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

Answer: (b)

A bail-in is rescuing a financial institution on the brink of failure by making its creditors and depositors take a loss on their holdings. A bail-in is the opposite of a bail-out, which involves the rescue of a financial institution by external parties, typically governments using taxpayers money.

Typically, bail-outs have been far more common than bail-ins, but in recent years after massive bail-outs, some governments now require the investors and depositors in the bank to take a loss before taxpayers.

Answer: (b)

Answer: (d)

Crowd funding or marketplace financing refers to a method of funding a project or new venture through small amounts of money raised from a large number of people, typically through a portal (internet/social media) acting as an intermediary.

Crowd funding makes use of the easy accessibility of vast networks of people through social media and crowdfunding websites to bring investors and entrepreneurs together.

Crowd funding has the potential to increase entrepreneurship by expanding the pool of investors from whom funds can be raised beyond the traditional circle of owners.

Answer: (a)

Answer: (b)

Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. Paper currency and coins are common forms of legal tender in many countries. Legal tender money is a type of payment that is protected by law.

A legal tender, also known as the forced tender, is very secured and it is impossible to deny the legal tender while subsiding a debt that is assigned in the same medium of exchange. The term legal tender does not represent the money itself; rather it is a kind of status that can be bestowed on certain types of money.

Answer: (c)

Devaluation means the official lowering of the value of a country’s currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency.

Devaluation causes a country’s exports to become less expensive, making them more competitive in the global market. This, in turn, means that imports are more expensive, making domestic consumers less likely to purchase them.