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
- There is almost no speculation in the G-sec market
- The Investors in the G-Sec Market are predominantly the institutions
(a) Only 2 is correct
(b) Only 1 is correct
(c) Both 1 & 2 are correct
(d) Neither 1 nor 2 is correct
The correct answers to the above question in:
Answer: (c)
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Read more money and supply banking financial institutions Based Indian Economy Questions and Answers
Question : 1
Consider the following statements regarding "Account Aggregators":
- These are a new class of NonBanking Financial Companies
- They will provide lending to small customers
- They will provide information to the customers of their financial assets invested in different instruments
a) (i) & (ii) only
b) (i) & (iii) only
c) (i) only
d) (iv) only
Answer »Answer: (b)
RBI, in Nov 2017, notified the rules and regulations for a new class of Non-Banking Financial Companies (NBFCs) called Account Aggregators.
Earlier, persons holding financial assets, such as
- savings bank deposits,
- fixed deposits,
- mutual funds,
- insurance policies,
- do not get a consolidated view of their financial asset holdings,
- especially when the entities fall under the purview of different financial sector regulators like RBI, SEBI, IRDAI etc.
Account Aggregators will fill this gap by collecting and providing the information of customers’ financial assets (invested in different instruments and regulated by different bodies) in a consolidated, organized and retrievable manner to the customer or any other person as per the instructions of the customer.
The investors will be able to avail of the service of an Account Aggregator purely at their option.
The RBI will regulate and supervise the activity of account aggregation with a view to ensure that the services provided and the terms at which these are provided conform to prescribed standards.
Question : 2
Inflation is caused by
a) increase in production
b) decrease in production
c) increase in money supply and decrease in production
d) increase in money supply
Answer »Answer: (c)
Economists generally agree that in the long run, inflation is caused by increases in the money supply.
According to the theory of Demand-Pull Inflation, if demand grows faster than supply, prices will increase. There is too much money chasing too few goods. The increase in money supply is not matched by the equivalent production of goods.
Question : 3
'Stagflation' occurs in which of the following situation:
- Demand-pull inflation
- Cost-push inflation
a) (ii) only
b) Both (i) & (ii)
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (a)
Stagflation is an economic anomaly where stagnation in the economy is accompanied by high inflation (instead of low inflation due to falling demand).
Triggered first in 1973 by the OPEC's fourfold increase in oil prices which raised all prices, thus slowing down economic growth.
Stagflation = Stagnation in the economy + Inflation
Generally, when the economy stagnates (slows down) then inflation also comes down due to lower demand in the economy. But stagflation is an exception where the economy slows down but the inflation is high and this may be because of the steep rise in prices of some inputs required in the production process.
Question : 4
Variation in Cash Reserve Ratio and Open Market Operations are instruments of
a) Fiscal policy
b) Monetary policy
c) Budgetary policy
d) Trade policy
Answer »Answer: (b)
Bank Rate Policy, open market operations and variation of Cash Reserve Ratios, etc. are instruments of monetary policy. With the help of these instruments, the Reserve Bank of India controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability
Question : 5
Which agency has the authority to declare that certain bank notes cease to be legal tender:
a) RBI Central Board
b) Central Government
c) RBI governor
d) Central Government on the recommendation of RBI Central Board
Answer »Answer: (d)
As per section 26 of the RBI Act 1934, on recommendation of the Central Board the Central Government may, by notification in the Gazette of India, declare that, with effect from such date as may be specified in the notification, any series of bank notes of any denomination shall cease to be legal tender.
Question : 6
Consider the following statements.
- The National Housing Bank (NHB), the apex institution of housing finance in India was set-up as a wholly-owned subsidiary of the Reserve Bank of India.
- The Small Industries Development Bank of India was established as a wholly owned subsidiary of the Industrial Development Bank of India.
a) Only 2
b) Neither 1 nor 2
c) Both 1 and 2
d) Only 1
Answer »Answer: (c)
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