money supply, banking & financial institutions section 6 MCQ Questions & Answers Detailed Explanation

Question : 1

In the context of the Indian economy, which of the following is/are the purpose/purposes of ‘Statutory Reserve Requirements’?

1. To enable the Central Bank to control the number of advances the banks can create
2. To make the people’s deposits with banks safe and liquid
3. To prevent the commercial banks from making excessive profits
4. To force the banks to have sufficient vault cash to meet their day-to-day requirements

a) 1 and 2 only

b) 1 only

c) 2 and 3 only

d) 1, 2, 3 and 4

Question : 2

The major objective of monetary policy is to

a) Promote economic growth with price stability

b) weed out corruption in the economy

c) increase government’s tax revenue

d) revamp the Public Distribution System

Question : 3

What are the authorities of SEBI?

1. Oversee the working of stock exchanges
2. Regulate merchant banks and mutual funds
3. Register and regulate intermediaries such as stock brokers

a) 2 only

b) 1 only

c) 3 only

d) None of the Above

Question : 4

Priority Sector lending by banks in India constitutes the lending to

a) Micro and small enterprises

b) All of the above

c) Weaker sections

d) Agriculture

Question : 5

Which of the following scenarios can support sustainable economic growth?

1. Deflation
2. Low and moderate inflation
3. Galloping inflation
4. Hyperinflation

a) (i) & (ii) only

b) (ii) & (iii) only

c) (ii) only

d) All of the above

Question : 6

The Government is planning merger of public sector banks. It will benefit in which of the following ways:

1. Reducing cost and achieving efficiency
2. Achieving economies of scale
3. Leading to consolidation
4. 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