money supply, banking & financial institutions section 8 MCQ Questions & Answers Detailed Explanation

Question : 1

The smaller the Cash Reserve Ratio, the scope for lending by banks is :

a) weaker

b) lesser

c) greater

d) smaller

Question : 2

‘Money is a matter of functions four, a medium, a measure a standard and .....’. What is the fourth function of money indicated in this popular phrase?

a) A flow

b) A payment

c) A store

d) A stock

Question : 3

The Laffer curve is the graphical representation of:

a) The relationship between tax rates and absolute revenue these rates generate for the government.

b) The inequality in income distribution.

c) The inverse relationship between the rate of unemployment and the rate of inflation in an economy.

d) The relationship between environmental quality and economic development.

Question : 4

Which action by the Reserve Bank would stimulate the economy in an economic downturn?

a) Selling government securities in the cash market

b) Selling foreign currencies on the foreign exchange market

c) Buying government securities in the cash market

d) Buying foreign currencies on the foreign exchange market

Question : 5

In India, the interest rate on savings accounts in all the nationalised commercial banks is fixed by

a) Union Finance Commission

b) Banks itself

c) Indian Bank’s Association

d) Union Ministry of Finance

Question : 6

Consider the following statements:

1. In Minimum Reserve System, RBI had to keep a minimum reserve of Gold worth ` 115 Crores and rest in Indian Rupees.
2. The Minimum Requirement of Foreign Securities was diluted when Minimum Reserve System was launched.

a) Only 2 is correct

b) Only 1 is correct

c) Both of them are correct

d) Both of them are incorrect