Question 1

The Pradhan Mantri Mudra Yojana (PMMY) scheme provides loans up to which amount without collateral?

Accepted Answer

PM Mudra Yojana, launched in April 2015, provides collateral-free loans to micro and small enterprises. The scheme covers loans up to ₹10 lakh for non-farm businesses.

Question 2

Revenue Deficit in a government budget occurs when:

Accepted Answer

Revenue Deficit is the excess of revenue expenditure over revenue receipts. It indicates that the government's regular income is insufficient to cover its regular (non-capital) spending.

Question 3

Revenue Deficit in the Union Budget refers to which of the following?

Accepted Answer

Revenue Deficit is the difference between revenue expenditure and revenue receipts. It indicates that the government's revenue earnings are insufficient to cover its revenue spending, excluding capital expenditure.

Question 4

What is the primary objective of the Reverse Repo Rate in monetary policy?

Accepted Answer

The Reverse Repo Rate is the rate at which the RBI borrows money from commercial banks. It is used to absorb excess liquidity from the banking system and control inflation.

Question 5

Which ministry is responsible for implementing the Pradhan Mantri Mudra Yojana (PMMY) scheme?

Accepted Answer

PMMY is a scheme for providing loans to non-corporate, non-farm small/micro enterprises. It is implemented by the Ministry of Micro, Small and Medium Enterprises (MSME).

Question 6

Which of the following best describes Fiscal Deficit in the context of Union Budget?

Accepted Answer

Fiscal deficit is the difference between total government expenditure and total government revenue (excluding borrowing). It indicates the amount the government needs to borrow to meet its spending obligations.

Question 7

Which RBI monetary policy tool involves injecting liquidity into the banking system by purchasing government securities from banks?

Accepted Answer

Open Market Operations (OMO) is the RBI's tool to manage liquidity by buying and selling government securities. When RBI buys securities, it injects liquidity; when it sells, it absorbs liquidity.

Question 8

Revenue Deficit in the Union Budget occurs when revenue expenditure exceeds revenue receipts. Which of the following is NOT a component of revenue receipts?

Accepted Answer

Revenue receipts include tax revenue (income tax, excise, customs, etc.) and non-tax revenue (interest, dividends, fees). Capital receipts (loans, asset sales) are NOT part of revenue receipts.

Question 9

As per RBI guidelines, the Statutory Liquidity Ratio (SLR) is the minimum percentage of deposits that commercial banks must maintain in the form of liquid assets. What is the current SLR as of 2024?

Accepted Answer

The Statutory Liquidity Ratio (SLR) is set by the RBI to ensure that commercial banks maintain a certain level of liquid assets. As of 2024, the SLR stands at 18.00% of Net Demand and Time Liabilities (NDTL).

Question 10

As per RBI monetary policy framework, the Repo Rate is the rate at which:

Accepted Answer

The Repo Rate is the rate at which the RBI lends money to commercial banks against government securities as collateral. It is a key tool of monetary policy used to control inflation and liquidity in the economy.

Question 11

The Cash Reserve Ratio (CRR) is the percentage of deposits that commercial banks must maintain with the RBI. As of 2024, what is the primary purpose of CRR?

Accepted Answer

CRR is a monetary policy tool used by the RBI to control liquidity in the banking system. By changing the CRR, the RBI can influence the amount of money available for lending by commercial banks.

Question 12

The Pradhan Mantri Mudra Yojana (PMMY) is a scheme to provide collateral-free loans to micro and small enterprises. Under this scheme, loans are provided in three categories. Which of the following is NOT one of the three loan categories?

Accepted Answer

PMMY provides loans under three categories: Shishu (up to ₹50,000), Kishore (₹50,001 to ₹5 lakh), and Tarun (₹5 lakh to ₹10 lakh). These categories are based on loan amount and business maturity.

Question 13

Which of the following is NOT a function of monetary policy conducted by the RBI?

Accepted Answer

Monetary policy is conducted by the RBI to control money supply, inflation, and interest rates. However, certain functions like direct taxation and expenditure allocation are fiscal policy functions, not monetary policy functions.

Question 14

Which of the following best defines 'Fiscal Deficit' in the Union Budget of India?

Accepted Answer

Fiscal Deficit is the difference between the government's total expenditure and its total receipts excluding borrowings. It indicates the total borrowing requirement of the government. It is expressed as a percentage of GDP and is a key indicator of the financial health of the government.

Question 15

As per the Union Budget 2024-25, what is the primary objective of the Fiscal Responsibility and Budget Management (FRBM) Act in controlling fiscal deficit?

Accepted Answer

The FRBM Act, 2003 mandates that the Central Government maintain fiscal discipline by setting targets for fiscal deficit reduction. The 2024-25 budget aims to bring fiscal deficit to 4.9% of GDP, demonstrating the Act's core objective of ensuring macroeconomic stability and sustainable public finances.

Question 16

Under the Liquidity Adjustment Facility (LAF), the RBI uses the Statutory Liquidity Ratio (SLR) to regulate the money supply. What is the primary purpose of SLR in the Indian banking system?

Accepted Answer

The Statutory Liquidity Ratio (SLR) is the minimum percentage of deposits that commercial banks must maintain in the form of liquid assets (government securities, cash, gold) with the RBI. It serves to ensure banking system stability, control inflation, and provide the RBI with a tool to regulate money supply and credit expansion.

Question 17

As per the Union Budget 2024-25, what is the primary objective of the Fiscal Deficit target announced by the Government of India?

Accepted Answer

The Union Budget 2024-25 set a fiscal deficit target of 4.9% of GDP for FY 2024-25, with a medium-term goal of reducing it to 4.5% by FY 2025-26. This reflects the government's commitment to fiscal consolidation while maintaining growth momentum.

Question 18

Which of the following best describes the relationship between the Repo Rate and Reverse Repo Rate set by the RBI?

Accepted Answer

The Repo Rate is the rate at which the RBI lends to commercial banks against government securities, while the Reverse Repo Rate is the rate at which the RBI borrows from banks. The Reverse Repo Rate is always lower than the Repo Rate, forming a corridor that influences money supply in the economy.

Question 19

The Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme was launched in which year, and what is its primary objective?

Accepted Answer

PM-KISAN was launched on 24 February 2019 by the Ministry of Agriculture & Farmers Welfare. The scheme provides direct income support of ₹6,000 per annum (in three installments of ₹2,000 each) to eligible farmer families to supplement their income for agricultural and allied activities.

Question 20

Under the Monetary Policy Framework, the RBI's Cash Reserve Ratio (CRR) is primarily used to achieve which of the following objectives?

Accepted Answer

The Cash Reserve Ratio (CRR) is the percentage of deposits that commercial banks must maintain as cash reserves with the RBI. By adjusting the CRR, the RBI controls the money supply in the economy. A higher CRR reduces the money available for lending (contractionary), while a lower CRR increases it (expansionary).

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