money supply, banking & financial institutions section 12 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
(a) The Reserve Bank of India will have less money to lend
(b) The commercial banks will have more money to lend
(c) The Union Government will have less money to lend
(d) The commercial banks will have less money to lend
The correct answers to the above question in:
Answer: (d)
Practice Money Supply, Banking and Financial Institutions (money supply, banking & financial institutions section 12) Online Quiz
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Read more money and supply banking financial institutions Based Indian Economy Questions and Answers
Question : 1
Consider the following statements : The function of the Reserve Bank of India does not include:
- Open market operations
- Monitoring revenue collection
- Supervising non-banking finance companies
- Review of public expenditure
a) 2 and 4
b) 1 only
c) 1, 3 and 4
d) 1, 2, 3 and 4
Answer »Answer: (a)
Question : 2
‘Simply Click’ credit card scheme is launched by which of the following Banks?
a) ICICI
b) SBI
c) BOB
d) IDBI
Answer »Answer: (b)
Question : 3
Consider the following statements regarding Foreign Portfolio Investors (FPI):
- FPI is mainly into the primary market
- FPI investment may happen through primary market
- FPI investment happens only in equity shares
- FPI investment happens only in debt securities
a) (ii) only
b) (ii) & (iii) only
c) (i) only
d) None of the above
Answer »Answer: (a)
Question : 4
The outcome of ‘devaluation of currency’ is
a) increased import and improvement in balance of payment
b) increased export and import
c) increased export and improvement in balance of payment
d) increased export and foreign reserve deficiency
Answer »Answer: (c)
Devaluation is a reduction in the exchange value of a country’s monetary unit in terms of gold, silver, or foreign currency.
By decreasing the price of the home country’s exports abroad and increasing the price of imports in the home country, devaluation encourages the home country’s export sales and discourages expenditures on imports, thus improving its balance of payments.
Question : 5
Consider the following statements regarding lending by “Microfinance Institutions (MFIs)”:
- RBI has put a cap on household income limit to avail credit from MFIs
- RBI has increased the lending limit by MFIs per borrower to Rs. 1.25 lakhs
a) (ii) only
b) Both (i) & (ii)
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (b)
RBI has increased the income limit for each rural household to be eligible for microfinance from Rs. 1 lakh to Rs. 1.25 lakh, and from Rs. 1.6 lakh to Rs. 2 lakh for urban and semi-urban areas.
Second, RBI has also increased the lending limit per borrower from Rs. 1 lakh to Rs. 1.25 lakh.
Both these eligibility measures are necessary to qualify a loan as a microfinance asset by MFIs. (One individual can borrow from two MFIs at the most, no need to remember) Both measures are expected to expand the pool of beneficiaries at the bottom of the pyramid, as well as increase the flow of credit in absolute amounts through this channel.
The RBI board set up a sub-committee in 2011, under the chairmanship of Y.H. Malegam, to study issues and concerns relating to the microfinance industry. It covers a range of services which include, in addition to the provision of credit, many other services such as savings, insurance, money transfers, counselling, etc.
As a consequence of the Malegam committee report, RBI decided to set up a separate category of non-banking financial institutions: Non-banking financial company-micro finance institution (NBFC-MFI).
Question : 6
Inflation can be checked by
a) increasing Government expenditure
b) decreasing money supply
c) increasing exports
d) increasing money supply
Answer »Answer: (b)
The technical and most often used way to control inflation is by tightening the money supply.
The logic goes that when people do not have excess money, they will buy a lesser quantity of goods and services and postpone luxurious expenses.
This will reduce the demand for the products and thus lead to a reduction in prices. Most central banks use high-interest rates as the traditional way to fight or prevent inflation.
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