GK Quiz: Test Your Understanding Of India’s Financial System, Banking And Economy

The general awareness of the economy and financial system can often earn you an A-plus in aptitude tests. Economics and banking are also an important part of all competitive exams and policy understanding. 

From how RBI operates to how inflation affects the system, these concepts explain how money flows in the economy and how it is regulated. 

This quiz will help you test your knowledge and give you a clearer idea of monetary tools and market structure. Attempt these questions to sharpen your understanding of India’s financial system and strengthen your exam preparation.

GK QUIZ: Test Your Knowledge

Q) Where do banks keep liquid assets for Statutory Liquidity Ratio (SLR)?

• A. With themselves
• B. With the RBI
• C. With other banks
• D. In the market

Answer: A. With themselves

Explanation: Under SLR, banks maintain a portion of their deposits in liquid assets like cash, gold, or approved securities with themselves.

Q) Which among the following is an essential feature of a commercial bank?

• A. Providing locker facilities
• B. Dealing with credit
• C. Providing business information
• D. Sale of securities

Answer: B. Dealing with credit

Explanation: The core function of commercial banks is accepting deposits and providing credit/loans.

Q) Which sector contributes most to India’s GDP in FY26?

• A. Primary sector
• B. Secondary sector
• C. Tertiary sector
• D. Quaternary sector

Answer: C. Tertiary sector

Explanation: The service (tertiary) sector contributes the largest share to India’s GDP.

Q) If a commodity has more substitutes, demand will be:

• A. More elastic
• B. Less elastic
• C. Inelastic
• D. Perfectly elastic

Answer: A. More elastic

Explanation: More substitutes mean consumers can easily switch, increasing price elasticity.

Q) In which type of economy is government interference limited?

• A. Socialist economy
• B. Market economy
• C. Mixed economy
• D. None of the above

Answer: B. Market economy

Explanation: A market economy operates mainly on private decisions with minimal government intervention.

Q) Which sector gained most in GDP share post-1991 LPG reforms?

• A. Primary sector
• B. Secondary sector
• C. Tertiary sector
• D. Unorganised sector

Answer: C. Tertiary sector

Explanation: Liberalisation boosted services like IT, banking, and telecom, increasing their GDP share.

Q) Which measure can RBI take but not the Government to control inflation?

• A. Progressive taxation
• B. Adjusting public expenditure
• C. Credit rationing
• D. Regulating FDI

Answer: C. Credit rationing

Explanation: RBI controls money supply through credit policies, unlike fiscal tools used by the government.

Q) When does RBI sell government securities via Open Market Operations?

• A. Liquidity deficit
• B. Low foreign inflow
• C. Bank fund shortages
• D. Surplus liquidity

Answer: D. Surplus liquidity

Explanation: RBI sells securities to absorb excess liquidity from the banking system.

Q) Which statement about White Label ATMs is correct?

• A. Owned by foreign companies
• B. Owned by ATM service providers, not banks
• C. Outsourced with sponsor branding
• D. Owned by government

Answer: B. Owned by ATM service providers, not banks

Explanation: White Label ATMs are run by non-banking companies under RBI guidelines.

Q) What is amortization in banking?

• A. Lump-sum repayment
• B. Gradual repayment of principal and interest
• C. Interest only payment
• D. Writing off assets

Answer: B. Gradual repayment of principal and interest

Explanation: Amortization refers to loan repayment in scheduled instalments over time.