Money and Banking MCQ Quiz - Objective Question with Answer for Money and Banking - Download Free PDF

The correct answer is the reverse repo rate.

• The rate at which the Reserve Bank of India takes loans from other banks is called the reverse repo rate.

Key Points

• Reverse Repo Rate:
  • It is the rate, at which banks park short-term excess liquidity with the RBI.
  • The current reverse repo rate is 3.35%

Additional Information

• Bank Rate:
  • It is also called the rediscount rate.
  • It is the rate, at which the RBI gives finance to commercial banks.
• Cash Reserve Ratio (CRR):
  • The RBI (Amendment) Bill, 2006, empowers RBI to prescribe CRR–Cash that banks deposit with the RBI without any floor rate or ceiling rate.
  • The current CRR rate is 4.5%.
• Statutory Liquidity Ratio (SLR):
  • It is the ratio of liquid assets, which all commercial banks have to keep in the form of cash, gold, and unencumbered approved securities equal to not more than 40% of their total demand and time deposit liabilities (ranges is 25‑40%).
  • The current SLR is 18.00%.
• ​Repo Rate:
  • It is the rate, at which RBI lends short-term money to the bank against securities.
• Open Market Operations (OMOs):
  • Under OMOs, the RBI sells G-securities in the market.

The correct answer is Fiscal deficit.

Key Points

• Fiscal Deficit is the difference between the total income of the government (total taxes and non-debt capital receipts) and its total expenditure.
• A recurring high fiscal deficit means that the government has been spending beyond its means.
• The government meets the fiscal deficit by borrowing money. In a way, the total borrowing requirements of the government in a financial year are equal to the fiscal deficit in that year.
• A fiscal deficit situation occurs when the government’s expenditure exceeds its income excluding borrowings.
• This difference is calculated both in absolute terms and also as a percentage of the Gross Domestic Product (GDP) of the country.
• Fiscal Deficit formula:
  • ​Fiscal Deficit = Total expenditure of the government (capital and revenue expenditure) – Total income of the government (Revenue receipts + recovery of loans + other receipts)

Additional Information

• Constitutes the government’s total income or receipts:​
• Revenue receipts of the government:
  • ​Corporation Tax.
  • Income Tax.
  • Custom Duties.
  • Union Excise Duties.
  • GST and taxes of Union territories.
• Non-tax revenues:
  • ​Interest Receipts.
  • Dividends and Profits.
  • External Grants.
  • Other non-tax revenues.
  • Receipts of union territories.
• Expenditures of the government:
  • ​Revenue Expenditure.
  • Capital Expenditure.
  • Interest Payments.
  • Grants-in-aid for creation of capital assets.

The correct answer is Excise duty.

• Indirect tax is the tax levied on the consumption of goods and services. It is not directly levied on the income of a person.
• It is levied upon goods and services before they reach the customer who ultimately pays the indirect tax as a part of the market price of the good or service purchased

Important Points

1. Excise duty is a form of tax imposed on goods for their production, licensing and sale.
2. An indirect tax paid to the Government of India by producers of goods, excise duty is the opposite of Customs duty in that it applies to goods manufactured domestically in the country, while Customs is levied on those coming from outside of the country.
3. After GST was introduced, excise duty was replaced by central GST because excise was levied by the central government. The revenue generated from CGST goes to the central government.
4. Today, excise duty applies only to petroleum and liquor.

Additional Information

•  Direct Tax:
  • ​A direct tax is a tax that a person or organization pays directly to the entity that imposed it that is government.
  • The following are types of direct taxes:
  • Corporation tax
    • It is a direct tax imposed on the net income or profit that enterprises make from their businesses.
  • Capital gain tax:
    • Capital can be defined as any profit that is received through the sale of a capital asset. The profit that is received falls under the income category. Therefore, a tax needs to be paid on the income that is received. The tax that is paid is called capital gains tax and it can either be long-term or short term 
  • Income tax
    • It is a direct tax that a government levies on the income of its citizens. The Income Tax Act, of 1961, mandates that the central government collect this tax.

Hence, The correct answer is Excise duty.

The correct answer is Reserve Bank of India.

