money supply, banking & financial institutions section 10 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) 1975
(b) 1982
(c) 1980
(d) 1976
The correct answers to the above question in:
Answer: (b)
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Read more money and supply banking financial institutions Based Indian Economy Questions and Answers
Question : 1
With reference to inflation in India, which of the following statements is correct?
a) The Reserve Bank of India has no role in controlling the inflation
b) Controlling the inflation in India is the responsibility of the Government of India only
c) Decreased money circulation helps in controlling the inflation
d) Increased money circulation helps in controlling the inflation
Answer »Answer: (c)
When inflation becomes very high, the RBI decreases supply of money (to check inflation) by adopting light monetary policy.
Question : 2
Which of the following are part of Monetary Base of an economy?
- Currency notes and coins with the public
- Vault cash of commercial banks
- Deposits of commercial banks with RBI
- Deposits of Government of India with RBI
a) (i) & (ii) only
b) (iii) & (iv) only
c) (i) only
d) All of the above
Answer »Answer: (d)
Monetary Base or High-Powered Money is the total liability of the Monetary Authority of India i.e. RBI.
All the currency notes and coins issued by RBI does not matter who is holding them, is always the liability of RBI. When Government and banks deposit their money with RBI, it becomes the liability of RBI. (In the same way as when you deposit money in your bank, then the deposits become the bank’s liability towards you).
For a detailed understanding, you can refer to the book on Indian Economy by Vivek Singh.
Question : 3
Credit creation power of the commercial banks gets limited by which of the following?
a) Cash reserve ratio
b) All of the above
c) Credit policy of the central bank
d) Banking habits of the people
Answer »Answer: (b)
Question : 4
Consider the following statements regarding the "Banks Board Bureau (BBB)" constituted in 2016:
- It will be responsible for the appointment of heads in PSBs and Financial Institutions
- It will help PSBs in developing strategies and capital raising plans
- It will improve the governance of the Public Sector Banks (PSBs)
a) (i) & (iii) only
b) (ii) & (iii) only
c) (i) only
d) All of the above
Answer »Answer: (d)
With a view to improving the Governance of Public Sector Banks (PSBs), the GoI appointed an autonomous Banks Board Bureau (BBB) which started functioning from 1st April 2016. The Board has three ex-officio members and three expert members in addition to a Chairman. The following are the functions of the BBB
It will be responsible for the selection and appointment of Board of Directors in PSBs and Financial Institutions (FIs) It will advise the Government on matters relating to appointments, confirmation or extension of tenure and termination of services of the Board of Directors
It will help banks to develop a robust leadership succession plan for critical positions
It will build a data bank containing data relating to the performance of PSBs/FIs and their officers It will advise the Government on the formulation and enforcement of a code of conduct and ethics for managerial personal in PSBs/FIs
It will advise the Government on evolving suitable training and developmentØ programmes for management personnel in PSBs/FIs
It will help banks in terms of developing business strategies and capital raising planØ etc.
Question : 5
What is ‘Future Trading’?
- It is a trade between two stock exchanges wherein it is decided to purchase stocks of each other on a fixed price throughout the year
- It is an agreement between two parties to buy or sell an underlying asset in the future at a predetermined price
- It is an agreement between stock exchange that they will not trade in stocks of each other in future or for a predetermined period of time
a) 2 only
b) 1 only
c) 3 only
d) All 1, 2 and 3
Answer »Answer: (a)
Question : 6
What does the letter ‘e’ denotes in the term ‘e - banking ’ ?
a) Electronic Banking
b) Expansion Banking
c) Essential Banking
d) Economic Banking
Answer »Answer: (a)
‘e-banking’ stands for electronic banking which involves the use of computers to carry out banking transactions such as withdrawals through cash dispensers or transfer of funds at point of sale. It is also known as online or interne banking.
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