For Underemployment, identify the interpretation.
Correct answer: C
A person may be employed yet insufficiently utilised.
Economy
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Evaluate the two proposed answers. Which are supported? I. Currency appreciation — the interpretation: Market rise in a currency's external value. II. Underemployment — the interpretation: Employed persons plus unemployed persons seeking or available for work under the measure.
Correct answer: C
I is correct: Currency appreciation → Market rise in a currency's external value. Each unit buys more foreign currency. II is incorrect: Underemployment → Employment using less labour time or skill than available. A person may be employed yet insufficiently utilised.
Evaluate the two proposed answers. Which are supported? I. Financial inclusion — the meaning: Money's role in transferring purchasing power over time. II. Credit risk — the meaning: Sale of securities with an agreement to repurchase.
Correct answer: D
I is incorrect: Financial inclusion → Access to useful and affordable formal financial services. It includes appropriate savings, payments, credit and insurance access. II is incorrect: Credit risk → Risk that a borrower does not meet obligations. Default can cause lender losses.
Evaluate the two proposed answers. Which are supported? I. Inflation targeting — the meaning: Monetary policy organised around a stated inflation objective. II. Collateral — the meaning: Can inject liquidity into the banking system.
Correct answer: C
I is correct: Inflation targeting → Monetary policy organised around a stated inflation objective. It provides a nominal anchor for policy and expectations. II is incorrect: Collateral → Asset pledged to secure a loan. The lender may have rights over it if contractual conditions are breached.
For Open market purchase by a central bank, identify the meaning.
Correct answer: A
The central bank pays for securities it buys.
Evaluate the two proposed answers. Which are supported? I. Time deposit — the meaning: Deposit placed for an agreed period. II. Store of value — the meaning: Money recognised by law for discharging specified debts.
Correct answer: D
I is correct: Time deposit → Deposit placed for an agreed period. It differs from a balance freely payable on demand. II is incorrect: Store of value → Money's role in transferring purchasing power over time. Inflation can reduce that stored purchasing power.
Evaluate the two proposed answers. Which are supported? I. Cash reserve ratio — the meaning: Monetary policy organised around a stated inflation objective. II. Demand deposit — the meaning: Ease of conversion into spendable funds with little loss.
Correct answer: C
I is incorrect: Cash reserve ratio → Specified share of relevant bank liabilities kept with the RBI. It is a reserve requirement rather than a lending rate. II is incorrect: Demand deposit → Bank deposit withdrawable on demand. Savings and current account balances are common examples.
For Repo transaction, identify the meaning.
Correct answer: B
It provides collateralised short-term funding.
Evaluate the two proposed answers. Which are supported? I. Statutory liquidity ratio — the meaning: Money's role in making payments. II. Medium of exchange — the meaning: Money's role as a common measure of value.
Correct answer: A
I is incorrect: Statutory liquidity ratio → Specified share of relevant bank liabilities maintained in eligible liquid assets. It differs from cash reserves held with the RBI. II is incorrect: Medium of exchange → Money's role in making payments. It avoids the need for a double coincidence of wants.
Evaluate the two proposed answers. Which are supported? I. Legal tender — the meaning: Money recognised by law for discharging specified debts. II. Open market purchase by a central bank — the meaning: Specified share of relevant bank liabilities maintained in eligible liquid assets.
Correct answer: C
I is correct: Legal tender → Money recognised by law for discharging specified debts. Its legal status is distinct from every privately accepted payment instrument. II is incorrect: Open market purchase by a central bank → Can inject liquidity into the banking system. The central bank pays for securities it buys.
For Financial inclusion, identify the meaning.
Correct answer: D
It includes appropriate savings, payments, credit and insurance access.
Evaluate the two proposed answers. Which are supported? I. Time deposit — the meaning: Deposit placed for an agreed period. II. Demand deposit — the meaning: Ease of conversion into spendable funds with little loss.
Correct answer: A
I is correct: Time deposit → Deposit placed for an agreed period. It differs from a balance freely payable on demand. II is incorrect: Demand deposit → Bank deposit withdrawable on demand. Savings and current account balances are common examples.
