INSIGHTS STATIC QUIZ 2019
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Question 1 of 5
1. Question
Consider the following statements regarding Open market operations.
- Open market operations are conducted by the Reserve Bank of India (RBI) with an objective to adjust the rupee liquidity conditions in the market on a durable basis.
- These operations are conducted only on quarterly basis in a manner that balances inflation while helping banks continue to lend.
- RBI carries out the Open market operations through commercial banks and does not directly deal with the public.
Which of the above statements is/are correct?
Correct
Solution: c)
What are open market operations?
They are conducted by the RBI by way of sale or purchase of government securities (g-secs) to adjust money supply conditions.
The central bank sells g-secs to suck out liquidity from the system and buys back g-secs to infuse liquidity into the system.
These operations are often conducted on a day-to-day basis in a manner that balances inflation while helping banks continue to lend.
The RBI uses OMO along with other monetary policy tools such as repo rate, cash reserve ratio and statutory liquidity ratio to adjust the quantum and price of money in the system.
When the RBI wants to increase the money supply in the economy, it purchases the government securities from the market and it sells government securities to suck out liquidity from the system.
RBI carries out the OMO through commercial banks and does not directly deal with the public.
Incorrect
Solution: c)
What are open market operations?
They are conducted by the RBI by way of sale or purchase of government securities (g-secs) to adjust money supply conditions.
The central bank sells g-secs to suck out liquidity from the system and buys back g-secs to infuse liquidity into the system.
These operations are often conducted on a day-to-day basis in a manner that balances inflation while helping banks continue to lend.
The RBI uses OMO along with other monetary policy tools such as repo rate, cash reserve ratio and statutory liquidity ratio to adjust the quantum and price of money in the system.
When the RBI wants to increase the money supply in the economy, it purchases the government securities from the market and it sells government securities to suck out liquidity from the system.
RBI carries out the OMO through commercial banks and does not directly deal with the public.
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Question 2 of 5
2. Question
As per agriculture Census consider the following Categorisation of Farmers.
- Small Farmer- Below 2.00 hectare
- Medium Farmer- 4.00-10.00 hectare
- Large Farmer- 10.00 hectare and above
Which of the above statements is/are correct?
Correct
Solution: c)
In agriculture Census, the operational holdings are categorised in five size classes as follows:
Marginal: Below 1.00 hectare.
Small: 1.00-2.00 hectare.
Semi- Medium: 2.00-4.00 hectare.
Medium: 4.00-10.00 hectare.
Large: 10.00 hectare and above.
Incorrect
Solution: c)
In agriculture Census, the operational holdings are categorised in five size classes as follows:
Marginal: Below 1.00 hectare.
Small: 1.00-2.00 hectare.
Semi- Medium: 2.00-4.00 hectare.
Medium: 4.00-10.00 hectare.
Large: 10.00 hectare and above.
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Question 3 of 5
3. Question
With reference to the currency market, the term “Convertibility” is used to denote
- Freedom to exchange currencies like commodities across the counter.
- Freedom to invest globally.
- Freedom to residents to remit outside the country.
Select the correct answer code:
Correct
Solution: a)
- Convertibility is the quality that allows money or other financial instruments to be converted into other liquid stores of value.
- Convertibility is an important factor in international trade, where instruments valued in different currencies must be exchanged.
Incorrect
Solution: a)
- Convertibility is the quality that allows money or other financial instruments to be converted into other liquid stores of value.
- Convertibility is an important factor in international trade, where instruments valued in different currencies must be exchanged.
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Question 4 of 5
4. Question
Consider the following statements.
- GDP is the total market value of all goods and services produced in the economy during a particular year, excluding taxes and subsidies on products.
- Real GDP growth measures how much the production of goods and services in the economy has increased in actual physical terms during a year.
- Nominal GDP growth helps to measure the increase in incomes resulting from rise in both production and prices.
Which of the above statements is/are correct?
Correct
Solution: c)
GDP is the total market value of all goods and services produced in the economy during a particular year, inclusive of all taxes and subsidies on products. The market value taken at current prices is the nominal GDP. The value taken at constant prices — that is prices for all products taken at an unchanged base year — is the real GDP.
In simple terms, real GDP is nominal GDP stripped of inflation. Real GDP growth thus measures how much the production of goods and services in the economy has increased in actual physical terms during a year. Nominal GDP growth, on the other hand, is a measure of the increase in incomes resulting from rise in both production and prices.
Incorrect
Solution: c)
GDP is the total market value of all goods and services produced in the economy during a particular year, inclusive of all taxes and subsidies on products. The market value taken at current prices is the nominal GDP. The value taken at constant prices — that is prices for all products taken at an unchanged base year — is the real GDP.
In simple terms, real GDP is nominal GDP stripped of inflation. Real GDP growth thus measures how much the production of goods and services in the economy has increased in actual physical terms during a year. Nominal GDP growth, on the other hand, is a measure of the increase in incomes resulting from rise in both production and prices.
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Question 5 of 5
5. Question
Predatory pricing policy is designed to
Correct
Solution: a)
Predatory Pricing – the pricing of goods or services at such a low level that other firms cannot compete and are forced to leave the market.
Incorrect
Solution: a)
Predatory Pricing – the pricing of goods or services at such a low level that other firms cannot compete and are forced to leave the market.
