Tag: instruments of monetary policy and the reserve bank of india

Questions Related to instruments of monetary policy and the reserve bank of india

Dear money policy means ___________.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. giving loan and advances to trade and industry at higher interest rate.

  2. paying less for the same quantity of goods and services

  3. printing high denomination currency

  4. printing money by costly technology

Show answer
Correct Option: A
Explanation:

Dear money policy refers to a monetary policy by the central bank where the central bank sets high interest rates so that credit is not easily available to the general public in order to decrease the real income and hence purchasing power of the people. Such a policy is used by the government at the time of inflation in the economy. 

Cheap money policy means __________.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. making money available to trade and industry at cheaper interest rate.

  2. giving money at discounted price

  3. demanding more money for the same goods than earlier.

  4. printing money by cost efficient printing technology

Show answer
Correct Option: A
Explanation:

Cheap money policy refers to a monetary policy by the central bank where the central bank sets low interest rates so that credit is easily available to the general public in order to bring efficiency in trade and commerce in an economy. Such a policy is used by the government at the time of deflation or recession in the economy. 

Dear money policy is followed  _________.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. to counter inflation

  2. to reverse depression

  3. to appease the public

  4. to increase disposal income of the houeholds

Show answer
Correct Option: A
Explanation:

Dear money policy refers to a monetary policy by the central bank where the central bank sets high interest rates so that credit is not easily available to the general public in order to decrease the real income and hence purchasing power of the people. Such a policy is used by the government at the time of inflation in the economy as it decreases the money supply in the economy which combats inflation. 

RBI was introduced as a shareholders bank on _________.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. April 1935

  2. May 1940

  3. June 1969

  4. April 1947

Show answer
Correct Option: A

Head quarter of RBI permanently shifted to _______ in 1937.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. Kolkata

  2. Delhi

  3. Chennai

  4. Mumbai

Show answer
Correct Option: D

Which of these terms are/is appropriate for RBI?

instruments of monetary policy and the reserve bank of india money and banking economics

  1. Banker's Bank

  2. Banker to the Government

  3. Both

  4. None

Show answer
Correct Option: C

Exchange Control and Management is done by __________.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. RBI

  2. As per Defence of India Act

  3. SBI

  4. IDBI

Show answer
Correct Option: A

RBI was established on the recommendation of ________.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. Hilton Young Commission 

  2. Simon Commission

  3. Chandra Commission

  4. LK Jha Commission

Show answer
Correct Option: A

RBI was nationalized in _____.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. June 1947

  2. Jan 1949

  3. March 1954

  4. April 1936

Show answer
Correct Option: B
Explanation:

On January 1949, Reserve Bank of India(RBI) which is an apex bank that regulates and controls the entire banking system of India was nationalized. It is the sole agency of note issuing and controls the supply of money in the economy. It is also the government's bank and banker's bank as it acts an agent, guide and banker to government and the commercial banks. 

RBI can very CRR between _________.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. $5 \ to \ 15\%$

  2. $3 \ to \ 15\%$

  3. $5 \ to \ 12\%$

  4. $4 \ to \ 10\%$

Show answer
Correct Option: B
Explanation:

Cash Reserves Ratio (CRR) refers to the proportion of total deposits of the commercial banks which they must keep as reserves with the central bank in the form of cash. Cash reserve ratio is determined by central bank so that they can control the amount of credit creation of the commercial banks at the time of inflation or deflation in the economy. By the order of the parliament, Reserve Bank of India(RBI) can vary the cash reserve ratio between 3 to 15% of the total deposits of the commercial banks.