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
- All deposits of Public
- Government securities held by banks
- Cash held by banks in their vaults
- Money deposited with RBI
(a) (ii), (iii) & (iv) only
(b) (iv) only
(c) (ii) & (iii) only
(d) All of the above
The correct answers to the above question in:
Answer: (a)
When people deposit money in banks (public deposits), then banks keep only a certain portion with them and the rest they lend. Whatever they keep with themselves is considered as reserves.
The portion that they keep as reserves can be in the form of cash or gold or they can purchase government securities (bonds) or they can also deposit with RBI.
So only (ii), (iii) & (iv) statements are true.
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Read more money and supply banking financial institutions Based Indian Economy Questions and Answers
Question : 1
FEMA (Foreign Exchange Management Act) was finally implemented in the year
a) 1997
b) 2007
c) 2000
d) 1991
Answer »Answer: (c)
Question : 2
Green banking means
a) financing of irrigation projects by banks
b) None of the above
c) development of forestry by banks
d) financing of environmental friendly projects by banks
Answer »Answer: (d)
Green banking is like a normal bank, which considers all the social and environmental/ecological factors with an aim to protect the environment and conserve natural resources. It is also called an ethical bank or a sustainable bank.
They are controlled by the same authorities but with an additional agenda toward taking care of the Earth’s environment/ habitats/resources.
Question : 3
The term stagflation refers to a situation where
a) rate of growth in faster than the rate of price increase
b) rate of growth is slower than the rate of price increase
c) growth has no relation with the change in prices
d) rate of growth and prices both are decreasing
Answer »Answer: (b)
In economics, stagflation is a situation in which the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high.
Stagflation occurs when the economy isn’t growing but prices are, which is not a good situation for a country to be in.
This happened to a great extent during the 1970s, when world oil prices rose dramatically, fueling sharp inflation in developed countries. For these countries, including the U.S., stagnation increased the inflationary effects.
Question : 4
Match List-I with List-II and select the correct answer using the codes given below the lists.
List I | List II |
a. 1994 | 1. Export-Import Bank of India |
b. 1964 | 2. Industrial Development Bank of India |
c. 1982 | 3. Industrial Credit and Investment Corporation of India |
d. 1987 | 4. Board of Industrial and Financial Reconstruction |
a) 2 3 1 4
b) 4 1 2 3
c) 3 2 1 4
d) 1 2 3 4
Answer »Answer: (c)
Question : 5
Which of the following statements are true regarding the “Long Term Repo Operation” (LTRO) Conducted by RBI as per the 6th February 2020 monetary policy review meeting?
- It was a fixed-term repo operation
- It was done at above the repo rate
- RBI did not conduct an auction to select the bank for this operation
a) (i) & (iii) only
b) (ii) & (iii) only
c) (i) only
d) None of the above
Answer »Answer: (c)
On 6th Feb 2020 monetary policy review meeting, RBI decided to conduct a long term repo operation at a fixed rate of “repo rate” i.e. 5.15% worth Rs. 1 lakh crore (at that time repo rate was 5.15%).
Since it was done at a fixed rate, so the auction was not required but a lot of banks wanted money at the repo rate, so RBI had to do an auction to select the bank which will get money from RBI at the repo rate.
As all banks combined together, during the auction, quoted much more than Rs. 1 lakh crore, so proportionally it was given to banks depending on which bank bid for how much amount during the auction.
LTRO auctions were conducted on the electronic platform called the E-Kuber, the Core Banking Solution (CBS) platform of RBI.
Question : 6
The Scheduled Commercial Banks (SCB) are required to maintain CRR with RBI as per which act:
a) The Banking Regulation Act 1949
b) Securities Contract (Regulation) 1956
c) Reserve Bank of India Act 1934
d) None of the above
Answer »Answer: (c)
As per Section 42 of the RBI Act 1934, every Scheduled (included in the second schedule of RBI Act 1934, whether commercial or cooperative) bank need to maintain CRR with RBI.
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