money supply, banking & financial institutions section 3 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
- Imposing tariffs may not help in improving the trade balance as the exchange rate moves to offset the tariff
- The exchange rate depends on the demand and supply of the two currencies
(a) (ii) only
(b) Both (i) & (ii)
(c) (i) only
(d) Neither (i) nor (ii)
The correct answers to the above question in:
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.
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Question : 1
Which of the following are the provisions of the SARFAESI Act which enables banks to reduce their non-performing assets (NPAs)?
- Enforcement of Security interests by secured creditors (Banks/ Financial Institutions).
- Transfer of non-performing assets to asset reconstruction company which will then dispose of those assets and realise the proceeds.
- To provide a legal framework for securitization of assets.
- Assisting banks in making the credibility track record of customers under the Credit Information Bureau of India (CIBIL).
a) 1, 2 and 3
b) 1 and 2
c) 2, 3 and 4
d) 1, 2, 3 and 4
Answer »Answer: (a)
Question : 2
Bull and bear are related to which commercial activity ?
a) International trade
b) Stock market
c) Banking
d) E-commerce
Answer »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.
Question : 3
A speculator who enters into a purchase transaction with a view to sell in the near future when the price would have risen is called a
a) Bison
b) Boar
c) Bear
d) Bull
Answer »Answer: (d)
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.
Question : 4
What are the reforms of Narsimham Committee on Banking sector?
- Nationalisation of banks should not take place any more.
- Private and foreign banks should be set up to promote competition.
- There should be a phased reduction of CRR and SLR.
a) 2 only
b) 1 only
c) 3 only
d) All of the Above
Answer »Answer: (d)
Question : 5
Which among the following are the Nationalised Banks?
- Bank of India
- Punjab National Bank
- Canara Bank
- United Commercial Bank
a) 3 and 4
b) 1 and 2
c) 1 and 4
d) 1, 2, 3, 4
Answer »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.
Question : 6
Which of the following is the largest holder of Government securities?
a) Cooperative Banks
b) Reserve Bank of India
c) Commercial banks
d) Insurance companies
Answer »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.
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