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
(a) A bull is an optimistic operator who first buys and then sells shares in expectation of the price going up; a bear is a pessimistic market operator who sells the shares in expectation of buying them back at a lower price.
(b) Bull is one who first sells a share and then buys it at a lower price; bear means one who first buys and then sells it in expectation of prices going up.
(c) There is nothing significantly different as both operate in the capital market.
(d) A bull is ready to buy any share; a bear only deals in government securities.
The correct answers to the above question in:
Answer: (a)
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Read more money and supply banking financial institutions Based Indian Economy Questions and Answers
Question : 1
Which of the following is not a function of the Securities and Exchange Board of India (SEBI)?
a) Supervising the working of the Stock Exchanges
b) Regulating merchant banks and mutual funds
c) Underwriting new capital issues
d) promoting the development of a healthy capital market
Answer »Answer: (c)
Question : 2
The _____ is the total amount of monetary assets available in an economy at a specific time.
- Money Supply
- Money Stock
- Money Demand
- Stock in Demand
a) 3 and 4
b) 1 and 2
c) 1 and 3
d) 2 and 4
Answer »Answer: (b)
In economics, the money supply or money stock is the total amount of monetary assets available in an economy at a specific time.
Question : 3
Which of the following statements are true in case "the currency of two countries are at purchasing power parity":
a) PPP exchange rate is equal to Real exchange rate
b) Nominal exchange rate is equal to Real exchange rate
c) PPP exchange rate is equal to Nominal exchange rate
d) PPP, Nominal and Real exchange rates become equal
Answer »Answer: (c)
When nominal exchange rate becomes equal to PPP exchange rate, then we say that the currencies of two countries are at purchasing power parity.
Question : 4
Inflation redistributes income and wealth in favour of :
a) Middle class
b) Rich
c) Pensioners
d) Poor
Answer »Answer: (b)
A group of economists including Keynes is of the opinion that inflation, in one form or the other, is a factor that helps economic growth.
Usually, it is argued that inflation tends to redistribute income and wealth. The redistributive effect of inflation is always in favour of the profit-earning class, that is to say, it redistributes income always from the wage-recipient class towards the profit-recipient class in the community.
As a result, the saving ratio will increase because the marginal propensity to save of the profit earners is generally high as against the high marginal propensity to consume of the wage- earners because of their near-subsistence level of income.
Question : 5
Which of the following statements are true regarding “Cash Management Bills”?
- Issued by Central Government and not by state governments
- It is used to fund the fiscal deficit
- It can be used for temporary mismatches in the cash flow of the government
a) (ii) & (iii)
b) (iii) only
c) (i) & (ii)
d) (i) & (iii) only
Answer »Answer: (d)
In 2010, the Government of India, in consultation with RBI introduced a new short-term instrument, known as Cash Management Bills (CMBs).
It is not used to fund the Fiscal deficit but is used to meet the temporary mismatches in the cash flow of the Government of India. The CMBs have the generic character of T-bills but are issued for maturities less than 91 days. (Traded in money market)
Treasury bills or T-bills:
These are short term debt instruments issued by the Government of India for a maturity of less than one year. Treasury bills are zero-coupon securities and pay no interest. Instead, they are issued at a discount and redeemed at the face value at maturity. For example, a 91-day Treasury bill of Rs. 100/- (face value) may be issued at say Rs. 98.20, that is, at a discount of say, ?1.80 and would be redeemed at the face value of Rs. 100/-. (Treasury bills are traded in the money market).
Dated Securities:
Dated central government securities have a tenor of more than one year up to 40 years.
Question : 6
‘SHG Bank Linkage Programme’ is a programme which encourages India’s banks to lend to self-help groups (SHGs) composed mainly of poor women, this has evolved into an important Indian tool for microfinance. This programme was initiated by ?
a) Reserve Bank of India (RBI)
b) National Bank for Agriculture and Rural Development (NABARD)
c) Agricultural Refinance and Development Corporation (ARDC)
d) Non-Banking Finance Companies (NBFC)
Answer »Answer: (b)
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