money supply, banking & financial institutions section 3 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
money supply, banking & financial institutions section 2
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money supply, banking & financial institutions section 12
Question : 31
To know whether the rich are getting richer and the poor getting poorer, it is necessary to compare
a) the wholesale price index over different periods of time for different regions
b) the distribution of income of different sets of income recipients at a point of time
c) the distribution of income of an idential set of income recipients in different period of time
d) the availability of foodgrains among two sets of people, one rich and the other poor, over different period of time
Answer »Answer: (c)
Question : 32
Consider the following statements regarding Open Market Operations:
- It is conducted by Commercial Banks
- It is conducted by RBI
- It is about debt securities
- It is about equity securities
a) (ii) & (iii) only
b) (ii), (iii) & (iv) only
c) (i) & (iii) only
d) All of the above
Answer »Answer: (a)
Government issues only debt securities like treasury bills, cash management bills, dated securities and state development loans.
Anybody can give a loan (debt) to the government but they cannot own government i.e. they cannot purchase government shares. The government never issues shares.
‘Government’ is different from ‘government companies’ (PSUs) which can issue shares and bonds.
Open Market Operations is conducted by RBI where it buys or sells govt. bonds. (debt securities) So, (ii) & (iii) statements are true.
Question : 33
The Non-Votable charges or ‘Charged Expenditure’ included in the Union Budget include :
- Salary and Allowances of the Presiding Officers of the houses of Parliament.
- Salary and Allowances of the Judges of the Supreme Court and High Courts.
- Salary and Allowances of the CAG.
- Pension of the retired Judges of the Supreme Court.
- Pension of the retired Judges of High Courts.
a) 1, 2 and 3
b) 1 and 2
c) 1, 2, 3 and 4
d) All of them
Answer »Answer: (d)
Question : 34 [HCS (Pre) 2014]
Which among the following is a function of the Reserve Bank of India?
a) Collecting and compilation of statistical information relating to banking and other financial sector
b) Accepting deposits from the public
c) Banks underwrite the securities issued by public or private organisations
d) Bank issues the letter of credit to their customers certifying their creditability
Answer »Answer: (a)
Question : 35
Consider the following statements:
- Currencies and coins are fiat money
- Currencies do not have intrinsic value but coins have
- Currencies and coins are legal tenders
- Cheques are legal tenders
a) (i) & (iii) only
b) (iii) & (iv) only
c) (i) only
d) (ii), (iii) & (iv) only
Answer »Answer: (a)
Currencies and coins are fiat money because they derive their value from government "fiat"/ order. If the coin is melted then it will not fetch the same value in the market and the paper of which the currency note is made does not have any value in the market.
Hence, Currency notes and coins are called fiat money and they do not have intrinsic value.
They are also called legal tenders as they cannot be refused by any citizen of the country for settlement of any kind of transaction. Cheques were drawn on savings or current accounts, however, can be refused by anyone as a mode of payment. Hence cheques are not legal tenders.
So only (i) & (iii) statements are true.
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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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