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) 1542
(b) 1880
(c) 1601
(d) 1861
The correct answers to the above question in:
Answer: (d)
Practice Money Supply, Banking and Financial Institutions (money supply, banking & financial institutions section 2) Online Quiz
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Read more money and supply banking financial institutions Based Indian Economy Questions and Answers
Question : 1
A proportion of total deposits and reserves of the commercial banks deposited with the Reserve Bank of India is called
a) Bank Guarantee
b) Cash Reserve Ratio
c) Caution Money
d) Balance of payment
Answer »Answer: (b)
Question : 2
Consider the following statements:
- RBI is a wholly owned subsidiary of Govt. of India
- RBI’s surplus transfer to the central government has steadily decreased in the last 5 years
a) (ii) only
b) Both (i) & (ii)
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (c)
RBI is 100% owned by govt. of India but its surplus transfer to govt has fluctuated in the previous years.
Refer the Trends
Question : 3
The main source of long-term credit for a business unit is
a) loans from the Government
b) deposits from the public and financial institutions
c) sale of stocks and bonds to the public
d) borrowing from banks
Answer »Answer: (c)
Companies issue securities called stocks and bonds to raise necessary capital which funds the company’s daily operations and growth. Stock represents fractional ownership in the company. Investors may purchase preferred or common stock.
Bonds represent loans of the company to lenders called bondholders. A company decides to sell stock when it needs long-term access to capital.
Unlike bond loans, issuing stock to owners called stockholders doesn’t require the company’s repayment of investor principal.
Question : 4
Which of the following statements are true regarding “Shadow Banking”:
- They by and large raise funds from public deposits
- Their activities are transparent and properly regulated
- IL&FS is an example of a Shadow bank
a) (ii) only
b) (iii) only
c) (i) only
d) (i) & (ii) only
Answer »Answer: (b)
Shadow banking operates outside the regular banking system and financial intermediation activities are undertaken with less transparency and regulation than conventional banking.
Shadow banks, like conventional banks, undertake various intermediation activities akin to banks, but they are fundamentally distinct from commercial banks in various respects. NBFCs are examples of shadow banks.
The following are differences between normal banks and shadow banks.
- First, unlike commercial banks, which by dint of being depository institutions can create money, shadow banks cannot create money.
- Second, unlike the banks, which are comprehensively and tightly regulated, the regulation of shadow banks is not that extensive and their business operations lack transparency.
- Third, while commercial banks, by and large, derive funds through the mobilization of public deposits, shadow banks raise funds, by and large, through market-based instruments such as commercial paper, debentures, or other structured credit instruments.
- Fourth, the liabilities of the shadow banks are not insured, while commercial banks’ deposits, in general, enjoy Government guarantees to a limited extent.
- Fifth, in times of distress, unlike banks, which have direct access to central bank liquidity, shadow banks do not have such recourse.
Question : 5
Which of the following Banks is the Central Bank of India?
a) Bank of India
b) Reserve Bank of India
c) Union Bank of India
d) State Bank of India
Answer »Answer: (b)
Question : 6
In India, $M_3$ includes
a) demand deposits with banks
b) All of the above
c) currency with the public
d) time deposits with banks
Answer »Answer: (b)
GET Money Supply, Banking and Financial Institutions PRACTICE TEST EXERCISES
money supply, banking & financial institutions section 1
money supply, banking & financial institutions section 2
money supply, banking & financial institutions section 3
money supply, banking & financial institutions section 4
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money supply, banking & financial institutions section 11
money supply, banking & financial institutions section 12
Money Supply, Banking and Financial Institutions Shortcuts and Techniques with Examples
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