money supply, banking & financial institutions section 1 MCQ Questions & Answers Detailed Explanation

Question : 1

Consider the following statements.

1. Reserve Bank of India was nationalised in the year 1949.
2. The borrowing programme of the Government of India is handled by the Department of Expenditure, Ministry of Finance.

a) Only 2

b) Neither 1 nor 2

c) Both 1 and 2

d) Only 1

Question : 2

Which of the following statements are true regarding RBI?

1. As per the RBI Act 1934, RBI is bound to undertake the receipt and payments and other banking operations of the central government
2. As per the RBI Act 1934, RBI is obliged to act as a banker to State governments

a) (ii) only

b) Both (i) & (ii)

c) (i) only

d) Neither (i) nor (ii)

Question : 3

Consider the following statements regarding “Open Market Operations” (buying and selling of govt. bonds by RBI)

1. It changes the monetary base
2. It changes the money supply
3. It changes the money multiplier

a) (ii) only

b) (i) & (iii) only

c) (i) & (ii) only

d) All of the above

Question : 4

For which of the following, the Reserve Bank of India has stipulated a maximum Capital Adequacy Requirements in India?

a) Private Sector Banks

b) Local Area Banks

c) Banks that Undertake Insurance Business.

d) Scheduled Commercial Banks

Question : 5

What are “Futures”?

a) Securities or commodities sold or bought with the assumption of delivery at a later stage

b) Particular types and quantities of securities and com-modities bought for selling at higher prices

c) Shares and debentures bought at a cheaper rate and sold later at high rates

d) None of these

Question : 6

Consider the following statements:

1. Increase in deposit rate results in higher savings
2. Increase in deposit rate results in fall in credit off takes
3. Increase in deposit rate results in increase in investment

a) 1 & 3

b) 1 & 2

c) 1, 2, 3

d) Only 1