Important Points

• In India, the monetary policy is controlled by the Reserve Bank of India.
• The Reserve Bank of India (RBI) is India's central bank.
  • RBI was established on 1^st April 1935.
  • The headquarters of the RBI is located in Mumbai, Maharashtra.
  • RBI was set up on the recommendation of the Hilton Young Commission.
  • Reserve Bank of India act was passed in 1934.
  • RBI is also called as "Banker's Bank".
  • RBI was nationalised on 1^st January 1949.
  • Reserve Bank of India issues all the currency notes above one rupee.
  • Sir Osborne Smith served as the first governor of RBI.
  • C. D. Deshmukh served as the first Indian governor of RBI.
  • Shaktikanta Das is the 25^th governor(Incumbent) of the Reserve Bank of India.​

Key Points

• Important functions of the Reserve Bank of India are:
  • Monetary policy.
  • Regulation and supervision of the banking and non-banking financial institutions, including credit information companies.
  • Regulation of money, forex and government securities markets as also certain financial derivatives.
  • Debt and cash management for Central and State Governments.
  • Management of foreign exchange reserves.
  • Foreign exchange management: current and capital account management.
  • Banker to the Central and State Governments.
  • Oversight of the payment and settlement systems.
  • Currency management.

The correct answer is Repo Rate.

Key Points

• Repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) lends money to commercial banks in the event of any shortfall of funds.
• Repo rate is used by monetary authorities to control inflation.
• Current Repo Rate: 6.5% (June 2024 MPC))
• It is a rate on short-term, collateral-backed borrowing.

Additional Information

• Reverse Repo rate is the rate at which the Reserve Bank of India borrows funds from the commercial banks in the country.
• The bank rate is the rate of interest that is charged by a central bank while lending loans to a commercial bank.
• In the event of a fund deficiency, a bank can borrow money from the central bank of a country. 
• Cash reserve ratio or CRR is a part of the RBI's monetary policy, which helps eliminate liquidity risk and regulate the money supply in the economy.

The correct answer is Custom duties.

Important Points

• The tax imposed on the import and export of commodities is called Custom duties.
• This is a form of foreign trade control and a policy that taxes foreign goods to encourage or protect domestic industry.
• Tariffs may be set (a constant sum per unit of imported goods or a percentage of the price) or variable (the amount varies by price). Import taxation means that consumers are less likely to purchase them because they are more costly.
• An excise tax is an indirect tax on the sale of a particular good or service charged by the Government.
• A VAT (Value-added tax) is a consumption tax that is imposed on a product whenever a value is added at each stage of the supply chain, from production to point of sale.
• Goods and Services Tax(GST) is an Indirect tax on the purchase of goods and services used in India.

The correct answer is Ellora Caves.

Key Points

• In April 2019, RBI issued new Rs. 20 currency notes in the Mahatma Gandhi (New) series. 
• The new Rs 20 notes have the signature of the Reserve Bank's Governor.
• The base colour of the new note is Greenish Yellow.
• The new (Rs 20) denomination has the motif of Ellora Caves on the reverse side of the note.
• The dimension of the banknote will be 63 mm x 129 mm.

Additional Information

The correct answer is Sanchi Stupa.

Key Points 

• Rs 200 note
  • The motif of the new denomination Rs. 200 is Sanchi Stupa on the reverse and its colour is Bright Yellow.
  • The dimension of the banknote is 66 mm*146 mm.
  • It is released on 25 August 2017.
  • The obverse design is of Mahatma Gandhi.
• The Reserve Bank of India has the sole authority to issue banknotes in India except for the one-rupee note which is released by the Ministry of Finance.
• The Government of India is the issuing authority of coins and supplies coins to the Reserve Bank on demand.
• Along with new 200 Rs. note Rs. 2000, 500, 200, 100, 50, 20,10 banknotes were also released.

Additional Information 

The correct answer is fluorescent blue. Key Points

• The Rs. 50 banknote of the Mahatma Gandhi (New) series has a base color of fluorescent blue.
• It is part of the new series of Indian currency notes introduced by the Reserve Bank of India (RBI).
• The color fluorescent blue is chosen to enhance the security features of the banknote and make it more difficult to counterfeit.
• The reverse of the new 50 rupee banknote in the Mahatma Gandhi (New) series has a motif of the Hampi with Chariot.
• Hampi is an ancient city located in the state of Karnataka, India. It is a UNESCO World Heritage Site and was once the capital of the Vijayanagara Empire.

Important PointsOther notes of Indian Currency-

The correct answer is FII.

Key Points

• Foreign Institutional Investor (FII) is known as Hot money.
• FII is an investor or investment body that is present outside the country.
• Hot Money refers to funds that are controlled by investors who actively seek short-term returns.

