Question 1

Which of the following is the primary objective of the Reverse Repo Rate set by the RBI?

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 2

Fiscal Deficit occurs when a government's __________ exceeds its __________.

Accepted Answer

Fiscal Deficit is the difference between total government expenditure and total government revenue. When expenditure exceeds revenue, a fiscal deficit occurs.

Question 3

The Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme was launched in which year?

Accepted Answer

PM-KISAN is a central sector scheme that provides direct income support to farmers. It was launched in February 2019 to ensure income support to all landholding farmers.

Question 4

Which RBI monetary policy tool is used to set the minimum percentage of deposits that commercial banks must keep as cash reserves?

Accepted Answer

The Cash Reserve Ratio (CRR) is the percentage of deposits that commercial banks are required to maintain as cash reserves with the RBI. It is a key tool for controlling money supply.

Question 5

Revenue Deficit in a government budget occurs when __________ exceeds __________.

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.

Question 6

Which of the following best describes Fiscal Deficit in the context of India's 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

The Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme was launched in which year, and under which ministry?

Accepted Answer

PM-KISAN was launched in February 2019 by the Ministry of Agriculture & Farmers Welfare to provide direct income support to eligible farmer families.

Question 8

As per RBI's monetary policy framework, what is the primary objective of the Repo Rate?

Accepted Answer

The Repo Rate is the rate at which the RBI lends money to commercial banks against government securities. It is a key tool for controlling inflation and managing liquidity in the economy.

Question 9

Which of the following is NOT a component of the RBI's quantitative tools for monetary policy?

Accepted Answer

The RBI uses quantitative tools like CRR (Cash Reserve Ratio), SLR (Statutory Liquidity Ratio), and Repo Rate to control money supply. Qualitative tools include credit rationing and moral suasion.

Question 10

The Pradhan Mantri Mudra Yojana (PMMY) was launched to provide loans up to which amount without collateral to micro and small entrepreneurs?

Accepted Answer

PMMY was launched in April 2015 to provide collateral-free loans to micro and small enterprises. The scheme covers loans up to ₹10 lakh without requiring collateral or third-party guarantees.

Question 11

Which of the following best describes the primary objective of the Reverse Repo Rate in India's monetary policy framework?

Accepted Answer

The Reverse Repo Rate is the interest 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 12

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 to bring it down to 4.5% by FY 2025-26. This reflects the government's commitment to fiscal consolidation while maintaining growth.

Question 13

Which of the following best describes the relationship between Repo Rate and Reverse Repo Rate as monetary policy tools used by the RBI?

Accepted Answer

The Repo Rate is the rate at which RBI lends to commercial banks, while the Reverse Repo Rate is the rate at which RBI borrows from banks. The Reverse Repo Rate is typically lower than the Repo Rate, and the difference between them forms the corridor within which market rates operate.

Question 14

Under the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme, what is the annual financial support provided to eligible farmers, and which ministry oversees its implementation?

Accepted Answer

PM-KISAN provides ₹6,000 per year (₹2,000 per installment in three equal parts) to eligible small and marginal farmers. The scheme is implemented by the Ministry of Agriculture & Farmers Welfare and was launched in February 2019.

Question 15

Which of the following correctly distinguishes between Revenue Deficit and Fiscal Deficit in the context of government budgeting?

Accepted Answer

Revenue Deficit is the excess of revenue expenditure over revenue receipts (non-capital transactions). Fiscal Deficit is the excess of total expenditure (revenue + capital) over total receipts (revenue + capital receipts). Fiscal Deficit is always larger than or equal to Revenue Deficit.

Question 16

In the context of India's monetary policy framework, if the RBI increases the Cash Reserve Ratio (CRR) by 50 basis points, what is the immediate impact on the money supply in the banking system?

Accepted Answer

An increase in CRR reduces the amount of funds available with commercial banks for lending, thereby contracting the money supply. This is a contractionary monetary policy tool used to control inflation.

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