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KAS Karnataka Planning And Economy — practice questions

Explore 44 free Planning And Economy questions in KAS Karnataka Economy. Open each question or exercise to read its content, reference answers and available explanation.

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Planning And Economy questions and exercises with answers

Showing questions 1–30 of 44.

With reference to the Indian economy, “Collateral Borrowing and Lending Obligations” are the instruments of :Read the answer and worked solution →In India, which one of the following is responsible for maintaining price stability by controlling inflation?Read the answer and worked solution →The money multiplier in an economy increases with which one of the following?Read the answer and worked solution →One common agreement between Gandhism and Marxism isRead the answer and worked solution →"Gold Tranche" (Reserve Tranche) refers toRead the answer and worked solution →The term 'West Texas Intermediate', sometimes found in news, refers to a grade ofRead the answer and worked solution →The Global Competitiveness Report is published by theRead the answer and worked solution →Among the following, which one is the largest exporter of rice in the world in the last five years?Read the answer and worked solution →The Service Area Approach was implemented under the purview ofRead the answer and worked solution →Which of the following is not included in the assets of a commercial bank in India?Read the answer and worked solution →Which one of the following is not a sub-index of the World Bank's 'Ease of Doing Business Index?Read the answer and worked solution →Among the agricultural commodities imported by India, which one of the following accounts for the highest imports in terms of value in the last five years?Read the answer and worked solution →Which one of the following links all the ATMs in India?Read the answer and worked solution →India enacted The Geographical Indications of Goods (Registration and Protection) Act, 1999 in order to comply with the obligations toRead the answer and worked solution →Despite being a high saving economy, capital formation may not result in significant increase in output due toRead the answer and worked solution →Which of the following gives 'Global Gender Gap Index' ranking to the countries of the world?Read the answer and worked solution →In the context of which of the following do you sometimes find the terms 'amber box, blue box and green box' in the news?Read the answer and worked solution →Recently, which one of the following currencies has been proposed to be added to the basket of IMF's SDR?Read the answer and worked solution →Recently, India's first 'National Investment and Manufacturing Zone' was proposed to be set up inRead the answer and worked solution →'Global Financial Stability Report' is prepared by theRead the answer and worked solution →The term 'Regional Comprehensive Economic Partnership' often appears in the news in the context of the affairs of a group of countries known asRead the answer and worked solution →The Fair and Remunerative Price (FRP) of sugarcane is approved by theRead the answer and worked solution →Which one of the following issues the 'Global Economic Prospects' report periodically?Read the answer and worked solution →Which of the following brings out the 'Consumer Price Index Number for Industrial Workers'?Read the answer and worked solution →The Government of India has established NITI Aayog to replace theRead the answer and worked solution →The problem of international liquidity is related to the non-availability ofRead the answer and worked solution →What does venture capital mean?Read the answer and worked solution →The main objective of the 12th Five-Year Plan isRead the answer and worked solution →In India, deficit financing is used for raising resources forRead the answer and worked solution →Disguised unemployment generally meansRead the answer and worked solution →

Worked practice questions

With reference to the Indian economy, “Collateral Borrowing and Lending Obligations” are the instruments of :

  1. Bond market
  2. Forex market
  3. Money market
  4. Stock market
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Correct answer: C. Money market

Answer: C. Collateralized Borrowing and Lending Obligation (CBLO) is a MONEY MARKET instrument. CBLO is a money-market product introduced by Clearing Corporation of India Ltd (CCIL) in 2003 for short-term funds. It allows borrowing and lending against eligible collateral (mainly G-Secs) with maturities ranging from one day to one year. Discontinued in 2018 and replaced by the Tri-party Repo (TREPS). CBLO/TREPS are short-tenor instruments serving banks, mutual funds, insurance companies and other institutions for liquidity management. The money market deals with such short-term debt instruments (typically less than one year), as opposed to bond market (long-term debt), forex (currency), or stock market (equities). Source: RBI Money Market documentation / CCIL website.

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In India, which one of the following is responsible for maintaining price stability by controlling inflation?

  1. Department of Consumer Affairs
  2. Expenditure Management Commission
  3. Financial Stability and Development Council
  4. Reserve Bank of India
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Correct answer: D. Reserve Bank of India

Answer: D. The RESERVE BANK OF INDIA is responsible for maintaining price stability by controlling inflation. The PRIMARY OBJECTIVE of RBI's monetary policy, as enshrined in the RBI Act 1934 (Section 45ZA, amended in 2016), is to MAINTAIN PRICE STABILITY while keeping in mind the objective of growth. The RBI Act sets a flexible inflation target of 4% (with a tolerance band of plus or minus 2%, i.e., 2-6%) measured by CPI inflation, jointly agreed with the Central Government every five years. The MONETARY POLICY COMMITTEE (MPC), constituted under the RBI Act, sets the policy repo rate to achieve this inflation target. MPC has 6 members (3 from RBI including the Governor, 3 external members nominated by the Government). Distractors: (A) Department of Consumer Affairs handles consumer protection laws. (B) Expenditure Management Commission (Bimal Jalan, 2014) made recommendations on expenditure but has no inflation-fighting role. (C) Financial Stability and Development Council (FSDC) coordinates regulators on financial stability, not inflation. Source: RBI Act 1934 (as amended 2016) / Monetary Policy Framework Agreement 2015.

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The money multiplier in an economy increases with which one of the following?

  1. Increase in the Cash Reserve Ratio in the banks
  2. Increase in the Statutory Liquidity Ratio in the banks
  3. Increase in the banking habit of the people
  4. Increase in the population of the country
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Correct answer: C. Increase in the banking habit of the people

Answer: C. The money multiplier increases with an INCREASE IN THE BANKING HABIT OF THE PEOPLE. THE MONEY MULTIPLIER (m) is the ratio of broad money supply (M3) to the monetary base (M0): m = M3/M0. It indicates how much commercial bank credit expansion can be sustained per unit of high-powered money. Standard money multiplier formula: m = (1 + c) / (c + r), where c = currency-to-deposit ratio and r = reserve-to-deposit ratio (CRR + SLR + excess reserves). For the multiplier to INCREASE, EITHER c (currency ratio) OR r (reserve ratio) must DECREASE. (C) CORRECT. AN INCREASE IN BANKING HABIT means more of the population's money is held in BANK DEPOSITS rather than as cash in hand. This REDUCES THE CURRENCY-DEPOSIT RATIO (c), which INCREASES the money multiplier. More money in the banking system means banks can lend more and create more deposit money through fractional reserve banking. This is the textbook answer. Why other options are WRONG: (A) Higher CRR — REQUIRES BANKS to hold more reserves with the RBI, REDUCING lendable funds, REDUCING the multiplier. Opposite direction. (B) Higher SLR — REQUIRES BANKS to hold more in liquid assets (government securities), REDUCING credit creation capacity, REDUCING the multiplier. Opposite direction. (D) Larger population — has no direct mechanical effect on the multiplier. Population growth might affect demand for money but does not by itself raise the multiplier. Source: syllabus Macroeconomics Chapter 'Money and Banking'.

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