Tag: economics

Questions Related to economics

Repo transaction means _________.

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

  1. sale of securities by the holder to the investor with the agreement to purchase them at a predetermined rate and date

  2. sale of securities by the holder to the investor with the agreement to resell them at a predetermined rate and date

  3. sale of securities by the holder to the investor with the agreement to purchase them at a prevailing rate and date

  4. sale of securities by the holder to the investor with the agreement to purchase them at a market driven rate

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Correct Option: A

As per Banking Regulation (Amendment) Act,1962, minimum SLR to be maintained is _____ $\%$ against the net demand and time liabilities.

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

  1. $20\%$

  2. $33\%$

  3. $25\%$

  4. $23\%$

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Correct Option: C

Repo transactions are allowed in ________.

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

  1. Government securities/ Treasury bills of all maturity

  2. State Government securities

  3. PSU bonds/ Private corporate bonds

  4. All the three

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Correct Option: D

Selective credit control method is used to __________.

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

  1. regulate credit for some specific purpose

  2. redirect credit for some specific purpose

  3. restrict supply of credit to check inflation

  4. restrict credit to some identified companies

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Correct Option: A
Explanation:

Selective credit control method of monetary policy includes those instruments which focus on the selected sectors of the economy and not the size of the total credit in economy as it is a qualitative method used by the central bank to change affected areas only and not the whole economy. It regulates the credit for some specific purpose which can be prices for a specific commodity etc. 

Repo Market means _________.

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

  1. a money market instrument which helps in collateral short term borrowing and leading through sale and purchase operation in debt instrument

  2. a money market instrument which helps in collateral long term borrowing and leading through sale and purchase operation in debt instrument

  3. a money market instrument which helps in collateral short term leading through sale and purchase operation in debt instrument

  4. a money market instrument which helps in collateral short term borrowing through sale and purchase operation in debt instrument

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Correct Option: A

As per RBI (Amendment) Act 1962, RBI is to determine the CRR for commercial banks between ________ to ________ of aggregate deposits and time liabilities.

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

  1. $3\%$, $10\%$

  2. $5\%$, $10\%$

  3. $3\%$, $15\%$

  4. $4\%$, $12\%$

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Correct Option: C

_____  is also called lender of the last resort in India.

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

  1. CBI

  2. SBI

  3. RBI

  4. UTI

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Correct Option: C
Explanation:

Central bank is an apex bank that regulates and controls the entire banking system of a country. The central bank lends money to government and the commercial banks when they are facing liquidity crunch or any type of insolvency. The central bank are the last resort to provide loans to the government and commercial banks against any type of collateral. Since Reserve Bank of India(RBI) is the central bank of India, it is also known as the lender of the last resort in India. 

Foreign currency reserves of the country are held by ______.

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

  1. SBI

  2. CBI

  3. UTI

  4. RBI

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Correct Option: D
Explanation:

Reserve Bank of India(RBI) is the central bank in India as it is an apex bank that regulates and controls the entire banking system of a country. The Reserve Bank of India(RBI) maintains a minimum reserve of international currency all the time in order to meet emergency requirements of foreign exchange and overcome adverse requirements of deficit in balance of payments. Therefore, foreign currency reserves of the country are held by RBI. 

Open market operations (OMOs) are related to _________.

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

  1. Fiscal policy

  2. Monetary policy

  3. Labour policy

  4. Agricultural policy

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Correct Option: B
Explanation:

Open market operation (OMO) is related to the monetary policy by the central bank in which the bank deals in the sale and purchase of securities and bonds in the open market to control the supply of money in the economy. By selling the securities and bonds, the central bank soaks liquidity from the economy which controls the inflation in the economy by decreasing the purchasing power of the people and by buying the securities and bonds, the central bank releases liquidity which controls deflation in the economy by increasing the purchasing power of the people.

A foreign corporation may open its project office ___________.

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

  1. without permission from the Reserve Bank of India

  2. with permission from the Reserve Bank of India

  3. only for research work

  4. both b and c

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Correct Option: B
Explanation:

The Reserve bank of India is the central bank of the country that regulates the function of all the bank. It issue notes, carry out various agency services, general services etc. It also regulates the working of all the banks as well as foreign exchange. Hence, a foreign corporation may open its project office with the permission from Reserve Bank of India.