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CA Foundation Economy & Banking Awareness Questions
Practise economy & banking awareness (general awareness) for the Chartered Accountancy Foundation Examination: 10 multiple-choice questions, each with the correct answer and a worked explanation. Click an option to check it, or “New questions” for another set.
Economy & Banking Awareness practice
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Q1.Which ratio measures a bank’s capital against its risk-weighted assets?
Show answer & explanation
Answer: D — CAR (CRAR)
Capital Adequacy Ratio = capital ÷ risk-weighted assets (Basel norms).
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Q2.Monetary policy is formulated in India by the:
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Answer: C — Monetary Policy Committee (MPC) of RBI
The six-member MPC sets the policy repo rate.
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Q3.When the demand for a good rises as income rises, the good is a:
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Answer: C — Normal good
Normal goods have positive income elasticity.
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Q4.A cheque that is presented more than three months after its date is:
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Answer: D — Stale
In India a cheque is valid for three months; after that it is stale.
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Q5.Fiscal deficit refers to:
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Answer: A — Total expenditure minus total receipts excluding borrowings
Fiscal deficit = total expenditure − total receipts (excluding borrowings): the government’s borrowing requirement.
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Q6.Inflation that is very high and accelerating is called:
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Answer: B — Hyperinflation
Hyperinflation is extremely rapid price growth (often >50% a month).
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Q7.Opportunity cost is:
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Answer: A — The value of the next best alternative forgone
It is the benefit given up by choosing one option over the next best.
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Q8.Which type of account typically earns no interest in India?
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Answer: C — Current account
Current accounts for businesses usually pay no interest.
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Q9.UPI in India stands for:
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Answer: C — Unified Payments Interface
UPI, run by NPCI, enables instant bank-to-bank payments.
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Q10.CRR stands for:
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Answer: A — Cash Reserve Ratio
Banks must keep a share of deposits as cash with the central bank — the Cash Reserve Ratio.
How to approach economy & banking awareness questions
Know what each regulator does (RBI, SEBI, IRDAI, PFRDA), the policy tools (repo, CRR, SLR) and the definitions behind GDP, inflation and fiscal deficit. Check current rates in the latest official releases.
About CA Foundation
Chartered Accountancy Foundation Examination — conducted by Institute of Chartered Accountants of India (ICAI). The entry level of the CA course: accounting, business laws, quantitative aptitude and business economics.
Original practice questions written for this site in the style and difficulty of each exam’s syllabus. They are not past papers and the site is not affiliated with any exam body. Exam patterns, marking schemes and syllabi change — always check the latest official notification.
CA Foundation practice topics
| Topic | Section | Question source |
|---|---|---|
| Accounting & Finance | Finance | Calculated + question bank |
| Simple & Compound Interest | Quantitative aptitude | Calculated (new numbers every set) |
| Averages & Statistics | Quantitative aptitude | Calculated (new numbers every set) |
| Logical Reasoning | Reasoning | Calculated (new numbers every set) |
| Economy & Banking Awareness | General awareness | Question bank |