money supply, banking & financial institutions section 10 Practice Questions Answers Test with Solutions & More Shortcuts
Money Supply, Banking and Financial Institutions PRACTICE TEST [12 - EXERCISES]
money supply, banking & financial institutions section 1
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money supply, banking & financial institutions section 12
Question : 21 [SSC CPO 2008]
Green banking means
a) financing of irrigation projects by banks
b) None of the above
c) development of forestry by banks
d) financing of environmental friendly projects by banks
Answer »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.
Question : 22 [SSC IT 2009]
The term stagflation refers to a situation where
a) rate of growth in faster than the rate of price increase
b) rate of growth is slower than the rate of price increase
c) growth has no relation with the change in prices
d) rate of growth and prices both are decreasing
Answer »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.
Question : 23 [SSC Constable 2013]
Deflation is a situation in which
a) The value of money is increasing.
b) The price level is stagnant.
c) The value of money is falling.
d) The price of goods is increasing.
Answer »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.
Question : 25
Consider the following statements regarding Cash Reserve Ratio (CRR) kept with RBI by commercial banks:
- It ensures safety to the people’s deposits in banks
- It ensures the solvency of banks
- It increases the cost of funds for the banks
- Banks earn interest on CRR
a) (i) & (ii) only
b) (i), (ii) & (iii) only
c) (i) only
d) All of the above
Answer »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.
IMPORTANT indian economy mcq EXERCISES
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Money Supply, Banking and Financial Institutions Shortcuts »
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indian economy MCQ CATEGORIES
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» Introduction to Indian Economy
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» Planning, Economic Development & Five year Plans
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» National Income & Human Development Index
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» Agriculture Sector, Subsidy and Food Processing
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» Industries, Manufacturing & Service Sectors
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» Inclusive growth, Sustainable development and employment
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» Poverty & Unemployment
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» Introduction to Micro Economics
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» Introduction to Macro Economics
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» Macro fundamentals, GDP, Investment, Growth
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» Demand & Supply, Profit Loss, Inflation & Price Index
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» Fiscal Policy, Public Finance and Monetary Policy
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» Money Supply, Banking and Financial Institutions
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» Taxes Types, Methods & Budgeting Process
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» Banking, Security Market & Insurance
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