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

Question : 1

Which of the following statements are true regarding the Monetary Policy Committee (MPC)?

1. It has the authority to decide repo rate, CRR, SLR
2. Its decision is binding on RBI

a) (ii) only

b) Both (i) & (ii)

c) (i) only

d) Neither (i) nor (ii)

Question : 2

Consider the following statements:

1. Debt overhang refers to a debt burden so large that an entity cannot take on additional debt to finance future projects.
2. Debt trap is a situation in which it becomes difficult or impossible to repay the debt

a) (ii) only

b) Both (i) & (ii)

c) (i) only

d) Neither (i) nor (ii)

Question : 3

According to the Chakravarthy Committee, one of the principal causes affecting price stability in India is:

a) existence of black money

b) India’s precarious balance of payment position

c) violent fluctuation in agricultural production

d) fiscal deficit

Question : 4

The term “Seigniorage” means:

a) The income generated by Government on account of money creation

b) The backup of physical gold required to print currency notes

c) The income generated by the Central Bank on account of money creation

d) It is the nominal value of all the currency notes and coins

Question : 5

In the context of Indian economy, consider the following pairs: Term Most Appropriate description

1. Melt down Fall in stock prices
2. Recession Fall in growth rate
3. Slow down Fall in GDP

a) 2 and 3

b) 1 only

c) 1 and 3

d) 1, 2 and 3

Question : 6

Which of the following is/are characteristic situations for ‘Bank Run’?

1. Customers withdraw their deposits fearing that banks will run out of reserves
2. Banks are at risk of default
3. The bank has been declared bankrupt

a) (i) & (iii) only

b) (iii) only

c) (i) & (ii) only

d) All of the above