Insights Static Quiz -362, 2019
Economy
INSIGHTS STATIC QUIZ 2019
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Question 1 of 5
1. Question
Consider the following statements.
- Unlike core inflation, headline inflation takes into account changes in the price of food and energy.
- Reserve Bank of India (RBI) uses CPI-combined as the sole inflation measure for the purpose of monetary policy.
- Consumer Price Index Numbers for Industrial workers measure a change over time in prices of a fixed basket of goods and services consumed by Industrial Workers.
Which of the above statements is/are correct?
Correct
Solution: d)
Incorrect
Solution: d)
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Question 2 of 5
2. Question
Consider the following statements about Peer to peer (P2P) lending.
- It is a form of crowdfunding used to raise unsecured loans which are re-paid with interest.
- Only individuals can borrow money.
- RBI enabled P2P entities as Non-Banking Financial Company (NBFC).
- Minimum networth requirement for these platforms is kept at Rs. 5 Cr.
Which of the above statements is/are incorrect?
Correct
Solution: c)
Peer to peer (P2P) lending is a form of crowdfunding used to raise unsecured loans which are re-paid with interest. Crowdfunding refers to financing of projects with small amounts of money raised from a large number of people, with a portal serving as an intermediary. It utilises an online platform which serves as a link between borrowers and lenders.
RBI vide a Notification on 24th August, 2017, enabled P2P entities as Non-Banking Financial Company (NBFC). However, an existing NBFC will not be able to operate as an NBFC-P2P.
Minimum networth requirement for these platforms is kept at Rs. 2 Cr. The borrower can either be an individual or a legal person (say a body of individuals, a HUF, a firm, a society or any artificial body, whether incorporated or not) requiring a loan.
The interest rate is not to be fixed by the platform. The interest rate for each and every loan is to be fixed separately over the electronic platform by way of a mutual agreement between the borrower and lender. Fund transfer between participants on the P2P lending platform will happen through escrow account mechanisms. All fund transfers shall be through and from bank accounts, and cash transactions are strictly prohibited.
Incorrect
Solution: c)
Peer to peer (P2P) lending is a form of crowdfunding used to raise unsecured loans which are re-paid with interest. Crowdfunding refers to financing of projects with small amounts of money raised from a large number of people, with a portal serving as an intermediary. It utilises an online platform which serves as a link between borrowers and lenders.
RBI vide a Notification on 24th August, 2017, enabled P2P entities as Non-Banking Financial Company (NBFC). However, an existing NBFC will not be able to operate as an NBFC-P2P.
Minimum networth requirement for these platforms is kept at Rs. 2 Cr. The borrower can either be an individual or a legal person (say a body of individuals, a HUF, a firm, a society or any artificial body, whether incorporated or not) requiring a loan.
The interest rate is not to be fixed by the platform. The interest rate for each and every loan is to be fixed separately over the electronic platform by way of a mutual agreement between the borrower and lender. Fund transfer between participants on the P2P lending platform will happen through escrow account mechanisms. All fund transfers shall be through and from bank accounts, and cash transactions are strictly prohibited.
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Question 3 of 5
3. Question
Under Statutory Liquidity Ratio (SLR) all Scheduled Commercial Banks in India must maintain an amount in which of the following forms?
- Cash
- Gold
- Treasury-Bills of the Government of India
- Corporate Bonds
- State Development Loans (SDLs)
Which of the above statements is/are correct?
Correct
Solution: b)
The Statutory Liquidity Ratio (SLR) is a prudential measure under which (as per the Banking Regulations Act 1949) all Scheduled Commercial Banks in India must maintain an amount in one of the following forms as a percentage of their total Demand and Time Liabilities (DTL) / Net DTL (NDTL);
[i] Cash.
[ii] Gold; or
[iii] Investments in un-encumbered Instruments that include;(a) Treasury-Bills of the Government of India.
(b) Dated securities including those issued by the Government of India from time to time under the market borrowings programme and the Market Stabilization Scheme (MSS).
(c) State Development Loans (SDLs) issued by State Governments under their market borrowings programme.
(d) Other instruments as notified by the RBI.If a bank fails to meet its SLR obligation, a penalty in the form of a penal interest payable is imposed.
SLR is also a tool for controlling liquidity in the domestic market via manipulating bank credit. A rise in SLR locks up increasing portion of a bank’s assets in the above three categories and may squeeze out bank credit.
In the wake of the global financial crisis, the SLR was reduced from 25 percent to 24 percent in November, 2008. As of April 2016 the SLR stands at 21.25 percent.
Incorrect
Solution: b)
The Statutory Liquidity Ratio (SLR) is a prudential measure under which (as per the Banking Regulations Act 1949) all Scheduled Commercial Banks in India must maintain an amount in one of the following forms as a percentage of their total Demand and Time Liabilities (DTL) / Net DTL (NDTL);
[i] Cash.
[ii] Gold; or
[iii] Investments in un-encumbered Instruments that include;(a) Treasury-Bills of the Government of India.
(b) Dated securities including those issued by the Government of India from time to time under the market borrowings programme and the Market Stabilization Scheme (MSS).
(c) State Development Loans (SDLs) issued by State Governments under their market borrowings programme.
(d) Other instruments as notified by the RBI.If a bank fails to meet its SLR obligation, a penalty in the form of a penal interest payable is imposed.
SLR is also a tool for controlling liquidity in the domestic market via manipulating bank credit. A rise in SLR locks up increasing portion of a bank’s assets in the above three categories and may squeeze out bank credit.
In the wake of the global financial crisis, the SLR was reduced from 25 percent to 24 percent in November, 2008. As of April 2016 the SLR stands at 21.25 percent.
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Question 4 of 5
4. Question
Which of the following measures is/are examples of expansionary fiscal policy?
- Decrease in tax rate
- Increase in pensions
- Increase in unemployment compensation
- Increase in tax rate.
Select the correct answer codes:
Correct
Solution: c)
An expansionary is a macroeconomic policy that seeks to encourage economic growth or combat inflationary price increases by expanding the money supply, lowering interest rates, increasing government spending or cutting taxes.
Increasing the tax rate is not an example of expansionary fiscal policy.
Incorrect
Solution: c)
An expansionary is a macroeconomic policy that seeks to encourage economic growth or combat inflationary price increases by expanding the money supply, lowering interest rates, increasing government spending or cutting taxes.
Increasing the tax rate is not an example of expansionary fiscal policy.
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Question 5 of 5
5. Question
The general rise in Gini Coefficient may indicate
Correct
Solution: a)
Gini Coefficient is a popular statistical measure to gauge the rich-poor income or wealth divide. It measures inequality of a distribution — be it of income or wealth — within nations or States. Its value varies anywhere from zero to 1; zero indicating perfect equality and one indicating the perfect inequality.
Gini Coefficients can be used to compare income distribution of a country over time as well. An increasing trend indicates that income inequality is rising independent of absolute incomes.
A general rise in Gini Coefficient indicates that government policies are not inclusive and may be benefiting the rich more than the poor.
Incorrect
Solution: a)
Gini Coefficient is a popular statistical measure to gauge the rich-poor income or wealth divide. It measures inequality of a distribution — be it of income or wealth — within nations or States. Its value varies anywhere from zero to 1; zero indicating perfect equality and one indicating the perfect inequality.
Gini Coefficients can be used to compare income distribution of a country over time as well. An increasing trend indicates that income inequality is rising independent of absolute incomes.
A general rise in Gini Coefficient indicates that government policies are not inclusive and may be benefiting the rich more than the poor.
