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

Question : 1

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 : 2

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 : 3

Consider the following statements regarding NonBanking Finance Companies (NBFCs):

1. NBFCs can also engage in Micro-Finance Activities.
2. Housing-finance companies form a distinct subgroup of the NBFCs.
3. The deposit insurance facility of the Deposit Insurance and Credit Guarantee Corporation is not available for NBFC depositors.

a) 1 and 3

b) Only 1

c) All of there

d) None of these

Question : 4

Which of the following is not a function of Reserve Bank of India?

a) Regulation of foreign trade

b) Custody and management of country’s foreign exchange reserved

c) Regulation of credit

d) Regulation of currency

Question : 5

Stagflation is a situation of

a) stagnation and inflation

b) stagnation and recovery

c) stagnation and deflation

d) stagnation and recession

Question : 6

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