money supply, banking & financial institutions section 2 MCQ Questions & Answers Detailed Explanation
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The following question based on Money Supply, Banking and Financial Institutions topic of indian economy mcq
List I | List II |
A. Depression | 1. Coexistence of inflation and stagnation |
B. Recession | 2. Recovery from depression |
C. Reflation | 3. Reduction in production over a short period |
D. Stagflation | 4. Insufficient demand leading to idle men and machinery over a long time |
5. Reduction in level of the economy due to falling prices |
(a) A-4; B-3; C-2; D-5
(b) A-1; B-2; C-3; D-5
(c) A-4; B-3; C-2; D-1
(d) A-3; B-4; C-2; D-1
The correct answers to the above question in:
Answer: (a)
Recession is slow down in effective demand for goods and services, slow down in the economy implies a short-run decline in the growth rate.
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Read more money and supply banking financial institutions Based Indian Economy Questions and Answers
Question : 1
Regulated markets aim at the development of the marketing structure to
a) increase the non-functional margins of the traders
b) maximise the non-functional margins of the commission agents
c) widen the price spread between the producer and the consumer
d) narrow down the price spread between the producer and the consumer
Answer »Answer: (d)
Regulated markets aim at the development of marketing structures to ensure remunerative prices to the producers and to narrow down the price spread between the producer and the consumer.
It also aims at reducing the non-functional margins of the commission agents.
Question : 2
The basic aim of Lead Bank Scheme is that
a) there should be stiff competition among the various nationalised banks
b) all the banks should make intensive efforts to mobile deposits
c) individual banks should adopt particular districts for intensive development
d) big banks should try to open offices in each district
Answer »Answer: (c)
Question : 3
Consider the following statements:
- As per the Banking Regulation Act 1949, RBI, in the public interest, can supersede the management of a banking company.
- As per the RBI Act 1934, RBI, in the public interest can supersede the management of a non-banking financial company
a) (ii) only
b) Both (i) & (ii)
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (b)
As per the Banking Regulation Act 1949 (Section 36), RBI, in the public interest, can supersede the Board of Directors (management) of a banking company. This is generally done if there is mismanagement in the bank or it is on the verge of default.
As per RBI Act 1934, RBI, in the public interest, can supersede the Board of Directors (management) of a non-banking financial company. (RBI can supersede a bank’s board through Banking Regulation Act 1949, but NBFCs are not covered in that Act.
So, an amendment was done to RBI Act 1934 in July 2019, to allow RBI to supersede the board of NBFCs, in the wake of the crisis faced by various NBFCs like DHFL, IL&FS etc.)
Question : 4
RBI acts as a 'lender of last resort' to ensure the following in the economy:
- To prevent possible failure of the banks
- To protect the interest of the depositors of the banks
- To ensure financial stability in the economy
a) (i) & (ii) only
b) (i) & (iii) only
c) (i) only
d) All of the above
Answer »Answer: (d)
RBI comes to the rescue of a bank that is solvent (has not gone bankrupt) but faces temporary liquidity (funds) problems by supplying it with much-needed liquidity when no one else is willing to extend credit to that bank.
RBI extends this facility to protect the interest of the depositors of the bank and to prevent possible failure of a bank, which in turn may also affect other banks and institutions and can have an adverse impact on financial stability and thus on the economy.
Question : 5
Since the economic reforms were launched in India, which one of the following statements is true for Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR) of the commercial banks?
a) SLR has been reduced but CRR has been raised
b) Both SLR and CRR have been reduced
c) SLR has been increased but CRR has been reduced
d) Both SLR and CRR have been raised
Answer »Answer: (b)
Question : 6
What is the role of “Ombudsman” in a bank?
a) To inspect the internal working of the branches.
b) To monitor the poverty alleviation programmes undertaken by or implemented by the bank.
c) To provide quality and speedy redressal of grievances of customers.
d) To provide suggestions for innovative schemes in the banks.
Answer »Answer: (c)
The Banking Ombudsman Scheme enables an expeditious and inexpensive forum to bank customers for the resolution of complaints relating to certain services rendered by banks.
The Banking Ombudsman Scheme was introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect from 1995.
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