money supply, banking & financial institutions section 6 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
- It is the Apex Bank.
- It regulates the money supply.
- It gives loan to the business houses.
- It supervises the operations of NABARD.
(a) 2 and 4
(b) 1, 2 and 4
(c) 1, 2 and 3
(d) 1 and 2
The correct answers to the above question in:
Answer: (d)
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Read more money and supply banking financial institutions Based Indian Economy Questions and Answers
Question : 1
Which one of the following statements about foreign exchange reserves of India is not true?
a) It is maintained with the Reserve Bank of India
b) Presently foreign exchange situation is satisfactory in India
c) Special drawing rights are not included in it
d) It includes foreign currency assets and gold holdings of Reserve Bank of India
Answer »Answer: (c)
Question : 2
The Government is planning merger of public sector banks. It will benefit in which of the following ways:
- Reducing cost and achieving efficiency
- Achieving economies of scale
- Leading to consolidation
- The merged entity will have less NPA as compared to the individuals
a) (i), (ii) & (iii) only
b) (ii), (iii) & (iv)
c) (i) & (ii) only
d) All of the above
Answer »Answer: (a)
The government is merging public sector banks to make them more efficient and achieve economies of scale and consolidation.
Just merging banks will not reduce the absolute value of NPAs.
Question : 3
Which of the following scenarios can support sustainable economic growth?
- Deflation
- Low and moderate inflation
- Galloping inflation
- Hyperinflation
a) (i) & (ii) only
b) (ii) & (iii) only
c) (ii) only
d) All of the above
Answer »Answer: (c)
Deflation is bad for economic growth. Because when prices start declining people postpone their purchase decisions and companies postpone their investment decisions.
This leads to a decrease in demand in the economy which hurts economic growth.
Low and moderate inflation is good for economic growth as it creates demand in the economy and people are also willing to save money in banks which ultimately increases investment.
Galloping or Hyperinflation eats away the savings of the people as they spend too much money in buying goods and services which ultimately decreases investment. Banks also do not offer higher interest rates (than inflation) in such cases and people do not keep money in banks as they do not get any real return.
So, only (ii) statement is true.
Question : 4
Who has the authority to issue currency notes in India?
a) Ministry of Finance
b) RBI
c) Central Government
d) RBI governor
Answer »Answer: (b)
The RBI Act of 1934, Section 22 gives the central bank the sole right to issue currency notes.
Question : 5
The question of full capital account convertibility of Indian was explained by the committee known as
a) Rangarajan Committee
b) Hashim Committee
c) Tarapore Committee II
d) Vaghul Committee
Answer »Answer: (c)
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