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

Question : 1

Which of the following investors/ agencies can purchase government of India securities/bonds?

1. Reserve Bank of India
2. Portfolio Investors
3. Financial Institution
4. Individuals

a) (i) & (iii) only

b) (iii) only

c) (i) only

d) All of the above

Question : 2

Debentures and Equity differ in?

a) Debentures are bonds confirming that money has been borrowed; equity is a shareholder’s voting rights in proportion to his shareholding

b) Equity shares have greater risk compared to debentures which have fixed interest on the amount paid.

c) An equity shareholder cannot withdraw his investment but debenture holder can withdraw his money.

d) Both have the right to vote irrespective of the size of their holdings. Debentures are of lower value than equity

Question : 3

Consider the following steps:

1. Banking Department gets currency from the Issue Department
2. Government puts the currency in circulation
3. Central Government incurs a deficit in its Budget
4. Government Sells Treasury Bills to Banking Department of RBI

a) 2 3 4 1

b) 1 2 3 4

c) 3 4 1 2

d) 4 3 2 1

Question : 4

Which of the following statements are true regarding India’s present exchange rate system:

1. The rupee-dollar rate depends on market forces of demand & supply
2. RBI regulates the Rupee dollar rate
3. RBI intervenes in the forex market
4. RBI regulates the forex market

a) (i) & (iii) only

b) (i), (iii) & (iv) only

c) (i) only

d) (ii) & (iii)

Question : 5

Which one of the following statements is not correct?

a) RBI is the banker of the Central and State Government

b) RBI was established in 1949

c) RBI is the custodian of the country’s Foreign Exchange Reserve

d) RBI is the Central Bank of the country

Question : 6

Which of the following will be the impact of rupee depreciation?

1. Exports will become more competitive
2. Exporters will fetch more dollars for the same amount of goods exported
3. Demand for domestic goods and services will increase

a) (ii) only

b) (i) & (iii) only

c) (i) only

d) All of the above