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Currency and Inflation - General Awareness Multiple Choice Questions and Answers | Page-5

Questions
41 In which year the decimal system of currency introduced in India ?
A 1948
B 1950
C 1955
D 1957

Answer: Option [D]

In 1957, the decimal system of currency was introduced in India. The value of the pound itself was unchanged by decimalisation.) The first decimal coins – the five pence (5p) and ten pence (10p) — were introduced in 1968 in the run-up to decimalisation in order to familiarise the public with the new system. The “decimal coins” are the currently circulating coins in India.

42 Which of the following is not a remedy of Inflation ?
A Lowering bank rate
B Reducing budgetary deficit
C Better capacity utilization
D An efficient public distribution system

Answer: Option [A]

The correct answer is Lowering bank rate. When banks want to borrow long term funds from RBI, bank rate is the interest rate which RBI charges to them. Increase in the bank rate will be useful to control inflation. The bank rate is not used to control money supply these days.

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43 The Indian Rupee is fully convertible ?
I. In respect of Current Account of Balance of Payments
II. In respect of Capital Account of Balance of Payments
III. Into Gold

Which of these statements is/are correct ?

A I only
B III only
C I and II only
D None of the above

Answer: Option [A]

The correct answer is In respect of Current Account of Balance of Payments. The rupee has been convertible on the current account since 1994, meaning it can be changed freely into foreign currency for purposes like trade-related expenses. Presently, India has current account convertibility. This means one can import and export goods or receive or make payments for services rendered. However, investments and borrowings are restricted.

44 Devaluation of currency by a country is meant to lead to:
I. Expansion of import trade
II. Promotion of import substitution
III. Expansion of export trade
A I only
B II and III only
C I and II only
D All of the above

Answer: Option [B]

Devaluation of currency by a country is meant to lead to

  • Promotion of import substitution
  • Expansion of export trade

Devaluation is the decision to reduce the value of a currency in a fixed exchange rate. A devaluation means that the value of the currency falls. Domestic residents will find imports and foreign travel more expensive.

45 Hard Currency is defined as currency:
A Which is used in times of war
B Which can hardly be used for international transaction
C Traded in foreign exchange market for which demands is persistently relative to the supply
D None of these

Answer: Option [C]

Hard Currency is defined as currency traded in foreign exchange market for which demands is persistently relative to the supply.

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