money supply, banking & financial institutions section 3 MCQ Questions & Answers Detailed Explanation

Answer: (b)

Suppose country A imposed a tariff against country B to reduce imports from B. Then it will lead to a reduction in demand of currency B for import purposes, which will lead to depreciation of currency B, resulting in negating the effect of tariffs imposed.

In a market-determined exchange rate, the rate of exchange between two currencies depends only on the demand and supply of the two currencies.

But the demand and supply of two currencies may depend on several factors like export and import and foreign people coming in or going out of the country and so on.

Answer: (a)

Answer: (b)

Both the terms are related to the stock market. Investors who take a bull approach purchase securities under the assumption that they can be sold later at a higher price.

A “bear” is considered to be the opposite of a bull. Bear investors believe that the value of a specific security or an industry is likely to decline in the future.

Answer: (d)

The nationalised banks are Central Bank of India, Bank of India, Punjab National Bank, Canara Bank, United Commercial Bank, Syndicate Bank, Bank of Baroda, United Bank of India, Union Bank of India, Dena Bank, Allahabad Bank, Indian Bank, Indian Overseas Bank Bank of Maharashtra.

Answer: (c)

As commercial banks are required to keep SLR (cash, gold, government securities) of 18.25%, they keep the maximum per cent of government securities. Out of cash, gold and government securities, the government securities give the best returns (interest), so they prefer this instrument.

Cooperative banks also keep government securities under SLR but since cooperative banks overall share in deposit and lending is around 10 per cent of the Scheduled commercial banks, so commercial banks have the highest share of government securities.

Answer: (b)

Electronic Clearing Service is a mode of electronic funds transfers from one bank account to another bank account using the services of a Clearing House. This is normally for bulk transfers from one account to many accounts or vice-versa.

This can be used both for making payments like distribution of dividend, interest, salary, pension, etc. by institutions or for collection of amounts for purposes such as payments to utility companies like telephone, electricity, or charges such as house tax, water tax, etc or for loan instalments of financial institutions/banks or regular investments of persons.