GS PrelimsEconomyBanking2010

Which of the following terms indicates a mechanism used by commercial banks for providing credit to the government?

A

Cash Credit Ratio

B

Debt Service Obligation

C

Liquidity Adjustment Facility

D

Statutory Liquidity Ratio

Correct Answer: Option D

Explanation

1. The question asks to identify which pairs of economic terms and their descriptions are correctly matched. 2. Pair 1: 'Melt down - Fall in stock prices'. A financial meltdown typically involves a rapid and severe fall in stock prices. While implying severity, it's commonly associated with a significant drop. This pair is plausibly matched. 3. Pair 2: 'Recession - Fall in growth rate'. A recession involves negative economic growth (fall in GDP), not just a slower growth rate. This pair is incorrectly matched. 4. Pair 3: 'Slow down - Fall in GDP'. A slow down refers to a decreasing growth rate, while a fall in GDP defines a recession. This pair is incorrectly matched. 5. Based on the analysis, only Pair 1 is reasonably matched. Pairs 2 and 3 incorrectly define the terms. 6. Therefore, the correct answer is (A) 1 only.

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