SSC CGL Finance – Economic Reforms in India; Money & Banking – Level 2 · Exam Level · Paper III Sprint
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The committee recommended lowering pre-emptions (SLR, CRR), deregulating interest rates and allowing new private banks.
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SSC CGL Finance – Economic Reforms in India; Money & Banking – Level 2 · Exam Level · Paper III Sprint – 15 questions, subject: Finance & Economics (Tier II Paper III). 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. Data tableM1 is:
Directions (next 2 questions): Imaginary data (₹ crore): currency with the public 4,200; demand deposits with banks 3,100; other deposits with RBI 80; post office savings deposits 400; net time deposits of banks 9,500; total post office deposits (excluding NSC) 1,200.
Correct Answer: A [₹ 7,380 crore]
Explanation:
Answer: ₹ 7,380 crore. 4,200 + 3,100 + 80 = 7,380.
2.
Data tableM3 (broad money) is:
Correct Answer: B [₹ 16,880 crore]
Explanation:
M1 7,380 + time deposits 9,500 = 16,880.
3.
Statement-basedWhich is/are correct?
I. Stabilisation measures of 1991 were short-term, aimed at correcting the balance of payments and inflation.
II. Structural reform measures were long-term, aimed at improving efficiency and competitiveness.
I. Stabilisation measures of 1991 were short-term, aimed at correcting the balance of payments and inflation.
II. Structural reform measures were long-term, aimed at improving efficiency and competitiveness.
Correct Answer: D [Both I and II]
Explanation:
This is the standard two-part division of the 1991 reforms.
4.
Currency–deposit ratio c = 0.2 and reserve–deposit ratio r = 0.1. The money multiplier is:
Correct Answer: C [4]
Explanation:
(1 + c)/(c + r) = 1.2/0.3 = 4.
5.
Match the followingMatch the instrument with its type:
P. CRR Q. Moral suasion R. Margin requirement on loans against goods
1. Selective credit control 2. Quantitative instrument 3. Persuasion (qualitative)
P. CRR Q. Moral suasion R. Margin requirement on loans against goods
1. Selective credit control 2. Quantitative instrument 3. Persuasion (qualitative)
Correct Answer: D [P-2, Q-3, R-1]
Explanation:
CRR is quantitative; moral suasion is persuasion; margin requirement is selective control.
6.
Assertion–Reason
A: When the RBI buys government securities in the open market, money supply increases.
R: The RBI pays for the securities, adding to banks' reserves.
A: When the RBI buys government securities in the open market, money supply increases.
R: The RBI pays for the securities, adding to banks' reserves.
Correct Answer: C [Both A and R are true and R explains A]
Explanation:
OMO purchase injects reserves (liquidity) → more lending.
7.
A bank's net demand and time liabilities are ₹ 2,50,000 crore; CRR 3% and SLR 18%. Funds left for lending (ignoring other needs) are:
Correct Answer: A [₹ 1,97,500 crore]
Explanation:
2,50,000 − 7,500 − 45,000 = 1,97,500.
8.
Nominal interest rate 10% and inflation 6%. The real interest rate is approximately:
Correct Answer: B [4%]
Explanation:
Fisher: real ≈ 10 − 6 = 4% (exact 3.77%).
9.
Odd one outwhich was NOT a part of the 1991 reform package?
Correct Answer: A [Nationalisation of 14 commercial banks]
Explanation:
Bank nationalisation happened in 1969 – the opposite direction of 1991 liberalisation.
10.
Two-quantity comparisonTwo-quantity comparison (RBI, policy announced 7 October 2026):
Quantity I: Marginal Standing Facility rate
Quantity II: Bank Rate
Quantity I: Marginal Standing Facility rate
Quantity II: Bank Rate
Correct Answer: D [Quantity I = Quantity II]
Explanation:
Both 5.75% (repo 5.50%, SDF 5.25%).
11.
Trick SpotterDeposit ₹ 40,000, reserve ratio 5%. The fastest way to the maximum new credit is:
Correct Answer: B [40,000 × (1/0.05 − 1) = 40,000 × 19]
Explanation:
Multiplier 20 → total deposits 8,00,000; new credit 7,60,000.
12.
Spot My Mistake“CRR 25%, initial deposit ₹ 16,000 → total credit created = 16,000 ÷ 0.25 = ₹ 64,000.” The correct new credit (loans) is:
Correct Answer: C [₹ 48,000]
Explanation:
64,000 is total deposits; loans = 64,000 − 16,000 = 48,000.
13.
Under the RBI Act (as amended in 2016), the Monetary Policy Committee has:
Correct Answer: B [Six members with the Governor as chairperson]
Explanation:
Governor, Deputy Governor (monetary policy), one RBI officer and three external members.
14.
Quantity theory of money (MV = PT): M = 400, V = 5, T = 800. If M doubles with V and T unchanged, the price level becomes:
Correct Answer: D [5]
Explanation:
P = MV/T = 2,000/800 = 2.5 → doubles to 5.
15.
Which statement about the Banking sector after the Narasimham Committee (1991) is correct?
Correct Answer: A [SLR and CRR were to be reduced to free more funds for lending]
Explanation:
The committee recommended lowering pre-emptions (SLR, CRR), deregulating interest rates and allowing new private banks.
➤ Full notes, shortcuts and every answer explained – SSC CGL 2026 Finance & Economics (Tier II Paper III) book (₹149): www.shanmugamiasacademy.in/study-materials/ssc-cgl-finance-economics
📘 SSC CGL 2026 – General Studies – Finance & Economics (Tier II Paper III)
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