Concept Application and Fact for Prelims Day-26

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This is the Day-26 questions of the CAF Revision plan for prelims. The questions are based on the syllabus as provided in the schedule. Aspirants are requested to go through the detailed CAF strategy to understand the need of the UPSC prelims and to prepare well for the same. Attempt the questions honestly. The link to key answers and explanations of this test is at the end of the questions. The maximum time to attempt the 19 questions is 25 minutes.


Q.1) Who among the following can issue the Commercial Bill?

  1. Non-Banking Finance Companies (NBFCs)
  2. Scheduled Commercial Banks
  3. Merchant Banks
  4. Co-operative Banks
  5. Mutual Funds

Choose the correct answers from the codes given below

(a) 1, 2 and 5 only

(b) 1, 3, 5 only

(c) 1, 2, 3, and 5 only

(d) All the above


Q.2) Which of the following are the borrowers in the Call Money Market?

  1. Scheduled commercial banks
  2. Mutual Funds
  3. NABARD
  4. Co-operative banks

Choose the correct answers from the codes given below

(a) 1 and 3

(b) 2 and 4

(c) 1 and 4

(d) 3 and 4


Q.3) Which of the following is/are the All India Financial Banks?

  1. NABARD
  2. SIDBI
  3. Exim Bank
  4. NHB

Choose the correct answers from the codes given below

(a) 1, 2 and 3 only

(b) 2, 3, and 4 only

(c) 1, 2 and 4 only

(d) All the above


Q.4) Which of the following are the recommendations of Financial Sector Legislative Reforms Commission?

  1. Unified Financial Agency
  2. Financial Redressal Agency
  3. Financial Sector Appellate Tribunal

Choose the correct answers from the codes given below

(a) 1 and 2

(b) 1 and 3

(c) 2 and 3

(d) 1, 2 and 3


Q.5) With respect to ‘Market Stabilisation Scheme’ consider the following statements.

  1. Surplus liquidity arising from large capital inflows is absorbed.
  2. RBI does this through sale of short-dated government securities and treasury bills.

Choose the correct answers from the codes given below

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) None


Q.6) With respect to ‘Marginal Cost of funds-based Lending Rate’, consider the following statements.

  1. Transmission of policy rate into the lending rates of banks to improve.
  2. Computation of the interest rates by banks will get more transparent.
  3. Cost of loan will decrease drastically to the borrowers.

Which of the above statements is/are correct?

(a) 1 and 2

(b) 1 and 3

(c) 2 and 3

(d) 1, 2 and 3


Q.7) Which of the following has regulatory power over Co-operative banks?

  1. RBI
  2. Registrar of Cooperative Societies (RCS) of the respective states
  3. NABARD

Choose the correct answers from the codes given below

(a) 1 and 2

(b) 1 and 3

(c) 2 and 3

(d) 1, 2 and 3


Q.8) Which of the following are components of the Reserve Money?

  1. Currency in circulation
  2. Bankers’ Deposits the RBI
  3. ‘Other’ deposits with the RBI

Choose the correct answers from the codes given below

(a) 1 and 2

(b) 1 and 3

(c) 2 and 3

(d) 1, 2 and 3


Q.9) With respect to the ‘minimum reserve system’ consider the following statements.

  1. The RBI was required to hold a reserve worth of only Rs 515 crore as per this system.
  2. This consists of rupees securities and gold.

Which of the above statements is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) None


Q.10) The sources of high-power money supply in India are

  1. RBI
  2. Government of India

Which of the above statements is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) None


Q.11) Which of the following do not have an intrinsic value?

1. Fiat Money

2. Gold or Silver coin

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


Q.12) The Reserve Bank of India often uses the method of sterilisation in order

a) To neutralise the fresh money that enters the system.

b) To eliminate unaccounted income

c) To increase the price of government bonds

d) To reduce Non-Performing Assets in commercial banks.


Q.13) Which one of the following statements correctly describes the meaning of legal tender money?

(a) The money which is tendered in courts of law to defray the fee of legal cases

(b) The money which a creditor is under compulsion to accept in settlement of his claims

(c) The bank money in the form of cheques, drafts, bills of exchange, etc.

(d) The metallic money in circulation in a country


Q.14) The establishment of “Payment Banks’ is being allowed in India to promote Financial inclusion. Which of the following statements is/are correct in this context?

  1. Mobile telephone companies and supermarket chains that are owned and controlled by residents are eligible to be promoters of Payment Banks.
  2. Payment Banks can issue both credit cards and debit cards.
  3. Payment Banks cannot undertake lending activities.

Select the correct answer using the code given below:

(a) 1 and 2 only

(b) 1 and 3 only

(c) 2 only

(d) 1, 2 and 3


Q.15) ‘Societal Poverty Line’ is recently in news associated with

(a) Human development Index

(b) World Bank report on global poverty

(c) Multi-Dimensional Poverty Index

(d) Both (a) and (c)


Q.16) Consider the following statements about ‘fixed term employment’ (FTE).

  1. FTE is a contract in which a company hires an employee for a specific period of time.
  2. Such contracts are given out for temporary jobs and not for routine jobs.
  3. The employee is not on the payroll of the company.

Chose the correct answer from the codes given below

(a) 1 and 2

(b) 1 and 3

(c) 2 and 3

(d) 1, 2 and 3


Q.17) Consider the following statements about National Council for Vocational Education and Training (NCVET).

  1. It will regulate functions of entities engaged in vocational education and training.
  2. It functions as Research and information dissemination body.
  3. It is the body for Grievance redressal.

Chose the correct answer from the codes given below

(a) 1 and 2

(b) 1 and 3

(c) 2 and 3

(d) 1, 2 and 3


Q.18) ‘Udyam Abhilasha’ was often in news is a

(a) national level skill development awareness campaign

(b) national level employment awareness campaign

(c) national level labour union awareness campaign

(d) national level entrepreneurship awareness campaign


Q.19) Consider the following statements about ‘Transformation of Aspirational Districts’ program.

  1. Convergence (of Central & State Schemes), Collaboration (of Central, State level ‘Prabhari’ Officers & District Collectors), and Competition are the broad contours of the program.
  2. Tata Trusts is partnering with the government in the Transformation of Aspirational Districts Programme.
  3. Health & Nutrition, Education, Agriculture & Water Resources, Financial Inclusion & Skill Development, and Basic Infrastructure are this programme’s core areas of focus.

Chose the correct answer from the codes given below

(a) 1 and 2

(b) 1 and 3

(c) 2 and 3

(d) 1, 2 and 3


Click here to download key answer and explanation