UPSC Prelims 2011— Question 13

Concept and answer: Option A is correct. A lower Bank Rate generally makes central-bank credit cheaper and can expand liquidity and credit conditions. The question should be approached by identifying the exact proposition being tested and then checking each alternative against that proposition. A familiar word or related fact is not enough; the option must be completely consistent with the underlying concept. Option A: Correct. This option states the proposition that directly matches the established principle described above. Option B: Incorrect. This alternative is related to the subject but does not satisfy the specific mechanism, definition, historical fact or institutional rule tested by the question. It therefore cannot be selected over option A. Option C: Incorrect. This alternative is related to the subject but does not satisfy the specific mechanism, definition, historical fact or institutional rule tested by the question. It therefore cannot be selected over option A. Option D: Incorrect. This alternative is related to the subject but does not satisfy the specific mechanism, definition, historical fact or institutional rule tested by the question. It therefore cannot be selected over option A. Exam takeaway: the decisive distinction is the one stated in the core explanation. Option A is the only choice that remains fully consistent with that distinction. This approach is useful for Prelims because many distractors contain a partially true statement but add an incorrect qualifier, reverse a relationship, confuse two institutions, or use an absolute term. Always test the entire option rather than recognizing only one familiar phrase.