SSC CGL Economy – Money & Inflation – Level 2 · Exam Level · Tier I Sprint

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SSC CGL Economy – Money & Inflation – Level 2 · Exam Level · Tier I Sprint – 15 questions, subject: Indian Economy. Every question has the correct answer with a one-line explanation; tap "Show Answer". Free practice for TNPSC, UPSC, SSC, Bank and RRB exams – Shanmugam IAS Academy, Coimbatore.

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1.  
Match the followingMatch:
P. M1 Q. M2 R. M3 S. M0
1. M1 + net time deposits 2. narrow money 3. reserve money 4. M1 + post-office savings deposits

Correct Answer: C [P-2, Q-4, R-1, S-3]

Explanation:

M1 narrow; M2 = M1 + PO savings; M3 = M1 + time deposits; M0 reserve money.

2.  

Directions (next 2 questions): Data (₹ crore) – currency with the public 45,000; demand deposits with banks 35,000; other deposits with RBI 2,000; net time deposits with banks 1,50,000; savings deposits with post office savings banks 6,000; reserve money 58,000.

Data tableM1 is:

Correct Answer: B [₹ 82,000]

Explanation:

45,000 + 35,000 + 2,000 = 82,000.

3.  
Data tableThe money multiplier (M3 ÷ M0) is:

Correct Answer: A [4]

Explanation:

M3 = 82,000 + 1,50,000 = 2,32,000; 2,32,000 ÷ 58,000 = 4.

4.  
Prices rise by 20%. The purchasing power of money falls by about:

Correct Answer: D [16.67%]

Explanation:

Answer: 16.67%. 20 ÷ 120 × 100 = 16⅔%.

5.  
Inflation falls from 7% to 4% while prices are still rising. This is called:

Correct Answer: C [Disinflation]

Explanation:

Falling (but positive) inflation = disinflation.

6.  
Assertion–Reason
A: Rising oil prices can cause inflation even when demand is unchanged.
R: Cost-push inflation results from an increase in the cost of production.

Correct Answer: B [Both A and R are true and R explains A]

Explanation:

Costlier oil raises costs → AS shifts left → prices rise (cost-push).

7.  
Which pair is incorrectly matched?

Correct Answer: A [WPI – compiled by NSO, MoSPI]

Explanation:

WPI is compiled by the Office of the Economic Adviser, DPIIT.

8.  
A bank pays 8% interest on deposits and inflation is 6%. The approximate real rate of interest is:

Correct Answer: D [2%]

Explanation:

Real ≈ 8 − 6 = 2% (exact 1.89%).

9.  
True/False countHow many of the following are true?
I. M1 is more liquid than M3.
II. Demand deposits are part of M1.
III. Time deposits are part of M1.
IV. M4 includes post-office deposits.

Correct Answer: A [Three]

Explanation:

III is false – time deposits enter M3, not M1.

10.  
Under the RBI Act, the inflation target is fixed by:

Correct Answer: B [the Central Government in consultation with the RBI]

Explanation:

Section 45ZA: the Central Government, in consultation with the RBI, once every five years.

11.  
Two-quantity comparison
Quantity I: inflation when CPI rises from 200 to 212
Quantity II: inflation when CPI rises from 125 to 132

Correct Answer: A [Quantity I > Quantity II]

Explanation:

QI = 12 ÷ 200 = 6%; QII = 7 ÷ 125 = 5.6% → QI > QII.

12.  
Trick SpotterFastest way to find in how many years prices double at 9% inflation?

Correct Answer: D [70 ÷ 9 ≈ 7.8 years]

Explanation:

Rule of 70 gives ≈ 7.8 years (exact 8.04).

13.  
Spot My Mistake"CPI went from 240 to 252, so inflation = 12 ÷ 100 × 100 = 12%." The correct inflation is:

Correct Answer: C [5%]

Explanation:

Divide by last year's index: 12 ÷ 240 × 100 = 5%.

14.  
Which of the following is NOT legal tender in India?

Correct Answer: B [A cheque]

Explanation:

A cheque is an order to a bank to pay; the payee may refuse it.

15.  
Reverse questionThis committee of six members, chaired by the RBI Governor, fixes the policy repo rate. It is the:

Correct Answer: A [Monetary Policy Committee]

Explanation:

MPC under Section 45ZB of the RBI Act.

➤ Full notes, shortcuts and every answer explained – SSC CGL 2026 Indian Economy book (₹149): www.shanmugamiasacademy.in/study-materials/ssc-cgl-indian-economy

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