Tag: money and banking

Questions Related to money and banking

In order to reduce credit in the country, RBI may ________________.

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

  1. Buy securities in the open market

  2. Sell securities in the open market

  3. Reduce cash reserve ratio

  4. Reduce Repo Rate

Show answer
Correct Option: B
Explanation:

If RBI sells securities to public then commercial bank will buy those using its reserves then commercial banks don't have enough fund to lend money to general public so it reduces the credit in the country.

One of the State Government avails of a temporary financial assistance from Reserve Bank of India. This type of finance is called ____________ ?

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

  1. Overdraft

  2. Temporary loan

  3. Short term finance

  4. Ways and Means advance

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Correct Option: D

'Penal rate' is also known as _____________.

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

  1. rate of interest

  2. bank rate

  3. rate of capital formation

  4. rate of unemployment

Show answer
Correct Option: B
Explanation:

Bank Rate is now aligned to Marginal Standing Facility (MSF) rate, also called the penal rate at which banks can borrow money from the central bank over and above what is available to them through the LAF window.

LAF is a facility extended by the Reserve Bank of India to the scheduled commercial banks (excluding RRBs) and primary dealers to avail of liquidity in case of requirement or park excess funds with the RBI in case of excess liquidity on an overnight basis against the collateral of Government securities including State Government securities. Basically LAF enables liquidity management on a day to day basis.

Marginal Standing Facility (MSF) is a new scheme announced by the Reserve Bank of India (RBI) in its Monetary Policy (2011-12) and refers to the penal rate at which banks can borrow money from the central bank over and above what is available to them through the LAF window.

Bank rate is the rate at which the RBI extends credit to the ______________.

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

  1. public

  2. foreign countries

  3. commercial banks

  4. agriculture

Show answer
Correct Option: C
Explanation:

Bank Rate is the rate at which the commercial banks avail loans from the Reserve Bank of India. (R.B.I.)

It is used as a quantitative tool to change the quantity of money supplied in the economy.

When RBI grants a loan to commercial banks and charges interest on it, it is called _________.

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

  1. Rapo rate

  2. Reverse Rapo rate

  3. Sweep stack rate, basic rate

  4. Bank rate

Show answer
Correct Option: D
Explanation:

A bank rate is the rate of interest which a central bank (RBI)  charges on the loans and advances that it extends to commercial banks and other financial intermediaries. RBI uses this tool to control the money supply.

Choose the correct answer form the alternatives given.
Who recently became the first woman chief of the State Bank of India ?

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

  1. Arundhati Bhattacharya

  2. Shubhalakshmi Panse

  3. Vijaylakshmi Iyer

  4. Chanda Kochhar

Show answer
Correct Option: A
Explanation:

Arundhatiu Bhattacharya is an Indian Banker and currently the Chair-Managing  director of the  State Bank of India. She is the first woman to be the Chairperson of  State Bank of India. 

Banking ombudsman means.

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

  1. A person appointed by RBI to oversee the functioning of foreign banks

  2. Person appointed to recover dues from the defaulting borrowers

  3. A person to whom customer can approach for redressal of their grievances

  4. A person appointed to settle dispute between employees and management

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Correct Option: C

According to _____, people derive maximum satisfaction when they spend by making marginal utility equal in all goods.

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

  1. law of equi-marginal utility

  2. law of diminishing marginal utility

  3. law of diminishing marginal rate of substitution.

  4. law of demand

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Correct Option: A

_______ is the interest rate at which a central bank provides loans to other banks.

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

  1. Repo rate

  2. Borrowing rate

  3. Bank rate

  4. Treasury rate

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Correct Option: C

Quantitative measures consist of ________.

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

  1. repo rate and reverse repo rate

  2. open market operations

  3. variable reserve requirements

  4. all of above

Show answer
Correct Option: D