Q1
The Reserve Bank of India was established in:
- (1)1947
- (2)1949
- (3)1969
- (4)1935✓ Correct answer
Answer: (4) 1935
Explanation
RBI was established on 1 April 1935 under the RBI Act, 1934.
Budget, banking & inflation MCQ with Answers
12 questionswith explanationsfor RAS, Patwari, VDO and other Rajasthan exams
Questions
Q2
Inflation is best described as:
- (1)A sustained rise in the general price level✓ Correct answer
- (2)A rise in the price of a single commodity
- (3)A fall in the general price level
- (4)A rise in the exchange rate of the rupee
Answer: (1) A sustained rise in the general price level
Explanation
Inflation is a persistent rise in the general level of prices, reducing the purchasing power of money.
Q3
The repo rate is the rate at which:
- (1)RBI borrows funds from commercial banks
- (2)Commercial banks lend to their best customers
- (3)RBI lends short-term funds to commercial banks✓ Correct answer
- (4)The government borrows from the public
Answer: (3) RBI lends short-term funds to commercial banks
Explanation
Under repo, RBI lends to banks against government securities; the rate at which RBI borrows from banks is the reverse repo rate.
Q4
How many commercial banks were nationalised in India in July 1969?
- (1)6
- (2)10
- (3)20
- (4)14✓ Correct answer
Answer: (4) 14
Explanation
On 19 July 1969, 14 major commercial banks were nationalised.
Q5
The Reserve Bank of India was nationalised on:
- (1)1 January 1949✓ Correct answer
- (2)1 April 1935
- (3)15 August 1947
- (4)19 July 1969
Answer: (1) 1 January 1949
Explanation
RBI began as a shareholders' bank and was nationalised on 1 January 1949.
Q6
Fiscal deficit of the government is:
- (1)Revenue expenditure minus revenue receipts
- (2)Fiscal deficit minus interest payments
- (3)Total expenditure minus total receipts excluding borrowings✓ Correct answer
- (4)Capital expenditure minus capital receipts
Answer: (3) Total expenditure minus total receipts excluding borrowings
Explanation
Fiscal deficit = total expenditure − (revenue receipts + non-debt capital receipts); it shows the government's total borrowing requirement.
Q7
Primary deficit is equal to:
- (1)Revenue deficit minus interest payments
- (2)Fiscal deficit minus interest payments✓ Correct answer
- (3)Fiscal deficit minus revenue deficit
- (4)Fiscal deficit plus interest payments
Answer: (2) Fiscal deficit minus interest payments
Explanation
Primary deficit = Fiscal deficit − Interest payments; it shows borrowing needed for purposes other than paying interest.
Q8
The Union Budget is referred to in the Constitution of India as the 'Annual Financial Statement' under which Article?
- (1)Article 112✓ Correct answer
- (2)Article 110
- (3)Article 265
- (4)Article 280
Answer: (1) Article 112
Explanation
Article 112 requires the President to cause the Annual Financial Statement (Budget) to be laid before Parliament.
Q9
Cash Reserve Ratio (CRR) is the portion of a bank's net demand and time liabilities that it must:
- (1)Keep in gold and approved securities with itself
- (2)Keep as cash balance with the RBI✓ Correct answer
- (3)Lend to the priority sector
- (4)Invest in the share market
Answer: (2) Keep as cash balance with the RBI
Explanation
CRR is kept as cash with the RBI; liquid assets like gold and approved securities held by the bank itself fall under SLR.
Q10
The second phase of bank nationalisation in India, in which 6 banks were nationalised, took place in:
- (1)1969
- (2)1975
- (3)1980✓ Correct answer
- (4)1991
Answer: (3) 1980
Explanation
In April 1980, six more private banks were nationalised.
Q11
Which Article of the Constitution of India defines a 'Money Bill'?
- (1)Article 112
- (2)Article 123
- (3)Article 280
- (4)Article 110✓ Correct answer
Answer: (4) Article 110
Explanation
Article 110 defines a Money Bill; Article 112 deals with the Annual Financial Statement.
Q12
NABARD (National Bank for Agriculture and Rural Development) was established in:
- (1)1969
- (2)1982✓ Correct answer
- (3)1975
- (4)1990
Answer: (2) 1982
Explanation
NABARD was set up on 12 July 1982 on the recommendation of the B. Sivaraman Committee.