money supply, banking & financial institutions section 1 Practice Questions Answers Test with Solutions & More Shortcuts

Question : 11 [UPPCS (Mains) 2007]

Which of the following systems of Note-issue is followed by RBI?

a) Minimum Reserve System

b) None of the above

c) Fixed Fiduciary System

d) Proportional Reserve System

Answer: (a)

Question : 12

Consider the following statements:

  1. In Narrow Banking, Banks just accept deposits and provide loans.
  2. In Narrow Banking, there is rarely Asset Liability Mismatch.
Which among the above statements is / are correct?

a) Only 2 is correct

b) Only 1 is correct

c) Both 1 and 2 are correct

d) None of them is correct

Answer: (a)

Question : 13

Which of the following statements are true regarding “Term Repo Operations”?

  1. The interest rate is between reverse repo and repo rate
  2. The interest rate is above the repo rate
  3. The interest rate is generally fixed
  4. The interest rate is generally variable
Select the correct answer using the code given below:

a) (i) & (iv) only

b) (ii) & (iii) only

c) (i) & (iii) only

d) (ii) & (iv) only

Answer: (d)

RBI lends to banks @repo rate but only up to 0.25% of banks NDTL. RBI further lends from time to time above the repo rate up to 0.75% of the overall NDTL in the system. And in this case, the interest rate is decided by auction

i.e. if more banks want money, the interest rate will go higher, if fewer banks are competing for RBI money then the interest rate will be less but it will always be above the repo rate (actually RBI puts a condition that all the bids at or below the repo rate will be rejected).

This is called "term repo" which means RBI gives money for a fixed long term. Term Repo is also called Variable Term Repo Operations.

Question : 14 [SSC IT 2009]

Full convertibility of a rupeee means

a) repayment of loans in terms of rupees

b) determination of rate of exchange between rupee and foreign currencies freely by the market forces of demand and supply

c) purchase of foreign exchange for rupees freely

d) payment for imports in terms of ruppes

Answer: (b)

The full convertibility of the Indian currency means that the rupee would be made freely exchangeable into other currencies and vice versa. The rupee was made partially convertible in 1994.

Currently, it can be changed freely into foreign currency for business and trade expenses but not free for activities like acquiring overseas assets. Full conversation of the currency means the local currency can be exchanged for foreign currency without any governmental control.

Presently, the issue of capital account convertibility is in the discussion stage.

Question : 15 [UPSC (Pre) 2010]

Consider the following statements. The function of commercial banks in India includes

  1. Purchase and sale of shares and securities on behalf of customers.
  2. Acting as executors and trustees of wills.
Which of the statement(s) given above is/are correct?

a) Only 2

b) Neither 1 nor 2

c) Both 1 and 2

d) Only 1

Answer: (a)

IMPORTANT indian economy mcq EXERCISES

Money Supply, Banking and Financial Institutions Shortcuts »

Click to Read...

money supply, banking & financial institutions section 1 Online Quiz

Click to Start..
1273 money supply banking financial institutions based indian economy MCQ section 1 question answer

Recently Added Subject & Categories For All Competitive Exams

Classification MCQ Test: IBPS RRB PO 2024 Scale-1 Prelims

Free 150+ Classification Verbal Reasoning Multiple choice questions and answers practice test series PDF, Free Quiz For IBPS RRB PO Officer Scale 1 Level 2024

28-Mar-2024 by Careericons

Continue Reading »

100+ Analogy Verbal Questions Answers PDF For IBPS RRB PO

Most Important Analogy Verbal Reasoning Multiple choice questions and answers practice test series PDF & Free Quiz For IBPS RRB PO Officer Scale 1 Level 2024

27-Mar-2024 by Careericons

Continue Reading »

IBPS RRB Clerk 2024 Seating Arrangement Questions Answers

Seating Arrangement: Verbal Reasoning Practice multiple choice questions and answers test & Quiz PDF for IBPS RRB (Assistant Multipurpose) Clerk Prelims 2024

26-Mar-2024 by Careericons

Continue Reading »

Top Aptitude Time & Distance Questions PDF: IBPS RRB Clerk

Important Aptitude Time and Distance multiple choice questions answers practice test PDF for IBPS RRB Clerk (Office Assistant Multipurpose) Prelims 2024 Exam

25-Mar-2024 by Careericons

Continue Reading »