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
(a) 1957
(b) 1949
(c) 1935
(d) 1947
The correct answers to the above question in:
Answer: (a)
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
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
Answer »Answer: (b)
A line of credit is a preset amount of money that a bank has agreed to lend to a company/individual. The company can draw from the line of credit when it needs up to the maximum amount. The company will pay interest only on the amount used.
Question : 2
The sum of which of the following constitutes Broad Money in India?
- Currency with public
- Demand deposits with banks
- Time deposits with banks
- Other deposits with RBI
a) 1, 2 and 3
b) 1, 2 and 4
c) 1, 2, 3 and 4
d) 1 and 2
Answer »Answer: (c)
Question : 3
Why is the offering of ‘teaser loans’ by commercial banks is a cause of economic concern?
- The ‘teaser loans’ are considered to be an aspect of sub-prime lending and banks may be exposed to the risk of defaulters in future.
- In India, the ‘teaser loans’ are mostly given to entrepreneurs to set-up manufacturing or export units.
a) Only 2
b) Neither 1 nor 2
c) Both 1 and 2
d) Only 1
Answer »Answer: (d)
Question : 4
If new currency is being issued, then who has the authority to decide its "Denomination":
a) RBI Central Board of Directors
b) Central Government
c) RBI Governor
d) Monetary Policy Committee
Answer »Answer: (b)
As per section 24 of RBI Act 1934, “Central Government, on the recommendation of Central Board of Directors of RBI, has the authority to specify the denomination of the new currency note to be issued in the country.”
Question : 5
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
Answer »Answer: (c)
Question : 6
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
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
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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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