MCQ
Monetary & Fiscal Policy MCQ - Practice Questions with Answers
Solve 875 Monetary & Fiscal Policy questions for RAS/RPSC preparation.
Practice questions
Q1Quantitative tools of monetary policy include:
Quantitative (general) tools affect overall credit: CRR, SLR, Repo/Reverse Repo, Bank Rate, OMO. Qualitative (selective) tools target specific sectors: Moral suasion, Margin requirements, Credit rationing, Direct action.
Q2Primary Deficit is calculated as:
Primary Deficit = Fiscal Deficit – Interest Payments. It shows the borrowing requirement of the government excluding interest obligations. A zero primary deficit means the government borrows only to pay interest on past debt.
Q3Consider the following statements: 1. Payments banks can accept deposits up to ₹2 lakh per customer, but cannot lend or issue credit cards. 2. Airtel Payments Bank was the first payments bank to start operations in India in November 2016. 3. Under MSF, banks can borrow overnight by dipping into their SLR portfolio up to 2% of NDTL. 4. CRR deposits maintained by banks with the RBI earn interest at the repo rate. Which of the statements given above are correct?
Statement 1 is correct because payments banks can accept deposits up to ₹2 lakh per customer but cannot lend or issue credit cards. Statement 2 is correct because Airtel Payments Bank was the first payments bank to go live in India in November 2016. Statement 3 is correct because MSF permits overnight borrowing by dipping into the SLR portfolio up to 2% of NDTL. Statement 4 is incorrect because banks earn no interest on CRR deposits kept with the RBI.
Q4The base rate for bank lending has been replaced by:
The Base Rate system was replaced by MCLR (Marginal Cost of Funds based Lending Rate) in April 2016. MCLR was introduced to improve monetary policy transmission by using the marginal cost of funds rather than the average cost. Later, in October 2019, RBI mandated EBLR (External Benchmark Lending Rate) for new floating rate retail and MSME loans, effectively replacing MCLR for those categories. The sequence is: BPLR (2003) → Base Rate (2010) → MCLR (2016) → EBLR (2019).
Q5Consider the following statements about GST and tax policy: 1. The Kelkar Task Force on Indirect Taxes in 2004 first recommended a comprehensive GST to replace the existing indirect tax structure. 2. The 101st Constitutional Amendment Act, 2016 paved the way for GST in India. 3. GST was launched on 1 July 2017 as a unified indirect tax regime. 4. Budget 2023-24 abolished angel tax to boost the startup ecosystem. Which of the statements given above are correct?
Statement 1 is correct because the Kelkar Task Force on Indirect Taxes in 2004 first recommended a comprehensive GST. Statement 2 is correct because the 101st Constitutional Amendment Act, 2016 enabled GST. Statement 3 is correct because GST was launched on 1 July 2017 as a unified indirect tax regime. Statement 4 is incorrect because angel tax was abolished in Budget 2024-25, not Budget 2023-24.
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6Consider the following statements: 1. Quantitative Easing involves the central bank buying government bonds from the secondary market and can be reversed. 2. Helicopter money is direct fiscal monetisation and is a permanent injection. 3. For RBI's 2013 Inflation Indexed Bonds, the reference index for indexation was the Consumer Price Index. 4. Hyperinflation is generally defined, under Phillip Cagan's definition, as monthly inflation exceeding 50%. Which of the statements given above are correct?
7Consider the following statements: 1. The Annual Financial Statement is dealt with under Article 112 of the Constitution. 2. Vote on Account under Article 116 enables the government to meet expenditure for part of a new financial year before the budget is passed. 3. Income Tax in India is levied by state governments under the State List. 4. Treasury Bills have maturities of 91 days, 182 days and 364 days and carry a zero coupon rate. Which of the statements given above are correct?
8Which GST Council meeting paved the way for the GST 2.0 reforms implemented on September 22, 2025?
9SCORES portal is managed by:
10What does MCLR stand for in Indian banking?
11In the Union Budget 2026-27, customs duty on personal goods imports was reduced from 20% to what rate?
12Under the Union Budget 2025-26, the new income tax slabs under the new regime include a 30% rate for income above:
13Benami Transactions (Prohibition) Amendment Act was enacted in:
14The RBI's digital rupee pilot uses which technology model for distribution?
15Who has been appointed as part-time Chairman of IndusInd Bank effective January 31, 2026?