money supply, banking & financial institutions section 10 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

Questions : If the US Central Bank raises their interest rate then it may lead to which of the following in the Indian economy:

(a) Rupee appreciation

(b) Investors moving to India

(c) Rupee depreciation

(d) Increase in money supply

The correct answers to the above question in:

Answer: (c)

When the US Federal Bank increases the interest rate, then the foreign investors sell their investments in India (mostly debt instruments) and move to US. In the process they convert the Rupee into dollars in the forex market and the demand for dollar increases and rupee depreciates.

Money supply in the Indian economy will decrease in this case because foreign investors are selling their investments and taking money out of India.

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Question : 1

Which of the following are among the taxes levied exclusively by the Central Government and are mentioned in the Union List of the Seventh Schedule of the Constitution of India?

  1. Corporation Tax
  2. Taxes on advertisement in the newspapers
  3. Taxes on Agricultural income
  4. Taxes on consumption/sale of electricity

a) Only 4

b) Only 2

c) 1 and 2

d) 3 and 4

Answer: (c)

Taxes on Agricultural income and Taxes on consumption/sale of electricity are levied by the State Governments.

Question : 2

MUDRA Bank has been launched to help

a) Poor women

b) Rural sector

c) Small business

d) Marginal farmers

Answer: (c)

Micro Units Development and Refinance Agency Bank (or MUDRA Bank)is a new institution set up by the Government of India to provide funding to the non-corporate small business sector.

It will provide its services to small entrepreneurs outside the service area of regular banks, by using last mile agents.

Question : 3

Indian rupee had been made fully convertible on

a) current account in August, 1994

b) current account in April, 1995

c) capital account in August, 1994

d) current account on March 1, 1993

Answer: (d)

Question : 4

Consider the following statements:

  1. As per the Basel II accords, Banks have to maintain a minimum 8% CRAR
  2. Out of 8% Banks have to keep a Tier I Capital of 5%
  3. In India, the Banks are required to keep the CAR of 9% at least.
Which among the above statements is / are correct?

a) Only 1 & 2

b) Only 1

c) Only 1 & 3

d) All are correct statements

Answer: (c)

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