money supply, banking & financial institutions section 5 Practice Questions Answers Test with Solutions & More Shortcuts

Question : 16

Which among the following is the type of organised sector of Indian money market?

1. Call money market
2. Treasury Bill Market
3. Commercial Bill Market
4. Collateral loan market

a) 3 and 4

b) 1 and 2

c) 1, 2, 3, 4

d) None of the Above

Question : 17

Which of the following statements are true regarding “Letter of credit”?

1. It is a form of bank guarantee
2. It is an assurance that a buyer’s payment to a seller will be received on time
3. It is a letter issued from a bank that the bank has agreed to lend

a) (i) & (ii) only

b) (i) & (iii) only

c) (i) only

d) All of the above

Question : 18

Consider the following statements regarding liquidity crisis in the debt markets:

1. It may be caused due to defaults in the debt market
2. It may be caused due to FPIs running out of Indian markets
3. It may result in hardening of interest rates (iv) RBI may do OMO to resolve the liquidity crisis

a) (i) & (iii) only

b) (ii), (iii) & (iv) only

c) (i) & (ii) only

d) All of the above

Question : 19 [UPSC (Pre) 1998]

The banks are required to maintain a certain ratio between their cash in hand and total assets. This is called

a) SLR (Statutory Liquidity Ratio)

b) CLR (Central Liquidity Reserve)

c) CBR (Central Bank Reserve)

d) SBR (Statutory Bank Ratio)

Question : 20

Which of the following measures should be taken when an economy is going through in inflationary pressures?

1. The direct taxes should be increased.
2. The interest rate should be reduced.
3. The public spending should be increased.

a) Only 2

b) Only 1

c) 2 and 3

d) 1 and 2