121. Which of the following policies of the financial sectors is basically designed to transfer local financial assets into foreign financial assets freely and at market determined exchange rates? Policy to

1. 1. Capital Account Convertibility

   
   
   

   2. Financial Deficit Management

   
   
   

   3. Minimum Support Price

   
   
   

   4. Restrictive Trade Practices

   
   
   

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   Correct Option: A

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122. A rapid increase in the rate of inflation is sometimes attributed to the 'Base Effect'. What is Base Effect?

1. 1. It is the impact of drastic deficiency in supply due to failure of crops

   
   
   

   2. it is the impact of the surge in demand due to rapid economic growth

   
   
   

   3. it is the impact of the price levels of previous year on the calculation of inflation rate

   
   
   

   4. None of the above

   
   
   

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   N/A

   Correct Option: C

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123. What is an Indian Depository Receipt (IDR)?

1. 1. A deposit account with a public sector Bank

   
   
   

   2. A depository account with an y of the Depositories in India

   
   
   

   3. An instrument in the form of depository receipt created by an Indian depository against underlying equity shares of the issuing company

   
   
   

   4. An instrument in the form of deposit receipt issued by Indian depositories

   
   
   

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   N/A

   Correct Option: C

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124. Convertibility of the Rupee as it exists at present means

1. 1. Rupee is convertible into foreign currencies for all types of transactions

   
   
   

   2. Rupee is convertible into foreign currencies for trade transactions only

   
   
   

   3. Rupee is convertible into foreign currencies for all current transactions only

   
   
   

   4. Rupee is convertible into foreign currencies for capital transactions only

   
   
   

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   N/A

   Correct Option: C

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125. Which one of the following statements about Foreign exchange reserves of India, is NOT true?

1. 1. It includes foreign currency assets and gold holdings of Reserve Bank of India

   
   
   

   2. It is maintained with the Reserve Bank of India

   
   
   

   3. Special Drawing Rights (SDRs) are not included in it

   
   
   

   4. Presently foreign exchange situation is satisfactory in India

   
   
   

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   Correct Option: C

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