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

Question : 1

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 : 2

Open Market Operations refer to __________ .

a) Purchase and sale of Government securities by RBI

b) Deposit mobilisation

c) Borrowings by Scheduled banks from RBI

d) Lending by Commercial banks to industry

Question : 3

Which of the following are the reasons that make a moderate level of inflation good for the economy?

1. It increases consumption levels
2. It keeps businesses profitable
3. It induces people to save more

a) (i) & (ii) only

b) (iii) only

c) (ii) only

d) All of the above

Question : 4

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 : 5

Consider the following statements regarding National Housing Bank (NHB):

1. NHB regulates Housing finance companies
2. NHB is regulated by Govt. of India
3. NHB provides direct finance for individual housing loans
4. NHB provides refinance for individual housing loans

a) (i) & (iv) only

b) (ii) & (iii) only

c) (i) & (iv) only

d) (iv) only

Question : 6

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