UPSC Prelims 2013— Question 74

Concept and answer: Option D is correct. In liquidity terms, currency is the most liquid asset because it can be used immediately for transactions. Demand deposits are next because they are readily withdrawable, followed by savings deposits and then time deposits, which have greater withdrawal restrictions. Hence the decreasing order is currency, demand deposits, savings deposits and time deposits. The question tests the precise definition, fact or causal relationship identified above. The alternatives must therefore be checked against that exact point rather than against a loosely related fact. Option A: Incorrect. This alternative does not match the verified principle tested by the question. It either reverses the relationship, assigns the feature to the wrong institution, place, process or category, or includes an additional proposition that is not correct. The fact that an option may contain a term related to the subject does not make the entire option correct. Option B: Incorrect. This alternative does not match the verified principle tested by the question. It either reverses the relationship, assigns the feature to the wrong institution, place, process or category, or includes an additional proposition that is not correct. The fact that an option may contain a term related to the subject does not make the entire option correct. Option C: Incorrect. This alternative does not match the verified principle tested by the question. It either reverses the relationship, assigns the feature to the wrong institution, place, process or category, or includes an additional proposition that is not correct. The fact that an option may contain a term related to the subject does not make the entire option correct. Option D: Correct. This option is the combination or proposition that matches the verified principle described above. It does not introduce a contradiction or an unsupported qualification. Exam takeaway: the decisive point is the distinction stated in the core explanation, and Option D is the only choice fully consistent with it. For Prelims, avoid selecting an option merely because one part sounds familiar. Read the entire alternative, identify the controlling constitutional provision, historical fact, scientific mechanism, geographical location or economic definition, and then eliminate choices that overstate, omit or misclassify that point.