In India, the first bank of limited liability manages by Indians and founded in 1881 was
Answer: B
It was the Oudh Commercial Bank, founded in 1881 at Faizabad.
It was the first bank in India with limited liability under Indian management. Punjab National Bank followed in 1894 and is the oldest such bank still in existence, the Oudh Commercial Bank having failed in 1958.
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In the state of India, the State Financial Corporation have given assistance mainly to develop
Answer: D
They have assisted chiefly medium and small-scale industries.
State Financial Corporations were set up under the SFC Act, 1951 to fill the gap left by the all-India institutions, which lend to large concerns, and by the banks, which then lent mainly short. They provide term loans, guarantees and underwriting to smaller units within a state.
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How many banks were nationalized in 1969?
Answer: B
Fourteen banks were nationalised in 1969.
The government took over the fourteen largest commercial banks, each with deposits above Rs 50 crore, on 19 July 1969, bringing about 85 per cent of banking deposits under state control. The aim was to direct credit to agriculture and small industry.
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In the second nationalization of commercial banks, ___ banks were nationalized.
Answer: C
Six banks were nationalised in the second round.
They were taken over on 15 April 1980, each with deposits above Rs 200 crore, bringing the total number of nationalised banks to twenty. One, New Bank of India, was later merged into Punjab National Bank.
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If the cash reserve ratio is lowered by the RBI, its impact on credit creation will be to
Answer: A
Credit creation will increase.
The credit multiplier is the reciprocal of the reserve ratio: \[\text{deposit multiplier} = \frac{1}{CRR}\] A lower CRR leaves banks more of each deposit to lend, so a given cash base supports more credit. Raising the CRR contracts credit in the same way.
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Which of the following Union Government taxes yields the most in a year?
Answer: D
Corporation tax and income tax together yield the most.
Direct taxes now account for more than half the Union government's gross tax revenue, corporation tax and personal income tax being the two largest single heads. Union excise was the largest source in the decades before the 1990s, which is the older answer to this question.
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Who is responsible for establishing and maintaining astound and efficient accounting and financial reporting system in India?
Answer: A
It is the Controller General of Accounts.
The CGA, in the Ministry of Finance, is the principal accounts adviser to the government: it prescribes the form of accounts, runs the payment and accounting machinery, and prepares the monthly and annual accounts of the Union. The CAG, by contrast, audits those accounts.
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In India, which one among the following formulates the fiscal policy?
Answer: B
Fiscal policy is formulated by the Ministry of Finance.
It decides taxation, expenditure and borrowing, and gives them effect through the annual budget. Monetary policy is the Reserve Bank's; the Finance Commission recommends the sharing of resources between the Centre and the states.
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Devaluation of currency leads to
Answer: B
Devaluation leads to an increase in domestic prices.
Imports become dearer in home currency, and since fuel, fertiliser and industrial inputs are imported, costs rise through the economy. Exports also become more attractive, drawing goods away from the home market and pushing prices up further.
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In which of the following sequences the change in quantity of money leads to change in price level in the Keynesian models?
Answer: D
The Keynesian sequence runs change in the quantity of money → change in the rate of interest → change in investment → change in income and output → change in the price level.
Money affects prices only indirectly, through the interest rate and investment, and only once output nears full employment. This is what distinguishes Keynes from the quantity theory, in which money acts on prices directly.
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