banking, security market & insurance section 4 MCQ Questions & Answers Detailed Explanation

Answer: (a)

Devaluation is a deliberate downward adjustment to the value of a country’s currency, relative to another currency, group of currencies. Since it is relative to other currencies so the internal price remains unchanged.

It causes a country’s exports to become less expensive and imports more expensive.

Answer: (a)

At present, the index is being developed only for the residential housing sector. However, at a later stage, the index could be expanded to develop separate indices for commercial property and land.

Primary data on housing prices is being collected from real estate agents by commissioning the services of private consultancy/research organisations of national repute.

In addition, data on housing prices is also being collected from the housing finance companies and banks, which is based on housing loans contracted by these institutions.

Answer: (c)

The abbreviation of Net Demand and Time Liabilities is NDTL, in which ‘D’ stands for demand.

Answer: (a)

The ratio of liquid assets to net demand and time liability is called statutory Liquidity Ratio (SLR).

SLR Rate = $\text"Liquid Assets"/\text"Demand + Time Liabilities"$× 100

Answer: (d)

A liquidity trap is a situation in which injections of cash into the private banking system by a central bank fail to lower interest rates and hence fail to stimulate economic growth.

A liquidity trap is caused when people hoard cash because they expect interest to rise in future, an adverse event such as deflation, insufficient aggregate demand, or war.

Answer: (d)

Each depositor in a bank is insured up to a maximum of Rs.1,00,000 (Rupees One Lakh) for both principal and interest amount held by him in the same capacity and same right as on the date on liquidation/  cancellation of bank’s licence or the date on which the scheme of amalgamation/merger/ reconstruction comes into force.