money supply, banking & financial institutions section 10 MCQ Questions & Answers Detailed Explanation

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.

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.

Answer: (a)

Deflation is a situation where the prices of goods and commodities in a country go down. i.e., there is negative inflation. This is caused due to reduced supply of money/credit.

Inflation reduces the real value of money over time; conversely, deflation increases the real value of money – the currency of a national or regional economy.

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.

Answer: (c)

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.