Practice Money and supply banking financial institutions - indian economy mcq Online Quiz (set-2) For All Competitive Exams
Q-1) When was the first Regional Rural Bank formed?
(a)
(b)
(c)
(d)
Q-2) In which year did the Government of India Nationalised 14 major private banks?
(a)
(b)
(c)
(d)
Q-3) Paper currency was first started in India in
(a)
(b)
(c)
(d)
Q-4) The decimal system was made applicable to Indian currency system in which year?
(a)
(b)
(c)
(d)
Q-5) When was the NABARD formed?
(a)
(b)
(c)
(d)
Q-6) Which of the following statements are correct regarding "Regional Rural Banks (RRBs)":
- They are regulated by RBI
- They are supervised by NABARD
Select the correct answer using the code given below:
(a)
(b)
(c)
(d)
Regional Rural Banks (RRBs) are regulated by RBI and supervised by NABARD
Q-7) In which among the following types comes the Interest Rate Risk?
(a)
(b)
(c)
(d)
Q-8) Consider the following statements regarding ‘Agency Banks’ of RBI:
- RBI Act 1934 allows it to appoint agency banks
- Public sector and private sector banks both can act as agency banks
Select the correct answer using the code given below:
(a)
(b)
(c)
(d)
RBI carries out the general banking business of the governments through its own offices and commercial banks, both public and private, appointed as its agents (called Agency Banks).
Section 45 of the Reserve Bank of India Act, 1934, provides for the appointment of scheduled commercial banks as agents at all places or at any place in India.
A network comprising the Government Banking Division of RBI and branches of agency banks appointed under Section 45 of the RBI Act carry out the government transactions.
At present all the public sector banks and select private sector banks act as RBI's agents. Only designated branches of agency banks can conduct government banking business.
Q-9) Consider the following statements regarding “strategic disinvestment” of PSUs:
- Government sells up to 50% or higher percentage of shares to a strategic partner
- Management control must be transferred to the strategic partner
Select the correct answer using the code given below:
(a)
(b)
(c)
(d)
The term “Strategic Disinvestment” means the sale of a substantial portion of the Government share-holding of a central public sector enterprise (CPSE) of up to 50%, or such higher percentage (to the strategic partner) along with transfer of management control.
(It has to be kept in mind that even by selling less than 50% stake to the strategic partner, the government can transfer the management control to the strategic partner, it is legally possible.)
In Strategic Disinvestment, management control must be transferred to the private strategic partner. Strategic disinvestment is a way of privatisation
Q-10) “A statement of estimated receipts and expenditures called annual Financial Statement (Budget) has to be placed before parliament for each financial year.” The above provision has been enshrined in which among the following articles of Constitution of India?
(a)
(b)
(c)
(d)
Q-11) When the exchange rate changes from 1 $ = 60 to 1 $ = 58, it means- Rupee value has appreciated
- Dollar value has depreciated
- Rupee value has depreciated
- Dollar value has appreciated
Which of the statement(s) given above is/are correct?
(a)
(b)
(c)
(d)
Q-12) Who maintains the foreign exchange reserve in India?
(a)
(b)
(c)
(d)
Q-13) Which of the following can be used for checking inflation temporarily ?
(a)
(b)
(c)
(d)
An open market operation (also known as OMO) is an activity by a central bank to buy or sell government bonds on the open market.
India’s Open Market Operation is much influenced by the fact that it is a developing country and that the capital flows are much different than those in the other developed countries. Economists claim that an increase in money supply alone constitutes inflation.
In India, the Reserve Bank of India uses policy rates and reserve ratios such as Cash Reserve Ratio (CRR) in controlling the money supply. Apart from the CRR, banks are required to maintain liquid assets in the form of gold, cash and approved securities.
A higher liquidity ratio forces commercial banks to maintain a larger proportion of their resources in liquid form and thus reduces their capacity to grant loans and advances, thus it is an anti-inflationary impact.
A higher liquidity ratio diverts the bank funds from loans and advances to investment in government and approved securities.
Q-14) Which one of the following is not an instrument of selective credit control in India?
(a)
(b)
(c)
(d)
Q-15) The question of full capital account convertibility of Indian was explained by the committee known as
(a)
(b)
(c)
(d)
Q-16) As per the new Monetary Policy Framework, who will determine the inflation target?
(a)
(b)
(c)
(d)
The inflation target is decided by the Government of India in consultation with RBI
Q-17) The ratio of a bank’s cash holdings to its total deposit liabilities is called the
(a)
(b)
(c)
(d)
Cash Reserve Ratio (CRR) is the amount of funds that the banks have to keep with the RBI.
If the central bank decides to increase the CRR, the available amount with the banks comes down.
The RBI uses the CRR to drain out excessive money from the system.
Q-18) Which of the following could be the after-effects of demonetization?
- RBI's liability would reduce to the extent the old notes does not come to the banking system
- Transfer of wealth from holders of illicit black money to the public sector
- The shift of resources from the private sector to the government
- Indirect and corporate taxes would decline to the extent growth slows
Select the correct answer using the code given below:
(a)
(b)
(c)
(d)
The currency held by the public is the liability of RBI as whenever somebody comes with the currency note to the RBI, it needs to return a sum equivalent to the value of the currency.
So, if some old notes do not come to the banking system then they will become invalid, and RBI will never have to return the equivalent value of those currency notes.
If the black money does not come back to the banking system after demonetization then RBI's liability would reduce by that amount and its net Assets (net worth) will increase.
This ultimately means that the private money has been transferred to the RBI. Hence it is a kind of transfer of illicit black money to the public sector.
Demonetization may have some negative impact on GDP growth which will impact the revenues from indirect and corporate taxes.
"Black economy is the market-based production of goods and services – legal or illegal – that escapes capture in the official GDP statistics. And the tax that the government forfeits on this activity circulates as black money."
Q-19) Consider the following statements regarding the “Gold Monetization Scheme”:
- It will help in the mobilization of gold held by households and institutions
- It will facilitate the use of gold for productive purpose
- It will help in reducing the import of gold and the Current Account Deficit (CAD)
- Banks will be allowed to lend this gold to jewellers
Select the correct answer using the code given below:
(a)
(b)
(c)
(d)
Through this scheme, the households will be able to deposit their gold/ jewellery with the banks which they will melt and convert into gold bars and could sell these gold bars to jewellers.
The depositors of gold will earn a fixed interest rate (denominated in terms of gold) and they will get their gold back after the maturity period or cash whatever they want.
Through this scheme, the government wants to mobilize the gold jewellery lying with the households for productive purposes. This will also help in reducing the gold imports and Current Account Deficit (CAD).
Q-20) The Government is planning merger of public sector banks. It will benefit in which of the following ways:
- Reducing cost and achieving efficiency
- Achieving economies of scale
- Leading to consolidation
- The merged entity will have less NPA as compared to the individuals
Select the correct answer using the code given below:
(a)
(b)
(c)
(d)
The government is merging public sector banks to make them more efficient and achieve economies of scale and consolidation.
Just merging banks will not reduce the absolute value of NPAs.