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

Question : 1

Bank rate refers to:

a) the rate at which banks lend to its prime borrowers

b) the rate at which banks rediscount bills with RBI

c) the maximum rate that banks can pay for deposit

d) the rate of interest charged on inter-bank transactions

Question : 2

Rural Infrastructure Development Fund is being financed by

a) Reserve Bank of India

b) Selected group of Public Sector Banks

c) Ministry of Rural Development

d) NABARD

Question : 3

Which of the following are part of the money supply?

1. Cash and deposits of public
2. Bonds held by public
3. Shares held by public

a) (i) & (ii) only

b) (ii) & (iii) only

c) (i) only

d) All of the above

Question : 4

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 : 5

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 : 6

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