Tag: economics

Quizzes (361) Questions (3598)

Questions Related to economics

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. 

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

Foreign currency reserves of the country are held by ______.

  1. SBI

  2. CBI

  3. UTI

  4. RBI
Reveal answer Fill a bubble to check yourself
D Correct answer
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. 

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

Open market operations (OMOs) are related to _________.

  1. Fiscal policy

  2. Monetary policy

  3. Labour policy

  4. Agricultural policy
Reveal answer Fill a bubble to check yourself
B Correct answer
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.

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

A foreign corporation may open its project office ___________.

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