//
VisionIAS - Online Self Test
Vision-IAS Logo
*
Questions for practice
1)

The following statements are made with respect to monetary policy.

  1. It is released monthly by the RBI in consultation with Central Government
  2. It deals with keeping more money with the bank and does not target inflation.

Which of the statements given above is/are correct?

(a)1 only

(b)2 only

(c)Both 1 and 2

(d)Neither 1 nor 2

2)

Consider the following statements:

  1. Monetary Policy deals with the taxation and expenditure decisions of the government.
  2. Fiscal Policy deals with the supply of money in the economy and the rate of interest.

Which of the statements given above is/are not correct?

(a)1 only

(b)2 only

(c)Both 1 and 2

(d)Neither 1 nor 2

3)

Consider the following statements:

  1. GDP at Base Year Prices is known as Nominal GDP.
  2. GDP at Current Year Prices is known as Real GDP.

Which of the statements given above is/are not correct?

(a)1 only

(b)2 only

(c)Both 1 and 2

(d)Neither 1 nor 2

4)

With reference to Gross Domestic Product (GDP), consider the following statements:

  1. Nominal GDP is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy and expressed in base-year prices.
  2. Real GDP is evaluated at current market prices.
  3. The GDP price deflator is an economic measure of inflation and is the ratio of nominal GDP to real GDP.

Which of the statement(s) given above is/are correct?

(a)3 only

(b)1 and 2

(c)1, 2 and 3

(d)None of the above

5)

With reference to Gross Domestic Product (GDP), consider the following statements:
1. Nominal GDP is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy and expressed in base-year prices.
2. The GDP price deflator is an economic measure of inflation and is the ratio of nominal GDP by real GDP.
Which of the statement(s) given above is/are correct?

(a)1 only

(b)2 only

(c)Both 1 and 2

(d)Neither 1 nor 2

6)

Consider the following statements about Quantitative easing:

  1. The central bank will pump money into the economy by purchasing government bonds from Banks and other financial institutions.
  2. It may increase inflation.

Which of the statements given above is/are correct?

(a)1 only

(b)2 only

(c)Both 1 and 2

(d)Neither 1 nor 2

7)

With regard to Quantitative Easing (QE), consider the following statements:
1. QE is the process whereby a central bank purchases an existing bond in order to pump money directly into the financial system.
2. QE is regarded as a last resort to stimulate spending in an economy where the interest rate fails to work.
3. The most immediate effect of the asset purchases under QE is that the prices of the existing assets rise, while interest on them adjusts downwards.
Which of the statements given above is/are correct?

(a)1 and 2 only

(b)1 and 3 only

(c)2 and 3 only 

(d)1, 2 and 3 

8)

With respect to Expansionary Monetary Policy, consider the following statements:

1. It decreases the supply of money in the economy

2. It is used to tackle the menace of inflation in the economy by raising interest rates.

Which of the statements given above is/are correct?

(a)1 Only

(b)2 Only

(c)Both 1 and 2

(d)Neither 1 nor 2

9)

What do you understand by quantitative easing? Illustrate this with example. (150 words/10 marks)

10)

Explain nominal GDP and real GDP. Also mention the important properties required to select the base year for the measurement of real GDP. (150 words/10 marks)



Answers
1) d
2) c
3) c
4) a
5) b
6) c
7) d
8) d