245

Which of the following is not true w.r.t. NBFCs?

Correct answer: Facilitates payment system
Question 246

NBFCs are incorporated under __________ .

Correct answer: Companies Act, 2013

Question 247

In India, the headquarters of ICRA is located in which city?

Correct answer: Gurugram

Question 248

In a hire purchase arrangement, the frequency of payments is decided according to

the ___________ .
Correct answer: Agreement terms

Question 249

The objectives served by credit rating include which of the following?

Correct answer: Inculcating a positive environment regarding investment in debt
securities, Rating of debt obligations, Creating confidence in the minds of investors,
All of these

Question 250

In which type of lease, the first step is the sale of an asset by its owner?
Correct answer: Sale and leaseback

Question 251
 Which of the following mutual funds invest the entire corpus only in debt or fixed
income securities, such as debentures?
Correct answer: Debt funds

Question 252

In which of the following cases, the balance sheet of an NBFC will be affected?
Correct answer: Non-recourse factoring

Question 253

Which of the following is not a characteristic of hire purchase?

Correct answer: An asset is made available to the hirer after making the last
payment.

Question 254

Which of the following is the majority shareholder in CRISIL?

Correct answer: Standard and Poor’s Ratings

Question 255

Which of the following mutual funds are also known as hybrid mutual funds?
Correct answer: Balanced funds

Question 256

___________ refers to the large, diverse sets of information which grow at ever-
increasing rates.
Correct answer: Big data
Question 257

_____________ is a type of a digital bank which has no branches.

Correct answer: Neo banks

Question 258

In_____________ , Indian Fintech companies surpassed their global counterparts in

raising funds.
Correct answer: 2019

Question 259

Which is not the feature of crypto currency?

Correct answer: It has monetary value.

Question 260

Which among the following is not the advantage of digital currencies?

Correct answer: Digital money is a common target for hacks and scams.

Question 261

__________ is the ability of an application to digest and break down an incoming

question message from a user as language, so an application can process it.
Correct answer: Natural Language Processing

Question 262
A ____________ refers to an applicative solution such as a computer program
which is designed to simulate the conversation with human users online.
Correct answer: Chatbot

Question 263

Paypal is the example of __________.

Correct answer: Mobile wallets and payment application

Question 264

__________ refers to the collection of information stored electronically on a

computer system.
Correct answer: Database

Question 265

There are __________ types of Artificial Intelligence.

Correct answer: three

Question 266

__________ is digital money or a form of currency which is available only in digital

or electronic form.
Correct answer: Digital currency

Question 267

Which laws govern cyber security?

Correct answer: ITA, IPC, Companies Act, All of these
Question 268

Big data can be collected from which sources?

Correct answer: Publicly shared comments on social networks and websites,
voluntarily gathered from personal electronics and apps, All of these

Question 269

GoFundme is an example of ____________ .

Correct answer: Crowd funding

Question 270

____________ have algorithm-based portfolio recommendations and management

which reduces the costs and increases efficiency.
Correct answer: Robo-advisors