Question 1

Open market operations refer to the sale and purchase by the RBI of :&#10;A)Gold&#10;B)Foreign exchange&#10;C)Government securities&#10;D)All the above

Accepted Answer

Open market operations involve the buying and selling of government securities by the central bank (RBI) to control the money supply in the economy.

Question 2

Which of the following is not an objective of monetary policy?&#10;A)Price stability&#10;B)Balance of Payments equilibrium&#10;C)Economic growth&#10;D)Reduction in export

Accepted Answer

The primary objectives of monetary policy include price stability, balance of payments equilibrium, and economic growth. Reduction in exports is not typically an objective of monetary policy; instead, policies may aim to enhance or stabilize exports.

Question 3

Which of the following is not an element of high Powered money?&#10;A)Currency&#10;B)Repos&#10;C)Required Reserves&#10;D)Excess reserves

Accepted Answer

High Powered Money, also known as the monetary base, primarily consists of currency in circulation and reserves held by banks at the central bank. This includes both required reserves and excess reserves but does not typically include repos (repurchase agreements), which are short-term borrowing mechanisms for banks.

Question 4

The ratio of money supply to high powered money is:&#10;A)SLR&#10;B)CRR&#10;C)Money Multiplier&#10;D)Bank rate

Accepted Answer

The ratio of money supply to high powered money is known as the Money Multiplier. It indicates how much the money supply will increase for a given increase in high powered money.

Question 5

Fiscal Policy is a policy of the&#10;A)Central bank&#10;B)Government&#10;C)Finance commission&#10;D)Finance minister

Accepted Answer

Fiscal policy refers to the use of government spending and tax policies to influence economic conditions, including demand for goods and services, employment, and inflation. It is a policy tool of the government, not of the central bank, finance commission, or finance minister alone, although the finance minister plays a key role in proposing and implementing these policies.

Question 6

Fiscal Policy includes:&#10;A)Expenditure policy&#10;B)Tax policy&#10;C)both a and b&#10;D)neither a nor b.

Accepted Answer

Fiscal policy involves government spending and taxation decisions, which include both expenditure policy and tax policy to influence a country's economy.

Question 7

The objective of Monetary Policy is :&#10;A)to print notes of desired denominations&#10;B)to control cost and supply of money&#10;C)to provide loan to government&#10;D)none of these

Accepted Answer

The answer of The objective of Monetary Policy is :&#10;A)to...

Question 8

Fiscal Policy refers to policy towards:&#10;A)Public revenue&#10;B)public expenditure&#10;C)public debt&#10;D)all of the above

Accepted Answer

Fiscal policy encompasses government decisions on public revenue, public expenditure, and public debt to influence the economy.

Question 9

In a closed economy which of the following is not a macroeconomic objective?&#10;A)National income growth&#10;B)price level stability&#10;C)BOP stability&#10;D)employment

Accepted Answer

In a closed economy, there is no trade with other countries, so balance of payments (BOP) stability is not a relevant macroeconomic objective.

Question 10

A business cycle is composed of ----- phases:&#10;A)2 Phase&#10;B)3 Phase&#10;C)4 Phase&#10;D)No Phase

Accepted Answer

A business cycle typically consists of four phases: expansion, peak, contraction (or recession), and trough. These phases describe the fluctuations in economic activity that an economy experiences over a period.

Question 11

The percentage of deposits of commercial banks statutorily kept with the RBI is :&#10;A)Cash Reserve Ratio&#10;B)Statutory Liquidity Ratio&#10;C)Repo Rate&#10;D)None of these

Accepted Answer

The answer of The percentage of deposits of commercial banks...

Question 12

Peak is the --- turning point of the business cycle.&#10;A)Upper turning point&#10;B)Lower turning point&#10;C)Middle turning point&#10;D)None of these

Accepted Answer

The answer of Peak is the --- turning point of...

Question 13

Wage control is an instrument of ---- policy&#10;A)Fiscal policy&#10;B)Monetary policy&#10;C)Incomes policy&#10;D)None of these

Accepted Answer

The answer of Wage control is an instrument of ----...

Question 14

ISLM model was basically&#8230;&#8230;&#8230;&#8230;sector model:&#10;A)Two&#10;B)One&#10;C)Three&#10;D)Four

Accepted Answer

The answer of ISLM model was basically&#8230;&#8230;&#8230;&#8230;sector model:&#10;A)Two&#10;B)One&#10;C)Three&#10;D)Four...

Question 15

Original IS-LM model is a &#8230;&#8230;..model.&#10;A)Open&#10;B)Closed&#10;C)Both&#10;D)None

Accepted Answer

The answer of Original IS-LM model is a &#8230;&#8230;..model.&#10;A)Open&#10;B)Closed&#10;C)Both&#10;D)None...

Question 16

ISLM is used to determine:&#10;A)income&#10;B)interest&#10;C)Both&#10;D)All

Accepted Answer

The answer of ISLM is used to determine:&#10;A)income&#10;B)interest&#10;C)Both&#10;D)All...

Question 17

The steepness of the IS curve depends on:&#10;A)change in interest&#10;B)Size of the multiplier&#10;C)both&#10;D)None

Accepted Answer

The answer of The steepness of the IS curve depends...

Question 18

Who develop the ISLM open economy model?&#10;A)Mundell&#10;B)Fleming&#10;C)Both&#10;D)None

Accepted Answer

The answer of Who develop the ISLM open economy model?&#10;A)Mundell&#10;B)Fleming&#10;C)Both&#10;D)None...

Deck 11: Macroeconomic Policies and Business Cycles