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Kerala PSC Indian Economy Book Study Materials Page 639
Book's First Pageele ted s 23.17 April 1, 2013 to March 31, 2018). The the RRBs have been amalgamated into foreign banks with less than 20 branches 64 only (originally there were 196 such have no sub-targets within the overall banks set up to 1996 when GoI decided priority sector lending target of 32 per not to further them). cent. It is known that the RBI in August 10. (b) This happens when there is a fear that 2011 did set up a committee to re- the bank has insufficient funds with it— examine the existing classification and depositors lose confidence in the bank suggest revised guidelines with regard to and start withdrawing their deposits in PSL and related issues (chaired by S. M. the concerned bank. This term has been V. Nair). The committee submitted its used in contemporary journalism recently report in February 2012. in the wake of the high loss fetched by the 6. (d) The stock of money in ‘Other deposits’ United Bank of India. Similar situations with the RBI is the liquidity which is were seen in the wake of the sub-prime available at its disposal for day-to-day crisis in the US economy—by now, over uses and are not of any use for long-term 300 banks have been closed down in the purposes. Accounts in international economy due to losses. agencies include agencies like IMF and 11. (c) This question is based on the situation other such bodies. where ‘borrowers benefit out of inflation 7. (c) In the new monetary aggregate M3 is while lenders suffer’ (i.e., inflation premium). Inflation-indexed bonds the ‘broad money’ (like the old one). are neutral to the effects of inflation; Bankers’ deposit is part of the ‘reserve if someone holds such bonds during money’. Post Offices’ saving deposits inflationary pressures, the interest benefit (excluding National Saving Certificates) on it does not see any erosion. are part of M4 . For ‘other deposits’ see 12. (d) This question is based on the idea of the explanation of the Q. No. 8. relationship between ‘inflation’ and ‘real 8. (a) This is a situation when the import interest rate’ which borrowers pay on (custom) duty applicable on the finished their borrowings. Components of money product is lower than on the raw market are tools of borrowing ‘short- material (or intermediate product). This term’ (i.e., working capital) money from discourages domestic manufacturers. In the financial market—thus inflation case of India it occurs not solely because affects them in similar ways. of basic custom duty but in some cases as 13. (d) The idea is the same as ‘inflation a result of other additional duties. premium’. Seignorage is a technique by 9. (b) The share capital of the RRBs are which government intends to increase jointly held by the GoI, the sponsoring its tax revenues by issuing fresh currency scheduled commercial banks (SCBs) notes, which brings in extra cash to the and the concerned state governments government in two ways, one via printed in the ratio of 50 percent, 35 percent currency and the other through increase and 15 percent. Since December in tax income. 2012, appointments to the RRBs take 14. (b) RBI avails no autonomy in its place through the Institute of Banking functioning—though the Narasimhan Personnel Selection (IBPS). By now, Committee-I in 1991 has suggested