money supply, banking & financial institutions section 10 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (d)

Green banking is like a normal bank, which considers all the social and environmental/ecological factors with an aim to protect the environment and conserve natural resources. It is also called an ethical bank or a sustainable bank.

They are controlled by the same authorities but with an additional agenda toward taking care of the Earth’s environment/ habitats/resources.

Answer: (b)

In economics, stagflation is a situation in which the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high.

Stagflation occurs when the economy isn’t growing but prices are, which is not a good situation for a country to be in.

This happened to a great extent during the 1970s, when world oil prices rose dramatically, fueling sharp inflation in developed countries. For these countries, including the U.S., stagnation increased the inflationary effects.

Answer: (a)

Deflation is a situation where the prices of goods and commodities in a country go down. i.e., there is negative inflation. This is caused due to reduced supply of money/credit.

Inflation reduces the real value of money over time; conversely, deflation increases the real value of money – the currency of a national or regional economy.

Answer: (a)

Answer: (b)

One of the basic reasons for keeping CRR with RBI is to provide safety to the public deposits. It also ensures the solvency of banks i.e. staying in business and proper functioning and liquidity situation.

Since banks do not earn interest on the CRR, so it is idle money for the banks which increases costs for banks.