money supply, banking & financial institutions section 7 MCQ Questions & Answers Detailed Explanation

Question : 1

“Bad money (if not limited in quantity ) drives good money out of circulation.” The above statement is from which among the following laws?

a) Keynes’ law

b) Gresham’s law

c) Wagner’s law

d) Grimm’s law

Question : 2

Consider the following statements:

1. Non-Performing Assets of scheduled commercial banks is more than non-banking financial companies
2. Presently, the Capital Adequacy Ratio of scheduled commercial banks is around 15%

a) (ii) only

b) Both (i) & (ii)

c) (i) only

d) Neither (i) nor (ii)

Question : 3

Recently, one of the well known market analysts made this statement: “We expect the Reserve Bank of India to continue to ease liquidity” Which among the following instruments can be used by RBI to continue to ease liquidity?

1. Cutting the frequency of Open Market Operations
2. Cutting the Cash Reserve Ratio
3. Cutting the Repo and Reverse Repo rates

a) Only 1 & 2

b) Only 1

c) Only 2 & 3

d) 1, 2 & 3

Question : 4

What is the main cost-push factor in India?

1. Problem of hoarding by traders and black marketeers
2. Taxation which gives the traders an opportunity to raise the prices of goods, the proportion of which is often more than the levy of taxes
3. Administered Prices
4. Hike in Oil Prices

a) 1, 2, 3, 4

b) 1, 2, 3

c) 1, 2

d) None of the Above

Question : 5

When there is an official change in the exchange rate of domestic currency, then it is called :

a) Revaluation

b) Deflation

c) Appreciation

d) Depreciation

Question : 6

Consider the following statements regarding Foreign Direct Investment (FDI):

1. FDI investment happens through the secondary market
2. FDI investment is about equity securities
3. FDI investment is about debt securities

a) (i) & (ii) only

b) (i) & (iii) only

c) (i) only

d) (ii) only