money supply, banking & financial institutions section 4 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
- National Multi Commodity Exchange
- Multi Commodity Exchange
- National Commodity and Derivatives Exchange
- Indian Commodity Exchange
(a) 1, 2, 3
(b) 1 and 2
(c) 1, 2, 3, 4
(d) None of the Above
The correct answers to the above question in:
Answer: (c)
There are four commodity exchanges working in the country. They are
- NMCE (National Multi Commodity Exchange) - the oldest commodity exchange in the country which became operational in 2002,
- MCX (Multi Commodity Exchange),
- NCDEX (National Commodity and Derivatives Exchange) and
- ICEX (Indian Commodity Exchange).
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Read more money and supply banking financial institutions Based Indian Economy Questions and Answers
Question : 1
The Apex bank for providing Agricultural Refinance in India is
a) NABARD
b) SBI
c) LDB
d) RBI
Answer »Answer: (a)
Question : 2
Which among the followings is the type of inflation?
- Demand Pull Inflation
- Cost Push Inflation
- Stagflation
- Hyperinflation
a) 1, 2
b) 1, 2, 3, 4
c) 3, 4
d) 1, 4
Answer »Answer: (b)
Types of inflation are Demand Pull Inflation, Cost Push Inflation, Stagflation, Hyperinflation.
Question : 3
If a country has a ‘Pegged’ (fixed but adjustable) exchange rate, then consider the following statements:
- Inflation in the country may make its exports less competitive
- If the country devalues its currency in proportion to the inflation then its exports may remain competitive
a) (ii) only
b) Both (i) & (ii)
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (b)
The pegged exchange rate means a country fixes its exchange rate with another country currency or a basket of currencies and when required changes it accordingly
Suppose Nominal Exchange Rate is $1 = Rs.60 (Nominal exchange rate means how many Rs. can be purchased in USD 1)
For example, suppose - Burger Price - India : Rs. 30, US : $1,
In this case, US will import the burgers from India as in $1 they will get Rs. 60 and in Rs. 60 they will get 2 burgers from India. So, India will export burgers to US.
But if due to inflation the burger price in India becomes Rs. 60 then exports from India will stop. So, inflation in the country makes exports less competitive.
Hence, (i) statement is true. But when the price of burgers in India reaches Rs. 60 and RBI devalue the exchange rate to $1 = Rs. 120 then again exports from India will start.
Because now foreigners will get Rs. 120 in $1 and in Rs. 120 they will again get 2 burgers from India.
So (ii) statement is also true.
Question : 4
Which of the following activities will increase liquidity in the economy?
- Advance tax payment
- Tax refunds for GST
- Front loading of government expenditure
- Recapitalization of public sector banks
a) (ii), (iii) & (iv) only
b) (iii) & (iv) only
c) (i) & (iii) only
d) All of the above
Answer »Answer: (a)
Advance tax payment means paying a part of the yearly taxes in advance to the government. This reduces liquidity in the economy because the money moves from public to government. (the logic is money with the government is not part of the money supply in the economy)
In the case of GST, the government credits/gives back the taxes paid on inputs, to the suppliers which increase liquidity in the economy. Front loading of government expenditure means the government is spending its yearly targeted expenditure in the starting months rather than in the year-end. This increases liquidity in the economy.
Recapitalization of public sector banks means the government is putting money in public sector banks which increases the lending capacity of the banks resulting in an increase in money supply and liquidity.
Question : 5
Which of the following was described as the biggest ever cash purchase of the shares of a bank in India?
a) Purchase of Nedungadi Bank shares by Punjab National Bank
b) Merger of Centurion Bank of Punjab with HDFC Bank
c) Amalgamation of Global Trust Bank with Oriental Bank of Commerce
d) Purchase of State Bank of India shares from RBI by the Central Government
Answer »Answer: (d)
Question : 6
Which of the following kind of entities are covered under the Insolvency and Bankruptcy Code 2016?
- Individuals
- Partnership firms
- Limited Liability Partnerships
- Companies
a) (i) & (iv) only
b) (ii), (iii) & (iv) only
c) (iii) only
d) All of the above
Answer »Answer: (d)
The IBC Code 2016 covers solvency of Individuals/personal, Corporate Debtors, Proprietorship, Partnership firms and Limited Liability Partnership (LLPs) firms.
But the provisions of the IBC Code are being implemented/notified in a phased manner and till now only Corporate Debtors have been notified under IBC.
Personal insolvencies, Proprietorship (one-man company) and partnership firms (which are not "limited") and LLPs will be done soon.
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