Additional Information 

• Foreign direct investment (FDI): 
  • FDI is an investment in the form of controlling ownership in a business in one country by an entity based in another country. 
• ​American Depositary Receipts (ADR): 
  • ADRs are a type of stock that allows US people to invest in non-US corporations and receive dividends in US dollars.
• Global Depositary Receipts (GDR): 
  • GDRs are like ADRs except for the fact that it is listed on an exchange outside the United States and help the issuer raise funds simultaneously in different markets like Luxembourg or London.

• The question asks about Language Panel and NOT the whole note.

Key Points

• Contemporary Currency notes have 15 languages on the panel which appears on the reverse of the note.
• Source - https://www.rbi.org.in/scripts/ic_languagepanel.aspx
• Languages included on the panel are Assamese, Bengali, Gujarati, Kannada, Kashmiri, Konkani, Malayalam, Marathi, Nepali, Odia, Punjabi, Sanskrit, Tamil, Telugu, and Urdu.
• The Reserve Bank has the sole authority to issue banknotes in India.
• Reserve Bank, like other central banks the world over, changes the design of banknotes from time to time.
• The Reserve Bank has introduced banknotes in the Mahatma Gandhi Series since 1996 and has so far issued notes in the denominations of Rs.5, Rs.10, Rs.20, Rs.50, Rs.100, Rs.500 and Rs.2000 in this series.
• Source - Here

The correct answer is disguised unemployment.

Important Points

• The type of unemployment in the agricultural sector of India where more people are employed than required is known as disguised unemployment.
  • It is a common form of unemployment in rural areas.
  • Disguised unemployment will occur when more people are engaged in a job than required.
  • A study conducted in the late 1950s reported that one-third of agriculture workers in India as disguisedly unemployed
• Unemployment is the situation where a person is searching for a job but not able to get one.

Additional Information

• Seasonal unemployment is the unemployment that occurs during a certain season of the year.
  • Unemployment of the farmers during non-crop season is an example of seasonal unemployment.
• Structural unemployment is unemployment that arises due to the change in the structure of the economy.

The correct answer is Mangalayan.

Key Points

• India witnessed the second major monetary reform in November 2016 when it withdrew the legal tender status of ₹ 500 and ₹ 1,000 denominations of banknotes of the Mahatma Gandhi Series.
• It was issued by the Reserve Bank of India on November 8, 2016.
• The new banknotes were introduced in the Mahatma Gandhi (New) Series, highlighting the cultural heritage and scientific achievements of the country.
• Distinct colours were used for the different denominations and size was reduced.
• Two new denominations viz. ₹ 2000 on November 08, 2016, and ₹ 200 on August 23, 2017, were introduced in the Mahatma Gandhi (New) Series.
• Rupees Two Thousand Size: 66 x 166 mm
• Motifs: Mangalayam

Additional Information

The correct answer is Union Budget 2021-22.

Key Points

• On 1 February 2021, Finance Minister Nirmala Sitharaman presented the first paperless budget. This was done due to the ongoing COVID-19 pandemic in India.
• The Union Budget 2021 was presented in a digital format for the first time to promote the Government of India's (GoI) Digital India flagship programme.

Additional Information

• The Union Budget of India also referred to as the Annual Financial Statement in Article 112 of the Constitution of India, is the annual budget of the Republic of India.
• The Government presents it on the first day of February so that it could be materialized before the beginning of the new financial year in April.
• Until 2016 it was presented on the last working day of February by the Finance Minister in Parliament.
• The budget division of the department of economic affairs (DEA) in the finance ministry is the nodal body responsible for producing the budget.
• It is presented by means of the Finance Bill and the Appropriation bill has to be passed by Lok Sabha before it can come into effect on 1 April, the start of India's financial year.
• Since 1947, there have been a total of 73 annual budgets, 14 interim budgets, and four special budgets, or mini-budgets.

The correct answer is 30.

Key Points

• SENSEX(SENSitve indEX) is a free-float market-weighted stock market index of 30 well-established and financially sound companies listed on the Bombay Stock Exchange.
• It was introduced by the Bombay stock exchange on 1 January 1986.
• The index is widely reported in both domestic and international markets through print as well as electronic media.
• The index was initially calculated based on the "Full Market Capitalization" methodology but was shifted to the free-float methodology with effect from September 1, 2003.
• The SENSEX is the benchmark index with wide acceptance among individual investors, institutional investors, foreign investors and fund managers.
• The objectives of S&P BSE SENSEX-
  • To measure Market Movements
  • Benchmark for Funds Performance
  • For Index Based Derivatives Products
• Blue Chip companies refer to equity shares of companies with larger market capitalisation. These companies have entrenched market operations running for many years.