For Cash reserve ratio, identify the meaning.
Correct answer: B
It is a reserve requirement rather than a lending rate.
Evaluate the two proposed answers. Which are supported? I. Repo transaction — the meaning: Sale of securities with an agreement to repurchase. II. Inflation targeting — the meaning: Money's role in transferring purchasing power over time.
Correct answer: C
I is correct: Repo transaction → Sale of securities with an agreement to repurchase. It provides collateralised short-term funding. II is incorrect: Inflation targeting → Monetary policy organised around a stated inflation objective. It provides a nominal anchor for policy and expectations.
For Store of value, identify the meaning.
Correct answer: D
Inflation can reduce that stored purchasing power.
Evaluate the two proposed answers. Which are supported? I. Financial inclusion — the meaning: Access to useful and affordable formal financial services. II. Statutory liquidity ratio — the meaning: Monetary policy organised around a stated inflation objective.
Correct answer: B
I is correct: Financial inclusion → Access to useful and affordable formal financial services. It includes appropriate savings, payments, credit and insurance access. II is incorrect: Statutory liquidity ratio → Specified share of relevant bank liabilities maintained in eligible liquid assets. It differs from cash reserves held with the RBI.
Evaluate the two proposed answers. Which are supported? I. Store of value — the meaning: Bank deposit withdrawable on demand. II. Demand deposit — the meaning: Ease of conversion into spendable funds with little loss.
Correct answer: C
I is incorrect: Store of value → Money's role in transferring purchasing power over time. Inflation can reduce that stored purchasing power. II is incorrect: Demand deposit → Bank deposit withdrawable on demand. Savings and current account balances are common examples.
For Legal tender, identify the meaning.
Correct answer: A
Its legal status is distinct from every privately accepted payment instrument.
Evaluate the two proposed answers. Which are supported? I. Time deposit — the meaning: Deposit placed for an agreed period. II. Credit risk — the meaning: Sale of securities with an agreement to repurchase.
Correct answer: B
I is correct: Time deposit → Deposit placed for an agreed period. It differs from a balance freely payable on demand. II is incorrect: Credit risk → Risk that a borrower does not meet obligations. Default can cause lender losses.
For Medium of exchange, identify the meaning.
Correct answer: D
It avoids the need for a double coincidence of wants.
Evaluate the two proposed answers. Which are supported? I. Cash reserve ratio — the meaning: Specified share of relevant bank liabilities kept with the RBI. II. Statutory liquidity ratio — the meaning: Monetary policy organised around a stated inflation objective.
Correct answer: D
I is correct: Cash reserve ratio → Specified share of relevant bank liabilities kept with the RBI. It is a reserve requirement rather than a lending rate. II is incorrect: Statutory liquidity ratio → Specified share of relevant bank liabilities maintained in eligible liquid assets. It differs from cash reserves held with the RBI.
For Unit of account, identify the meaning.
Correct answer: B
Prices and accounts use a shared monetary unit.
Evaluate the two proposed answers. Which are supported? I. Legal tender — the meaning: Ease of conversion into spendable funds with little loss. II. Inflation targeting — the meaning: Money's role in transferring purchasing power over time.
Correct answer: D
I is incorrect: Legal tender → Money recognised by law for discharging specified debts. Its legal status is distinct from every privately accepted payment instrument. II is incorrect: Inflation targeting → Monetary policy organised around a stated inflation objective. It provides a nominal anchor for policy and expectations.
For Demand deposit, identify the meaning.
Correct answer: B
Savings and current account balances are common examples.
Evaluate the two proposed answers. Which are supported? I. Open market purchase by a central bank — the meaning: Access to useful and affordable formal financial services. II. Cash reserve ratio — the meaning: Access to useful and affordable formal financial services.
Correct answer: D
I is incorrect: Open market purchase by a central bank → Can inject liquidity into the banking system. The central bank pays for securities it buys. II is incorrect: Cash reserve ratio → Specified share of relevant bank liabilities kept with the RBI. It is a reserve requirement rather than a lending rate.