money supply, banking & financial institutions section 8 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
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money supply, banking & financial institutions section 11
money supply, banking & financial institutions section 12
Question : 11
Which action by the Reserve Bank would stimulate the economy in an economic downturn?
a) Selling government securities in the cash market
b) Selling foreign currencies on the foreign exchange market
c) Buying government securities in the cash market
d) Buying foreign currencies on the foreign exchange market
Answer »Answer: (c)
Question : 12 [HCS (Pre) 2014]
Which of the following measure of the high power money Supply (H) has been used by RBI in India?
a) Cash reserve of the commercial banks + other deposits with the RBI
b) Currency held by the public + Cash reserves of the commercial banks + Time deposits of commercial banks + Other deposits with the RBI
c) Currency held by the public + Cash reserves of the commercial banks + Other deposit with the RBI
d) Currency held by public + other deposits with the RBI
Answer »Answer: (c)
Question : 13 [SSC CML 2002]
The smaller the Cash Reserve Ratio, the scope for lending by banks is :
a) weaker
b) lesser
c) greater
d) smaller
Answer »Answer: (c)
Cash Reserve Ratio is a regulation set by the Central bank (RBI in India) which dictates the minimum amount (reserves) that a commercial bank must be held to customer notes and deposits.
A decrease in CRR will make it mandatory for the banks to hold a lesser proportion of their deposits in the form of deposits with the RBI. This will increase the number of Bank deposits and they will lend more as they have more amount as their reserve.
Question : 15
The Laffer curve is the graphical representation of:
a) The relationship between tax rates and absolute revenue these rates generate for the government.
b) The inequality in income distribution.
c) The inverse relationship between the rate of unemployment and the rate of inflation in an economy.
d) The relationship between environmental quality and economic development.
Answer »Answer: (a)
In economics, the Laffer curve is a hypothetical representation of the relationship between government revenue raised by taxation and all possible rates of taxation.
It is used to illustrate the concept of taxable income elasticity – which taxable income will change in response to changes in the rate of taxation.
IMPORTANT indian economy mcq EXERCISES
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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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