70-Days-WAR-Plan-Quiz-for-IAS-Prelims-2019-CA Day-33
70 Days WAR Plan

Day#33 Static Quiz Economic & Social Development [70 Days WAR Plan]

Green GDP; Criterion to be eligible for Maharatna companies; Demographic Dividend; Gross National Product (GNP) and National Domestic Product (NDP); Revenue Deficit and Effective Revenue Deficit; Personal Income (PI); Industrial Licencing; Incremental Capital Output Ratio (ICOR); Structural Unemployment; Currency Deposit Ratio;
By IT's Core Team
April 23, 2019

Quiz: 70 Days WAR Plan Static Quiz Day-33 [Economy & Social Development]

IASToppers Prelims 2019 Daily MCQs is based on the Hindu, PIB, Indian Express, Business Standard, TOI, LiveMint and other news sources.

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  • Noah

    Sir/Ma’am Can you please explain me how this statement is wrong “An increase in the deposit rates increases the money multiplier effect.”

    as I understand from the explanation, it should be correct right ?

    • Jayansh Singh

      I think the second statement should’ve been about the relationship between currency deposit ratio and money multiplier effect as the question is based on the former, in which case an increase in the former would have led to a decrease in the latter.

      Having said that, an increase in deposit rates (and not currency deposit ratio) would indeed lead to an increase in money multiplier effect as banks would have more money to lend, which is what is given in the question, and ergo, the statement is definitely correct. I think IASToppers would take notice of this and revise the answer.

      I hope it clears your doubt.

      • Noah

        Ya, if its a continuation of previous statement then this is wrong.

        So how do we tackle this kind of confusions in exam ? it sounds like an independent sentence, but what is intended is a continuation

        • Jayansh Singh

          There would have been no confusion in the first place if the answer that’s given was correct; I’m sure it was an inadvertent mistake. Don’t worry, focus primarily on learning concepts through questions (in this case, CDR, Money Multiplier Effect). There are questions with inherent ambiguity in sentences in real exam, too, but such questions are very few. Stay positive and keep learning!

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