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

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

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

Which of these are functions of RBI?

  1. Issue of Currency

  2. Managing Public Debt

  3. Rediscounting Bills of Commercial Banks

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Reserve Bank of India (RBI) performs all these functions, including issuing currency, managing public debt for the government, and acting as a banker to banks by rediscounting commercial bills.

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

Who is the official "lender of the last resort" in India?

  1. State Bank of India

  2. Punjab and National Bank

  3. Reserve Bank of India

  4. Oriental Bank of Commerce
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

RBI is the official lender of the last resort in India. Lender of the last resort means Central bank coming to the rescue of other banks in times of financial crisis.

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

Which of these are functions of RBI?

  1. Specifying Excise and Custom Duty Rates

  2. Specifying Income Tax Rates

  3. Representing India in International Economic Forums

  4. All of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The RBI acts as the representative of India in various international economic forums, such as the IMF and G20. Options A and B are fiscal functions performed by the Ministry of Finance.

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

Which of the following policies forms a part of the Monetary Policy?

  1. International Trade Policy

  2. Exchange Rate Policy

  3. Prices and Incomes Policy

  4. Export-Import Policy
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Monetary policy involves managing the money supply and interest rates. Exchange rate policy is a key component of this, as it influences the value of the currency and inflation.

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

Which of the following is not a Qualitative Credit Control measure of RBI?

  1. Capital Rationing

  2. Moral Suasion

  3. Statutory Liquidity Ratio

  4. Margin Requirements
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The Statutory Liquidity Ratio (SLR) is a quantitative credit control measure, as it mandates a specific percentage of assets to be held in liquid form. Qualitative measures include moral suasion and margin requirements.

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

In order to discourage investment in the economy, the RBI may __________.

  1. increase bank rate

  2. decrease bank rate

  3. buy securities in the open market

  4. decrease CRR
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Increasing the bank rate makes borrowing more expensive for commercial banks, which in turn raises interest rates for consumers and businesses, thereby discouraging investment.