money supply, banking & financial institutions section 3 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (c)

Cheap money is a loan or credit with a low interest rate, or the setting of low-interest rates by a central bank like the Federal Reserve.

Cheap money is good for borrowers, but bad for investors, who will see the same low-interest rates on investments like savings accounts, money market funds, CDs and bonds.

Cheap money can have detrimental economic consequences as borrowers take on excessive leverage.

Answer: (d)

Masala bonds are issued outside India and money is raised in foreign currency, so it is part of our capital account.

When NRIs are depositing money in Indian banks then it’s a transaction between Indian residents (banks) and non-resident Indians and it creates a liability on Indian banks for the future, hence it’s a capital receipt.

Import of capital equipment is part of the current account.

Answer: (c)

Foreign Banks and Regional Rural Banks also come under the category of Scheduled Commercial Banks. Now, the banks are free to determine their savings bank deposit interest rate, subject to the following two conditions:

1. Each bank will have to offer a uniform interest rate on savings bank deposits up to ` 1 lakh,irrespective of the amount in the account within this limit.

2. For savings bank deposits over ` 1 lakh, a bank may provide differential rates of interest, if it so chooses. However, there should not be any discrimination from customer to customer on interest rates for similar amount of deposit.

Answer: (a)

Answer: (b)

Brent Crude is a major trading classification of sweet light crude oil that serves as a major benchmark price for purchases of oil worldwide. Brent Crude is extracted from the North Sea and comprises Brent Blend, Forties Blend, Oseberg and Ekofisk crudes.

The Brent Crude oil marker is also known as Brent Blend, London Brent and Brent petroleum. The index represents the average price of trading in the 25 days Brent Blend, the Forties, Oseberg, Ekofisk (BFOE) market in the relevant delivery month as reported and confirmed by the industry media.