Indian Economy Section 2 MCQs

1. Which of the following is an example of passive investment instrument?

(A) Mutual Funds
(B) Gold ETFs
(C) Stocks
(D) Preference shares

Correct Answer: (B) Gold ETFs

Answer Explanation:
Gold ETFs are passive investment instruments that are based on price movements and investments in physical gold.

2. Which among the following Ministries of India publishes the Employment News?

(A) Ministry of Labour & Employment
(B) Ministry of Communication
(C) Ministry of Information & Broadcasting
(D) Ministry of Education

Correct Answer: (C) Ministry of Information & Broadcasting

3. In which year, “20 Point Programme” was initiated for the first time in India?

(A) 1972
(B) 1975
(C) 1976
(D) 1978

Correct Answer: (B) 1975

Answer Explanation:
The Twenty Point Programme was initially launched by Prime Minister Indira Gandhi in 1975 and was subsequently restructured in 1982 and again on 1986. With the introduction of new policies and programmes it has been finally restructured in 2006 and it has been in operation at present. The Programmes and Schemes under TPP-2006 are in harmony with the priorities contained in the National Common Minimum Programme, the Millennium Development Goals of the United Nations and SAARC Social Charter. The restructured Programme called Twenty Point Programme – 2006 (TPP-2006), was approved by the Cabinet on 5th October 2006 and operated w.e.f 1.4.2007.

4. The rate at which RBI purchases or rediscounts bills of exchange of commercial banks is called?

(A) Repo rate
(B) Reverse repo rate
(C) Bank rate
(D) Base rate

Correct Answer: (C) Bank rate

Answer Explanation:
Bank Rate refers to the official interest rate at which RBI will provide loans to the banking system which includes commercial / cooperative banks, development banks etc. Such loans are given out either by direct lending or by rediscounting (buying back) the bills of commercial banks and treasury bills. Thus, bank rate is also known as discount rate. Bank rate is used as a signal by the RBI to the commercial banks on RBI’s thinking of what the interest rates should be. Bank Rate and Repo Rate seem to be similar terms because in both of them RBI lends to the banks. However, Repo Rate is a short-term measure and it refers to short-term loans and used for controlling the amount of money in the market. On the other hand, Bank Rate is a long-term measure and is governed by the long-term monetary policies of the RBI. In broader term, bank rate is the rate of interest which a central bank charges on the loans and advances that it extends to commercial banks and other financial intermediaries. RBI uses this tool to control the money supply.

5. Universalization of Secondary Education was an aim of which among the following five year plans?

(A) 9th
(B) 10th
(C) 11th
(D) 12th

Correct Answer: (C) 11th

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