Daily GK Challenge

More practice: Indian Economy & Banking Awareness

5 more SSC CGL questions from the same chapter, with step-by-step solutions. Try each one, then reveal the answer.

1. Q1easy

   The reverse repo rate is the rate at which:

   • ACommercial banks borrow money from the RBI
   • BThe RBI borrows money from commercial banks
   • CCommercial banks lend to their best corporate customers
   • DThe government borrows from the public through bonds
   Show answer & solution

   Correct answer: (B) The RBI borrows money from commercial banks

   Repo rate is the rate at which the RBI lends to commercial banks against government securities. 'Reverse' flips the direction: banks park their surplus funds with the RBI, so the RBI is the borrower. Raising it pulls money out of the system. So the reverse repo rate is the rate at which the RBI borrows from commercial banks.

2. Q2easy

   Stagflation refers to an economic situation in which:

   • AHigh inflation exists along with slow growth and high unemployment
   • BPrices fall continuously while output rises
   • CBoth inflation and economic growth are high
   • DThe economy grows fast with stable prices
   Show answer & solution

   Correct answer: (A) High inflation exists along with slow growth and high unemployment

   The word combines 'stagnation' and 'inflation'. Prices keep rising while output growth is slow or stagnant and unemployment is high, which makes it hard to fix with normal policy. A continuous fall in prices is deflation, not stagflation. So stagflation is high inflation with slow growth and high unemployment.

3. Q3medium

   The share of their net demand and time liabilities (NDTL) that banks must keep with themselves in the form of cash, gold or approved government securities is called the:

   • ACash Reserve Ratio
   • BBank Rate
   • CStatutory Liquidity Ratio
   • DMarginal Standing Facility
   Show answer & solution

   Correct answer: (C) Statutory Liquidity Ratio

   The Cash Reserve Ratio (CRR) is kept as a cash balance with the RBI and earns no interest. The Statutory Liquidity Ratio (SLR) is kept by the bank itself in liquid assets: cash, gold or approved government securities. Bank Rate and MSF are lending rates, not reserve ratios. So the answer is the Statutory Liquidity Ratio.

4. Q4medium

   In the Union Budget, fiscal deficit is defined as:

   • ATotal expenditure minus total receipts excluding borrowings
   • BRevenue expenditure minus revenue receipts
   • CFiscal deficit minus interest payments
   • DRevenue deficit minus grants for the creation of capital assets
   Show answer & solution

   Correct answer: (A) Total expenditure minus total receipts excluding borrowings

   Revenue expenditure minus revenue receipts is the revenue deficit. Fiscal deficit minus interest payments is the primary deficit. Revenue deficit minus grants for capital assets is the effective revenue deficit. Fiscal deficit = total expenditure − (revenue receipts + non-debt capital receipts), which shows how much the government must borrow. So fiscal deficit is total expenditure minus total receipts excluding borrowings.

5. Q5medium

   In Indian national income accounting, 'National Income' refers to:

   • AGross Domestic Product at market prices
   • BNet National Product at factor cost
   • CGross National Product at market prices
   • DNet Domestic Product at market prices
   Show answer & solution

   Correct answer: (B) Net National Product at factor cost

   Start from GDP at market prices. Add net factor income from abroad to get GNP, then subtract depreciation to get NNP at market prices. Subtract net indirect taxes (indirect taxes − subsidies) to get NNP at factor cost. This last figure is what is called National Income, so the answer is Net National Product at factor cost.