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

Answer: (d)

The Reserve Bank of India gives temporary loan facilities to the centre and state governments as a banker to the government. This temporary loan facility is called Ways and Means Advances (WMA).

The WMA scheme was designed to meet temporary mismatches in the receipts and payments of the government. This facility can be availed by the government if it needs immediate cash from the RBI.

The WMA is a loan facility from the RBI for 90 days which implies that the government has to vacate the facility after 90 days.

The interest rate for WMA is currently charged at the repo rate. The limits for WMA are mutually decided by the RBI and the Government of India.

Answer: (c)

Answer: (d)

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.

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

1. savings bank deposits,
2. fixed deposits,
3. mutual funds,
4. insurance policies,
5. do not get a consolidated view of their financial asset holdings,
6. 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.

Answer: (c)