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
(a) At present there are 26 Nationalized Banks in India.
(b) Banks have the freedom to regulate their own Savings Bank Deposit interest rates.
(c) Foreign Banks and Regional Rural Banks do not come under the category of Scheduled Commercial Banks.
(d) Narsimham Committee is related to Banking Sector reforms.
The correct answers to the above question in:
Answer: (c)
Foreign Banks and Regional Rural Banks also come under the category of Scheduled Commercial Banks. Now, the banks are free to determine their savings bank deposit interest rate, subject to the following two conditions:
1. Each bank will have to offer a uniform interest rate on savings bank deposits up to ` 1 lakh,irrespective of the amount in the account within this limit.
2. For savings bank deposits over ` 1 lakh, a bank may provide differential rates of interest, if it so chooses. However, there should not be any discrimination from customer to customer on interest rates for similar amount of deposit.
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Read more money and supply banking financial institutions Based Indian Economy Questions and Answers
Question : 1
As in December 2017, Indian government’s holding in which of the following banks was maximum?
a) United Bank of India
b) State Bank of India
c) Bank of India
d) Central Bank of India
Answer »Answer: (a)
Question : 2
Brent index is associated with :
- crude oil prices
- copper future prices
- gold future prices
- shipping rate index
a) Only 2
b) Only 1
c) Only 3
d) Only 4
Answer »Answer: (b)
Brent Crude is a major trading classification of sweet light crude oil that serves as a major benchmark price for purchases of oil worldwide. Brent Crude is extracted from the North Sea and comprises Brent Blend, Forties Blend, Oseberg and Ekofisk crudes.
The Brent Crude oil marker is also known as Brent Blend, London Brent and Brent petroleum. The index represents the average price of trading in the 25 days Brent Blend, the Forties, Oseberg, Ekofisk (BFOE) market in the relevant delivery month as reported and confirmed by the industry media.
Question : 3
To know whether the rich are getting richer and the poor getting poorer, it is necessary to compare
a) the wholesale price index over different periods of time for different regions
b) the distribution of income of different sets of income recipients at a point of time
c) the distribution of income of an idential set of income recipients in different period of time
d) the availability of foodgrains among two sets of people, one rich and the other poor, over different period of time
Answer »Answer: (c)
Question : 4
Which of the following are part of capital account transactions?
- Masala bonds
- Purchase of capital equipment from abroad
- NRI deposits in Indian banks
a) (i) & (ii) only
b) (iii) only
c) (i) only
d) (i) & (iii) only
Answer »Answer: (d)
Masala bonds are issued outside India and money is raised in foreign currency, so it is part of our capital account.
When NRIs are depositing money in Indian banks then it’s a transaction between Indian residents (banks) and non-resident Indians and it creates a liability on Indian banks for the future, hence it’s a capital receipt.
Import of capital equipment is part of the current account.
Question : 5
Cheap money means
a) Low level of income
b) Low level of standard of living
c) Low rates of interest
d) Low level of saving
Answer »Answer: (c)
Cheap money is a loan or credit with a low interest rate, or the setting of low-interest rates by a central bank like the Federal Reserve.
Cheap money is good for borrowers, but bad for investors, who will see the same low-interest rates on investments like savings accounts, money market funds, CDs and bonds.
Cheap money can have detrimental economic consequences as borrowers take on excessive leverage.
Question : 6
Which of the following will be included in the balance of payments of India?
- Factor income of Indian residents from abroad
- Gift received by a family in India from his NRI son
a) (ii) only
b) Both (i) & (ii)
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (b)
Those transactions which happen between Indian residents and Foreigners or non-resident Indians (NRIs) are recorded in India’s balance of payment.
In the first statement, an Indian resident is earning income from abroad from a foreign entity and in the second statement also, an Indian family is getting money free from an NRI.
So, both will be recorded in India’s balance of payments under the current account.
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