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

Question : 1

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 : 2

Which of the following will necessarily lead to inflation?

a) Increase in effective demand

b) Decrease in Output

c) Increase in aggregate demand

d) Increase in current account deficit

Question : 3

One of the important goals of the economic liberalisation policy is to achieve full convertibility of the Indian rupee. This is being advocated because

a) it will attract more foreign capital inflow in India

b) it will help India secure loans from the world financial markets on attractive terms

c) it will help promote exports

d) convertibility of the rupee will stabilise its exchange value against major currencies of the world

Question : 4

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 : 5

Saving is that portion of money income that is

a) spent on health and education

b) spent for consumer durables

c) spent for development of Industries

d) not spent on consumption

Question : 6

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