Tag: economics

Questions Related to economics

Who is the custodian of monetary reserves in India?

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

  1. SBI

  2. SIDBI

  3. NABARD

  4. RBI

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Correct Option: D

Rate at which Reserve Bank of India gives loans to commercial banks is called ___________.

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

  1. credit rate

  2. loan rate

  3. bank rate

  4. discount rate

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Correct Option: C

Who has been appointed the first-ever Chief Financial Officer (CFO) of the Reserve Bank of India (RBI)?

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

  1. Ashoke Sen

  2. Sudha Balakrishnan

  3. Jayant Narlikar

  4. E.C. George Sudarshan

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Correct Option: B
Explanation:

Sudha Balakrishnan, the Vice-President of National Securities Depository Ltd (NSDL), has been appointed the first-ever Chief Financial Officer (CFO) of the Reserve Bank of India (RBI). She will hold the rank of executive director and will have a 3-year term. The CFO will be responsible for reporting of financial information of the central bank, establishing accounting policies and ensuring compliance with regulations.


 The CFO will also be entrusted with communicating RBIs expected and actual financial performance and overseeing its budget processes. As CFO, Balakrishnan will also be in charge of the dividend RBI pays to the government, which is crucial in the final budgetary calculations. Under the RBI Act, 1934, the central bank is required to pay the government its surplus after making provisions for bad and doubtful debts, depreciation in assets and, contribution to staff and superannuation fund among others. RBI follows a July to June financial year.

________ heads and conducts the affairs of RBI.

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

  1. Central Board

  2. Local board

  3. Regional board

  4. All of the above

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Correct Option: A

Which of the following rates decided by the RBI is called ''Policy Rate''?

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

  1. Lending Rate

  2. Cash Reserve Ratio

  3. Bank Rate

  4. Deposit Rate

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Correct Option: C

Which of the following is/are the benefit/s of the marginal cost of fund based lending rate (MCLR)? Use the code given below to select your answer:
1. Better transmission of the RBI's policy rates into the banks' lending rates.
2. Enhanced competition among the banks. 

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

  1. Only 1

  2. Only 2

  3. 1 and 2

  4. Neither 1 and 2

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Correct Option: C

Select the correct statements related to the monetary policy announced by the RBI, using the code:
1. LAF includes repo, term repo and reserve repo.
2. RBI always keeps marginal standing facility rate higher than the repo rate.

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

  1. Only 1

  2. Only 2

  3. 1 and 2

  4. Neither 1 nor 2

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Correct Option: C
Explanation:

Liquidity Adjustment Facility includes RBI's repo and reverse repo operations (thus it includes the term repo operation also). Being a penal rate the marginal standing facility rate has to be higher than that of the repo rate. 

Select the correct statement's related to the monetary tools which are used by the RBIusing the code given below:
1. RBI's open market operations (OMOs) influences not only the size and cost of fund in the economy, but inflation too.
2. Market stabilisation scheme is a monetary policy tool used by the RBI to influence particularly inflation.

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

  1. Only 1

  2. 1 and 2

  3. Only 2

  4. Neither 1 nor 2

Show answer
Correct Option: B
Explanation:

 Any tolls which regulates the floss of currency in the economy it influences the inflation also. 

Select the correct statements regarding the Marginal Standing Facility using the code given below:
1. It functions as the last resort for banks to borrow short-term funds.
2. This is on the line of the existing LAF' and is pan of it.
3. Being a penal rate, this is a costlier route than repo.
4. This is linked to the net demand and time liabilities of the banks. 

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

  1. 1,2 and 3

  2. 2,3 and 4

  3. 1,3 and 4

  4. 1,2,3 and 4

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Correct Option: C
Explanation:

 RBI announced this route in 2011−122011−12 as a 'penal' route for banks to borrow once they have exhausted all borrowing option, i.e., the Repo route. MSF rate is regulated by the RBI above the current Repo rate. This route can be used by the banks for only overnight borrowings and is linked to their net demand and time liabilities (NDTL). 

What is/ are the purpose/ purposes of the 'Marginal Cost of Funds based Lending Rate (MCLR)' announced by RBI?
1. These guidelines help improve the transparency in the methodology followed by banks for determining the interest rates on advances.
2. These guidelines help ensure availability of bank credit an interest rates which are fair to the borrowers as well as the banks.
Select the correct answer using the code given below.

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

  1. $1$ only

  2. $2$ only

  3. Both $1$ and $2$

  4. Neither $1$ nor $2$

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Correct Option: C