money supply, banking & financial institutions section 8 MCQ Questions & Answers Detailed Explanation
MOST IMPORTANT indian economy mcq - 12 EXERCISES
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The following question based on Money Supply, Banking and Financial Institutions topic of indian economy mcq
(a) Regulation of the Consumer Credit
(b) Margin Requirements
(c) Rationing of the Credit
(d) Variable Costs and Reserves
The correct answers to the above question in:
Answer: (d)
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Read more money and supply banking financial institutions Based Indian Economy Questions and Answers
Question : 1
The largest commercial bank of India is
a) State Bank of India
b) Union Bank of India
c) ICICI
d) NABARD
Answer »Answer: (a)
Question : 2
Demand management to control inflation may lead to:
a) increase in government expenditure
b) expansion of credit
c) increase in unemployment due to contraction of the economy
d) creation of excess liquidity
Answer »Answer: (c)
Question : 3
Consider the following statements.
- The National Housing Bank, the apex institution of housing finance in India, was set up as a whollyowned subsidiary of the Reserve Bank of India.
- The Small Industries Development Bank of India was established as a wholly-owned subsidiary of the Industrial Development Bank of India.
a) 2 only
b) 1 only
c) Both 1 and 2
d) Neither 1 nor 2
Answer »Answer: (c)
Question : 4
Consider the following statement:
- EXIM bank in India was established on January 1, 1982
- National Housing Bank was established in July, 1988.
- SIDBI started its operations from April 2, 1990.
a) 2 only
b) 1 only
c) 3 only
d) 1, 2, 3
Answer »Answer: (d)
EXIM bank in India was established on January 1, 1982. National Housing Bank was established in July 1988. SIDBI started its operations from April 2, 1990.
Question : 5
In the context of the Indian economy, which of the following is/are the purpose/purposes of “Statutory Reserve Requirements”?
- To enable the Central Bank to control the number of advances the banks can create
- To make the people’s deposits with banks safe and liquid
- To prevent the commercial banks from making excessive profits
- To force the banks to have sufficient vault cash to meet their day-to-day requirements
a) (i) & (ii) only
b) (ii) & (iii) only
c) (i) only
d) (i), (ii), (iii) & (iv) only
Answer »Answer: (a)
Statutory/Legal Reserve Requirements means all the reserve requirements mandated for the banks and it includes both CRR and SLR.
The purpose of CRR/SLR is not to prevent banks from making excessive profit but rather to make people’s deposits safe and liquid and allow RBI to manage liquidity in the economy.
Through CRR or SLR, RBI does not specify any amount of vault cash that the banks need to keep with them.
Through SLR, RBI specifies liquid assets in any form like cash, gold or govt. bonds and not any specific amount of vault cash.
Question : 6
Stagflation refers to a situation which is characterised by
a) inflation and rising employment.
b) inflation and rising unemployment
c) stagnant employment and deflation
d) deflation and rising unemployment
Answer »Answer: (b)
Stagflation describes a situation where an inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high.
It raises a dilemma for economic policy since actions designed to lower inflation may exacerbate unemployment and vice versa.
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