money supply, banking & financial institutions section 2 MCQ Questions & Answers Detailed Explanation
MOST IMPORTANT indian economy mcq - 12 EXERCISES
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The following question based on Money Supply, Banking and Financial Institutions topic of indian economy mcq
(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
The correct answers to the above question in:
Answer: (c)
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Read more money and supply banking financial institutions Based Indian Economy Questions and Answers
Question : 1
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 : 2
Which of the following statements are true regarding Foreign Portfolio Investors (FPIs):
- They fund India’s Current Account Deficit (CAD)
- They help in achieving governments disinvestment target
- They are liable to pay capital gain tax in India
a) (ii) & (iii) only
b) (iii) only
c) (i) only
d) All of the above
Answer »Answer: (d)
FPI comes under capital account in Balance of Payment but they bring dollars/foreign currencies and this dollar is used to finance/fund if we have a deficit in the current account.
When the government is listing a PSU on the stock exchange for disinvestment, then FPIs can also purchase the PSU’s shares in the primary market. So, FPIs help in the government’s disinvestment plan.
FPI’s pay tax on the earnings they derive from a gain in shares/bonds prices called capital gain tax.
Question : 3
Which one of the following Public Sector Bank’s emblem figures a dog and the words ‘faithful friendly, in it?
a) Punjab National Bank
b) Oriental Bank of Commerce
c) Syndicate Bank
d) State Bank of India
Answer »Answer: (c)
Syndicate Bank. The symbol of dog implies that Bank is trustworthy and a friend. Its slogan is : Your faithful and friendly financial partner.
Question : 4
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 : 5
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
Answer »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.
Question : 6
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.
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