money supply, banking & financial institutions section 7 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (c)

Devaluation means the official lowering of the value of a country’s currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency.

Devaluation causes a country’s exports to become less expensive, making them more competitive in the global market. This, in turn, means that imports are more expensive, making domestic consumers less likely to purchase them.

Answer: (b)

Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. Paper currency and coins are common forms of legal tender in many countries. Legal tender money is a type of payment that is protected by law.

A legal tender, also known as the forced tender, is very secured and it is impossible to deny the legal tender while subsiding a debt that is assigned in the same medium of exchange. The term legal tender does not represent the money itself; rather it is a kind of status that can be bestowed on certain types of money.

Answer: (a)

Answer: (b)

Indo Next is a new stock exchange, set up to promote liquidity to stocks of small and medium enterprises.

Answer: (b)

A bail-in is rescuing a financial institution on the brink of failure by making its creditors and depositors take a loss on their holdings. A bail-in is the opposite of a bail-out, which involves the rescue of a financial institution by external parties, typically governments using taxpayers money.

Typically, bail-outs have been far more common than bail-ins, but in recent years after massive bail-outs, some governments now require the investors and depositors in the bank to take a loss before taxpayers.