Pakistan Studies/Affairs MCQs
Topic Notes: Pakistan Studies/Affairs
MCQs and preparation resources for competitive exams, covering important concepts, past papers, and detailed explanations.
Plato
- Biography: Ancient Greek philosopher (427–347 BCE), student of Socrates and teacher of Aristotle, founder of the Academy in Athens.
- Important Ideas:
- Theory of Forms
- Philosopher-King
- Ideal State
41
Which SBP initiative allows overseas Pakistanis to open bank accounts in Pakistan remotely?
Answer:
Roshan Digital Account (RDA)
The Roshan Digital Account (RDA) is a major initiative that allows Non-Resident Pakistanis (NRPs) to open and operate bank accounts in Pakistan from anywhere in the world without visiting a branch. It provides access to investment opportunities in stocks, real estate, and government certificates, helping to attract stable foreign exchange inflows.
42
What is 'Expansionary Monetary Policy' also known as?
Answer:
Easy Monetary Policy
Expansionary or 'Easy' monetary policy is used when the SBP wants to stimulate economic growth. By lowering interest rates, the bank makes borrowing cheaper, encouraging businesses to invest and consumers to spend. This is typically done when inflation is low and the economy is facing a slowdown or recession.
43
What does the 'Interest Rate Corridor' in Pakistan consist of?
Answer:
The range between the SBP Floor Rate and the Ceiling (Reverse Repo) Rate
The Interest Rate Corridor is a framework used by the SBP to keep the overnight money market rate close to the policy rate. It consists of a 'Ceiling' (the rate at which SBP lends to banks) and a 'Floor' (the rate at which SBP accepts deposits from banks). Currently, the corridor width is typically set at 100 to 200 basis points.
44
What is 'Contractionary Monetary Policy' usually intended to achieve?
Answer:
Reducing inflation by curbing demand
A contractionary monetary policy involves raising interest rates and reducing the money supply. The SBP uses this tool when inflation is high. Higher rates make borrowing more expensive, which slows down spending and investment, eventually cooling off the economy and bringing price levels down.
45
Which system was launched by SBP to enable instant, person-to-person (P2P) digital payments across Pakistan?
Answer:
Raast
Raast is Pakistan’s first instant payment system, launched by the SBP to promote financial inclusion and digitalization. It allows for end-to-end digital payments between individuals, businesses, and government entities in real-time, significantly reducing the reliance on cash and improving the documentation of the economy.
46
What is the 'Policy Rate' (also known as the Target Rate) in Pakistan's monetary framework?
Answer:
The SBP overnight reverse repo rate
The Policy Rate is the SBP overnight reverse repo rate. It serves as the primary tool for the SBP to signal its monetary policy stance. By changing this rate, the SBP influences the cost of borrowing for commercial banks, which eventually affects the interest rates for businesses and consumers across the entire economy.
47
How many times a year is the Monetary Policy Committee (MPC) legally required to meet at minimum?
Answer:
6 times
Under the current framework, the MPC is required to meet at least six times a year to review economic conditions and decide on the policy rate. However, the committee can hold emergency meetings if sudden economic shocks, such as a currency crisis or global commodity price spikes, require an immediate change in policy stance.
48
Which body within the State Bank of Pakistan is responsible for deciding the policy interest rate?
Answer:
Monetary Policy Committee (MPC)
The Monetary Policy Committee (MPC) is an independent body that has the statutory authority to decide the monetary policy stance and the policy rate. It consists of the Governor, SBP officials, and independent economists. This structure is designed to ensure that interest rate decisions are based on technical economic data rather than political pressure.
49
What is the primary objective of the State Bank of Pakistan as per the SBP Act amendments of 2022?
Answer:
Achieving domestic price stability
Following the 2022 amendments to the SBP Act, the primary objective of the central bank was clearly defined as achieving and maintaining domestic price stability. While the bank also supports the government's economic goals and financial stability, these are secondary to the mandate of controlling inflation.
50
In which year was the State Bank of Pakistan (SBP) officially inaugurated by Quaid-e-Azam Muhammad Ali Jinnah?
Answer:
1948
The State Bank of Pakistan was inaugurated on July 1, 1948, by Quaid-e-Azam Muhammad Ali Jinnah. Prior to this, the Reserve Bank of India functioned as the central bank for both dominions until June 1948. The establishment of the SBP was a critical step in achieving financial sovereignty for the new nation.