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

Question : 1

What do we call an arrangement whereby an issuing Bank at the request of the Importer (Buyer) undertakes to make payment to the exporter (Beneficiary) against stipulated documents?

a) Bill of Exchange

b) Letter of Credit

c) Letter of Exchange

d) Bill of Entry

Question : 2

The Bank rate is the rate at which

a) the RBI lends to the public

b) the Government of India lends to other countries

c) the RBI gives credit to the commercial banks

d) a bank lends to the public

Question : 3

Which among the following is not correct?

a) Floating exchange rate breeds uncertainties and speculation

b) The system of floating exchange rate requires comprehensive government intervention

c) Economic and political factors and value judgments influence the choice of the exchange rate system

d) Floating exchange rate system works on market mechanism

Question : 4

Stagflation is a situation of

a) stagnation and inflation

b) stagnation and recovery

c) stagnation and deflation

d) stagnation and recession

Question : 5

If an exporter earns money and deposits that with RBI, what will be the ultimate impact on country’s money supply?

a) Money supply will increase

b) Money supply will remain unaltered

c) Money supply will decrease

d) Money supply will depend upon the current exchange rate

Question : 6

“Liquidity Coverage Ratio” is defined as a ratio of:

a) High quality liquid assets to deposits of the public in the bank

b) High quality liquid assets to net cash outflow amount over a 30 days period

c) High quality liquid assets to cash outflow for 30 days period

d) High quality liquid assets to total lending of banks