money supply, banking & financial institutions section 8 MCQ Questions & Answers Detailed Explanation
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The following question based on Money Supply, Banking and Financial Institutions topic of indian economy mcq
(a) Say’ Law
(b) Wagner’s Law
(c) Engle’s Law
(d) Gresham’s Law
The correct answers to the above question in:
Answer: (d)
Gresham's law is an economic principle that states:
"When a government compulsorily overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation."
It is commonly stated as: "Bad money drives out good.”
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Read more money and supply banking financial institutions Based Indian Economy Questions and Answers
Question : 1
The International Development Association, a lending agency, is administered by the:
a) International Bank for Reconstruction and Development
b) United Nations Development Programme.
c) International Fund for Agricultural Development
d) United Nations Industrial Development Organization
Answer »Answer: (a)
International Development Association (IDA), is a part of the World Bank that helps the world’s poorest countries.
It complements the World Bank’s other lending arm— the International Bank for Reconstruction and Development (IBRD) which serves middle-income countries with capital investment and advisory services. IDA was created in 1960.
Question : 2
What is the purpose of setting up of Small Finance Banks (SFBs) in India?
- To supply credit to small business units
- To supply credit to small and marginal farmers
- To encourage young entrepreneurs to set up business particularly in rural areas.
a) (ii) & (iii) only
b) (i) & (iii) only
c) (i) & (ii) only
d) (i), (ii) & (iii)
Answer »Answer: (c)
The objectives of setting up small finance banks are
- to promote financial inclusion by providing provision of savings vehicles and supply of credit to small business units;
- small and marginal farmers; micro and small industries; and other unorganized sector entities, through high technology-low cost operations.
- They are required to extend 75% of their loans to priority sectors and 50% of their loan portfolio shall constitute loans of up to 25 lacs.
The scope of activities for small finance banks will be,
Basic banking activities of acceptance of deposits and lending to unserved and underserved sections including small business units, small and marginal farmers, micro and small industries and unorganized sector entities and there will not be any restriction in the area of operations.
They will be required to maintain CRR and SLR. They will be set up as differentiated banks for serving niche interests
Small Finance Banks are not particularly for rural areas.
RBI released guidelines for 'on-tap' licensing of Small Finance Banks. Urban Cooperative Banks and Payment Banks can apply for conversion into SFB.
‘On-tap’ means any time they can apply for conversion into SFB and they don’t need to wait for a time window when RBI will grant licenses.
Question : 3
Which one of the following is not the function of Regional Rural Banks?
a) To provide credit to common people in rural area
b) To take over the functions of Agricultural Refinance Corporation of India
c) To supplement Scheduled Commercial Banks
d) To provide credit to small and marginal farmers
Answer »Answer: (b)
Question : 4
What is USP in marketing field?
a) US Programme based
b) Exclusive marketing features
c) Uninterrupted power supply
d) Universal standards of production
Answer »The Unique Selling Proposition (a.k.a. Unique Selling Point, or USP) is a marketing concept that was first proposed as a theory to understand a pattern among successful advertising campaigns of the early 1940s.
It states that such campaigns made unique propositions to the customer and that this convinced them to switch brands. The term was invented by Rosser Reeves of Ted Bates & Company.
Today the term is used in other fields or just casually to refer to any aspect of an object that differentiates it from similar objects. The term USP has been largely replaced by the concept of a Positioning Statement.
Question : 5
Debenture holders of a company are its
a) Debtors
b) Directors
c) Shareholders
d) Creditors
Answer »Answer: (d)
Companies issue debentures instead of shares to extend their business. These debentures are issue to borrow loans from the general public; interest is paid on the borrowed money to the debenture holders.
So a debenture holder is essentially a creditor who simply gives a loan to the company.
Question : 6
Which one is not a function of money ?
a) Price stabilisation
b) Value measurement
c) Transfer of value
d) Store of value
Answer »Answer: (a)
Generally, economists have defined four types of functions of money which are as follows:
- Medium of exchange (transfer of value)
- Measurement of value,
- Standard of deferred payments, and
- Store of value. Price stabilization is a function of monetary policy.
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