money supply, banking & financial institutions section 11 MCQ Questions & Answers Detailed Explanation

Question : 1

Bring out the only incorrect statement:

a) Reverse Repo operation by RBI aims at injecting/ increasing liquidity

b) Rupee appreciation results in decrease in imports

c) SDR refers to special drawing rights

d) Increase in inflation rate leads to decline in real interest rate

Question : 2

Which one of the following links all the ATMs in India?

a) National Securities Depository Limited

b) Reserve Bank of India

c) National Payments Corporation of India

d) Indian Bank’s Association

Question : 3

Name of four institutions that are regulated by the RBI as all-India FIs:

1. Export Import Bank of India (EXIM Bank)
2. National Bank for Agriculture and Rural Development (NABARD)
3. National Housing Bank (NHB)
4. Small Industries Development Bank of India (SIDBI)

a) 3 and 4

b) 1 and 2

c) 1, 3, 4

d) 1, 2, 3, 4

Question : 4

Consider the following statements regarding Money Multiplier:

1. It increases with an increase in reserve requirements of banks
2. It decreases with an increase in reserve requirements of banks
3. It increases with Monetary Base
4. It decreases with Monetary Base

a) (ii) only

b) (ii) & (iii) only

c) (i) only

d) (ii) & (iv) only

Question : 5

Consider the following statements regarding the Capital Adequacy Ratio (CAR) of banks:

1. Deposits of the public is a part of the capital for calculating CAR
2. Bondholders increase the CAR of the bank and hence safety of the depositors

a) (ii) only

b) Both (i) & (ii)

c) (i) only

d) Neither (i) nor (ii)

Question : 6

Which among the following gives a precise definition of “ Arbitrage” in Financial World?

a) To profit from an existing discrepancy among prices, exchange rates, and/or interest rates on Different Markets without risk of these changing

b) To profit from an existing discrepancy among prices, exchange rates, and/or interest rates on new techniques or products in same market.

c) to profit from an existing discrepancy among prices, exchange rates, and/or interest rates on Same market without risk of these changing

d) All of above