money supply, banking & financial institutions section 2 MCQ Questions & Answers Detailed Explanation

Question : 1

The decimal system was made applicable to Indian currency system in which year?

a) 1957

b) 1949

c) 1935

d) 1947

Question : 2

Which of the following statements is true regarding “Line of Credit”:

a) It is issued mainly in case of international transactions

b) It is a preset amount of money that a bank has agreed to lend

c) It is issued by one bank to another

d) The company will have to pay interest on the amount for which line of credit has been issued

Question : 3

The sum of which of the following constitutes Broad Money in India?

1. Currency with public
2. Demand deposits with banks
3. Time deposits with banks
4. Other deposits with RBI

a) 1, 2 and 3

b) 1, 2 and 4

c) 1, 2, 3 and 4

d) 1 and 2

Question : 4

Inflation, in theory, occurs:

a) when the price of essential commodities outstrips income

b) when the exchange rate of a currency falls

c) when money supply grows at a higher rate than GDP in real terms

d) when fiscal deficit exceeds balance of payment deficit

Question : 5

Open market operation of RBI refers to:

a) buying and selling of shares

b) trading in securities

c) auctioning of foreign exchange

d) transaction in gold

Question : 6

Devaluation makes import

a) Cheaper

b) Dearer

c) Competitive

d) Inelastic