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LIC AAO Economy & Banking Awareness Questions
Practise economy & banking awareness (general awareness) for the LIC Assistant Administrative Officer 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.A bear market is characterised by:
Show answer & explanation
Answer: B — Falling prices
A bear market is a sustained decline in asset prices (often 20% or more).
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Q2.The ‘lender of last resort’ in an economy is usually the:
Show answer & explanation
Answer: A — Central bank
Central banks provide emergency liquidity to banks.
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Q3.Inflation that is very high and accelerating is called:
Show answer & explanation
Answer: D — Hyperinflation
Hyperinflation is extremely rapid price growth (often >50% a month).
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Q4.Opportunity cost is:
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Answer: B — 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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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.Stagflation is a combination of:
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Answer: B — Stagnant growth and high inflation
Stagflation = stagnant economic growth + high inflation + often high unemployment.
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Q7.UPI in India stands for:
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Answer: D — Unified Payments Interface
UPI, run by NPCI, enables instant bank-to-bank payments.
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Q8.When the demand for a good rises as income rises, the good is a:
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Answer: D — Normal good
Normal goods have positive income elasticity.
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Q9.Which body regulates the securities market in India?
Show answer & explanation
Answer: A — SEBI
The Securities and Exchange Board of India (SEBI).
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Q10.Which ratio measures a bank’s capital against its risk-weighted assets?
Show answer & explanation
Answer: A — CAR (CRAR)
Capital Adequacy Ratio = capital ÷ risk-weighted assets (Basel norms).
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 LIC AAO
LIC Assistant Administrative Officer Examination — conducted by Life Insurance Corporation of India (LIC). Recruits Assistant Administrative Officers, including insurance and financial market awareness.
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.
LIC AAO practice topics
| Topic | Section | Question source |
|---|---|---|
| Data Interpretation | Data interpretation | Calculated (new numbers every set) |
| Logical Reasoning | Reasoning | Calculated (new numbers every set) |
| English Grammar | English | Question bank |
| Economy & Banking Awareness | General awareness | Question bank |
| Accounting & Finance | Finance | Calculated + question bank |