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Money and Banking

Description: Money and Banking 2
Number of Questions: 15
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Tags: Money and Banking 2 Money & Banking
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What are the two items listed on a balance sheet?

  1. Interest and principle

  2. Assets and liabilities

  3. Interest and assets

  4. Principle and bonds


Correct Option: B

Liquidity rules have been formulated and enforced by

  1. World Bank

  2. State Govt.

  3. Central Govt.

  4. RBI


Correct Option: D

What do you call deposits that are covered by cash?

  1. Paper deposits

  2. Nominal deposits

  3. Cash deposits

  4. Real deposits


Correct Option: D

RBI is responsible for overall

  1. credit and fiscal policy of the economy

  2. debit and fiscal policy of the economy

  3. credit and monetary policy of the economy

  4. none of these


Correct Option: C

Open market operations perform

  1. direct sales of securities

  2. indirect sales of securities

  3. purchase and sales of bills

  4. all of these


Correct Option: D

What role does the board of directors of a bank play?

  1. Make loans

  2. Make deposits

  3. Oversee bank activities

  4. Handle withdrawals


Correct Option: C

The lender of last resort means

  1. the govt. coming to the rescue of poor farmers

  2. the central bank coming to the rescue of other banks in financial crisis

  3. commercial banks in coming to the rescue of small industrial units

  4. none of these


Correct Option: B

Statutory liquidity ratio (SLR) means

  1. minimum cash reserve with RBI

  2. minimum liquid assets in the form of cash, gold and approved securities

  3. a maximum ratio of cash holding to total liabilities of bank

  4. a minimum ratio of cash holding to total liabilities of bank


Correct Option: B
Explanation:

Statutory liquidity ratio (SLR) is a term for reserve requirement that the commercial banks in India require to maintain in the form of gold and/or government approved securities before providing credit to the customers.

________ refers to that portion of total deposits of a commercial bank which it has to keep with the RBI in the form of cash reserves.

  1. CRR

  2. SLR

  3. Bank rate

  4. Repo rate


Correct Option: A

Which of the following is a function of money?

  1. Medium of exchange

  2. Store of value

  3. Transfer of value

  4. All the above


Correct Option: D

The effect of increase in CRR will be reduced or nullified, if

  1. bank rate is reduced

  2. securities are sold in the open market

  3. SLR is increased

  4. people do not borrow from non-banking institutions


Correct Option: A
Explanation:

 The effect of increase in CRR will be reduced or nullified, if bank rate is reduced

Which of the following statements about money is incorrect?

  1. There are many assets which carry the attributes of money.

  2. Money is what money does.

  3. In the modern sense, money has stability, high degree of substitutability and feasibility of measuring statistical variation.

  4. None of the above.


Correct Option: D

The main objective of the Regional Rural Bank is to

  1. provide credit and other facilities to small and marginal farmers, agricultural labour and artisans in the rural areas

  2. provide credit to the common people in rural areas

  3. take over the functions of the Agricultural Refinance Corporation of India

  4. supplement scheduled commercial banks


Correct Option: A

NABARD is a

  1. bank

  2. board

  3. exchange programme for consumer goods

  4. none of these


Correct Option: A

Open market operation by a Central bank involves

  1. sale and purchase of government securities

  2. increase and decrease of discount rate

  3. changing the reserve ratio up and down

  4. raising or lowering of the margin requirements


Correct Option: A
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