money supply, banking & financial institutions section 6 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (c)

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.

Answer: (d)

Gresham’s law is an economic principle that states:

“When a government compulsorily overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation.”

It is commonly stated as: “Bad money drives out good.”

More exactly, if coins containing metal of different value have the same value as legal tender, the coins composed of the cheaper metal will be used for payment, while those made of more expensive metal will be hoarded or exported and thus tend to disappear from circulation.

Answer: (b)

Answer: (b)

The term “Strategic Disinvestment” means the sale of a substantial portion of the Government share-holding of a central public sector enterprise (CPSE) of up to 50%, or such higher percentage (to the strategic partner) along with transfer of management control.

(It has to be kept in mind that even by selling less than 50% stake to the strategic partner, the government can transfer the management control to the strategic partner, it is legally possible.)

In Strategic Disinvestment, management control must be transferred to the private strategic partner. Strategic disinvestment is a way of privatisation