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

Project where imported capital goods are required, have automatic clearance if the value of imported capital goods required is ________ of the total valise plant and machinery up to __________.

  1. Less than 25% minimum of Rs. 2 crores

  2. Less than 25% maximum of Rs. 2 crores

  3. More than 5% minimum of Rs. 2 cores

  4. More than 25% minimum of Rs. 2 cores
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Project where imported capital goods are required automatic clearance if the value of imported capital goods required is less than 25% of the total value of plant and machinery up to maximum of Rs. 2 crores.

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

Reverse Repo transaction means ________.

  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 commitment to sell or purchase 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 market driven rate
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A Reverse Repo transaction involves the RBI absorbing liquidity by purchasing securities from banks with an agreement to resell them at a predetermined rate and date.

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

Repo transaction means _________.

  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
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A Repo transaction is a collateralized lending arrangement where the seller sells securities to the buyer with an agreement to repurchase them at a predetermined rate and date.

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

Repo transactions are allowed in ________.

  1. Government securities/ Treasury bills of all maturity

  2. State Government securities

  3. PSU bonds/ Private corporate bonds

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

Repo transactions are permitted across a wide range of debt instruments, including government securities, state government securities, and certain corporate bonds, to facilitate liquidity in the money market.

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

Selective credit control method is used to __________.

  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
Reveal answer Fill a bubble to check yourself
A Correct answer
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. 

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

Repo Market means _________.

  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
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Repo market is a segment of the money market that allows for short-term borrowing and lending against collateral in the form of debt instruments.

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

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

  1. $3\%$, $10\%$
  2. $5\%$, $10\%$
  3. $3\%$, $15\%$
  4. $4\%$, $12\%$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The RBI (Amendment) Act, 1962, empowers the RBI to fix the Cash Reserve Ratio (CRR) for banks within a range of 3% to 15% of their net demand and time liabilities.

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

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

  1. CBI

  2. SBI

  3. RBI

  4. UTI
Reveal answer Fill a bubble to check yourself
C Correct answer
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.