TNPSC GROUP II ONLINE TEST / QUIZ AS PER LATEST SYLLABUS | UNIT V: INDIAN ECONOMY AND DEVELOPMENT ADMINISTRATION IN TAMIL NADU | Fiscal Policy and Monetary Policy.

TNPSC GROUP II ONLINE TEST / QUIZ AS PER LATEST SYLLABUS | UNIT V: INDIAN ECONOMY AND DEVELOPMENT ADMINISTRATION IN TAMIL NADU | Fiscal Policy and Monetary Policy.

1. Which of the following is the primary objective of Fiscal Policy in India?

A) Controlling the supply of money in the economy
B) Managing government revenue and expenditure to influence the economy
C) Regulating the foreign exchange rates
D) Promoting private sector investments only

2. What is the main tool used by the Reserve Bank of India (RBI) to implement Monetary Policy?

A) Taxation and government spending
B) Public debt management
C) Interest rates and credit control measures
D) Disinvestment of public sector undertakings

3. The term 'Repo Rate' refers to the rate at which:

A) Commercial banks borrow money from the RBI for a short term
B) Commercial banks lend money to the RBI for a short term
C) The RBI lends money to the government
D) Commercial banks lend to their customers

4. Which of the following is an example of an indirect tax in India?

A) Income Tax
B) Corporate Tax
C) Goods and Services Tax (GST)
D) Wealth Tax

5. What is the objective of an expansionary fiscal policy?

A) To reduce inflation
B) To curb economic growth
C) To stimulate economic growth and employment
D) To decrease government spending

6. The Cash Reserve Ratio (CRR) is the portion of deposits that commercial banks must keep with the:

A) State Bank of India
B) Reserve Bank of India
C) Ministry of Finance
D) Other commercial banks

7. Which of the following is a quantitative tool of monetary policy?

A) Moral Suasion
B) Direct Action
C) Open Market Operations (OMO)
D) Rationing of Credit

8. What does 'Fiscal Deficit' primarily indicate?

A) The total revenue collected by the government
B) The difference between total expenditure and total receipts excluding borrowings
C) The difference between revenue expenditure and revenue receipts
D) The government's total outstanding debt

9. The Statutory Liquidity Ratio (SLR) mandates commercial banks to maintain a certain percentage of their deposits in the form of:

A) Cash only
B) Gold, approved securities, or cash
C) Foreign currency
D) Loans to priority sectors

10. If the RBI increases the Repo Rate, what is its likely impact on the economy?

A) It makes borrowing cheaper for commercial banks, leading to more loans
B) It makes borrowing more expensive for commercial banks, reducing money supply
C) It directly increases government expenditure
D) It leads to an increase in exports

11. What is meant by 'Deficit Financing'?

A) Balancing the budget by increasing taxes
B) Financing government expenditure by borrowing from the public
C) Printing new currency to meet government expenditure
D) Reducing government spending to eliminate deficit

12. Which body is responsible for fixing the benchmark interest rate (Repo Rate) in India?

A) Ministry of Finance
B) NITI Aayog
C) Monetary Policy Committee (MPC)
D) Parliament

13. A 'Revenue Deficit' occurs when:

A) Total expenditure exceeds total receipts
B) Revenue expenditure exceeds revenue receipts
C) Capital expenditure exceeds capital receipts
D) Government's total debt increases

14. What is the 'Reverse Repo Rate'?

A) The rate at which RBI lends to commercial banks
B) The rate at which commercial banks lend to RBI
C) The rate at which commercial banks lend to each other
D) The rate at which the government borrows from the public

15. Open Market Operations (OMO) conducted by the RBI involve:

A) Buying and selling of government securities
B) Regulating the stock market
C) Direct lending to industries
D) Setting foreign trade policies

16. The concept of 'Inflation Targeting' in India is primarily associated with:

A) Fiscal Policy
B) Monetary Policy
C) Industrial Policy
D) Agricultural Policy

17. Which of the following is a component of government expenditure?

A) Income Tax
B) Corporate Tax
C) Subsidies
D) Disinvestment receipts

18. If the RBI reduces the CRR, what is the likely impact on the liquidity in the banking system?

A) Liquidity will decrease
B) Liquidity will increase
C) Liquidity will remain unchanged
D) It will only affect foreign exchange reserves

19. The term 'Public Debt' refers to:

A) Loans taken by private companies
B) Loans taken by the central and state governments
C) Loans taken by individuals from banks
D) Loans taken by the RBI

20. Which of the following is a qualitative tool of monetary policy?

A) Bank Rate
B) Statutory Liquidity Ratio (SLR)
C) Margin Requirements
D) Open Market Operations

21. What is the purpose of the 'Finance Commission' in India?

A) To formulate monetary policy
B) To recommend the distribution of tax revenues between the Union and states
C) To regulate foreign trade
D) To manage public sector enterprises

22. An increase in government spending during a recession is an example of:

A) Contractionary monetary policy
B) Expansionary fiscal policy
C) Supply-side economics
D) Tight monetary policy

23. What is the primary aim of 'Disinvestment' by the government?

A) To increase government expenditure
B) To reduce fiscal deficit and raise resources
C) To nationalize private industries
D) To control inflation

24. If the RBI sells government securities in the open market, it aims to:

A) Increase liquidity in the banking system
B) Decrease liquidity in the banking system
C) Stabilize the stock market
D) Encourage exports

25. Which of the following is NOT a direct tax?

A) Income Tax
B) Corporate Tax
C) Customs Duty
D) Property Tax

26. The term 'Crowding Out' in fiscal policy refers to:

A) Government spending increasing private investment
B) Government borrowing leading to a reduction in private investment
C) Increased exports displacing domestic consumption
D) Foreign investment replacing domestic investment

27. What is the 'Bank Rate'?

A) The rate at which commercial banks lend to the public
B) The rate at which RBI lends money to commercial banks without any collateral
C) The rate at which commercial banks borrow from each other
D) The rate of interest on savings accounts

28. Which of the following is a non-tax revenue for the government?

A) Corporate Tax
B) Goods and Services Tax (GST)
C) Fees and Fines
D) Excise Duty

29. A 'balanced budget' implies that:

A) Government expenditure is less than revenue
B) Government expenditure equals revenue
C) Government expenditure is more than revenue
D) The government has no debt

30. The primary goal of Monetary Policy in India is to maintain price stability while keeping in mind the objective of:

A) Maximizing government revenue
B) Promoting economic growth
C) Reducing fiscal deficit
D) Increasing foreign exchange reserves

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