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Monitory policy is announced in India by _________- a)Ministry of Finance
- b)Reserve Bank of India
- c)Planning Commission
- d)Government
Correct answer is option 'B'. Can you explain this answer?
Monitory policy is announced in India by _________
a)
Ministry of Finance
b)
Reserve Bank of India
c)
Planning Commission
d)
Government
|
Poonam Reddy answered |
B: Reserve Bank of India
In India, monetary policy is announced by the Reserve Bank of India (RBI). The RBI is the central bank of India and is responsible for implementing and managing monetary policy in the country.
Monetary policy refers to the actions taken by the central bank to influence the supply and demand of money in the economy, with the aim of achieving certain macroeconomic objectives such as price stability, full employment, and economic growth. The RBI uses various tools, such as changing the interest rates, altering the reserve requirements for banks, and engaging in open market operations, to implement monetary policy in India.
The Ministry of Finance is responsible for managing the government's finances, including preparing the annual budget, mobilizing financial resources, and formulating fiscal policy. The Planning Commission is a government body that is responsible for formulating the country's five-year plans and for coordinating the development activities of various sectors of the economy. The government refers to the executive branch of government, which is responsible for implementing the policies and laws of the country.
Which of these is a Quantitative Method of Credit control?- a)Bank Rate
- b)Moral Suasion
- c)Margin Requirement
- d)All of the above
Correct answer is option 'A'. Can you explain this answer?
Which of these is a Quantitative Method of Credit control?
a)
Bank Rate
b)
Moral Suasion
c)
Margin Requirement
d)
All of the above
|
|
Ræjû Bhæï answered |
The important quantitative methods of credit control is (a) bank rate.The methods used by the central bank to regulate the flows of credit into particular directions of the economy are called qualitative or selective methods of credit control. Unlike the quantitative methods, which affect the total volume of credit, the qualitative methods affect the types of credit, extended by the commercial banks; they affect the composition rather than the size of credit in the economy.
The Reserve Bank of India issues all currency notes except:- a)500 Rupee note
- b)100 Rupee Note
- c)10 Rupee note
- d)1 Rupee note
Correct answer is option 'D'. Can you explain this answer?
The Reserve Bank of India issues all currency notes except:
a)
500 Rupee note
b)
100 Rupee Note
c)
10 Rupee note
d)
1 Rupee note
|
Vinit Gupta answered |
Because the power is in hands of government
Who is the custodian of National reserves of international currency?- a)SBI
- b)IDBI
- c)RBI
- d)ICICI
Correct answer is option 'C'. Can you explain this answer?
Who is the custodian of National reserves of international currency?
a)
SBI
b)
IDBI
c)
RBI
d)
ICICI
|
|
Lipika Kumari answered |
The RBI acts as the custodian of the country's foreign exchange reserves, manages exchange control and acts as the agent of the government in respect of India's membership of the IMF
Which system of issue of currency note is followed by RBI?- a)Fixed Fiduciary System
- b)Proportional Reserve System
- c)Percentage Reserve System
- d)Minimum Reserve System
Correct answer is option 'D'. Can you explain this answer?
Which system of issue of currency note is followed by RBI?
a)
Fixed Fiduciary System
b)
Proportional Reserve System
c)
Percentage Reserve System
d)
Minimum Reserve System
|
Anjali Sharma answered |
D: Minimum Reserve System
The Reserve Bank of India (RBI) follows the minimum reserve system for issuing currency notes. Under this system, the RBI is required to maintain a certain minimum amount of gold and foreign exchange reserves as a backing for the notes it issues. The RBI can issue currency notes up to a certain limit, known as the statutory liquidity ratio (SLR), based on the value of these reserves.
In the minimum reserve system, the RBI can issue notes up to a certain limit based on the value of its reserves, but it is not required to hold reserves in proportion to the amount of notes it issues. This allows the RBI to have some flexibility in issuing currency notes to meet the demand for cash in the economy.
The fixed fiduciary system, proportional reserve system, and percentage reserve system are other systems that have been used by central banks to issue currency notes. However, they are no longer in use in modern times. The fixed fiduciary system required the central bank to maintain a fixed amount of reserves for every unit of currency issued, while the proportional reserve system required the central bank to hold reserves in proportion to the amount of notes issued. The percentage reserve system required the central bank to hold a certain percentage of its deposits as reserves.
Which of the following is not a quantitative measure of credit control?- a)The Bank Rate Policy
- b)Open Market Operations
- c)Consumer Credit Regulation
- d)The Repo Rate.
Correct answer is option 'C'. Can you explain this answer?
Which of the following is not a quantitative measure of credit control?
a)
The Bank Rate Policy
b)
Open Market Operations
c)
Consumer Credit Regulation
d)
The Repo Rate.
|
Amrutha Goyal answered |
Quantitative Measures of Credit Control
Quantitative measures of credit control are the tools used by the central bank to regulate the supply of money in the economy. There are various quantitative measures of credit control, such as:
1. Bank Rate Policy - This is the interest rate at which the central bank lends money to commercial banks. By increasing or decreasing the bank rate, the central bank can control the amount of money in circulation in the economy.
2. Open Market Operations - This involves the buying and selling of government securities by the central bank. By buying government securities, the central bank injects money into the economy, while selling government securities withdraws money from the economy.
3. Repo Rate - This is the interest rate at which the central bank borrows money from commercial banks. By increasing or decreasing the repo rate, the central bank can influence the cost of borrowing for commercial banks and thereby regulate the supply of money in the economy.
4. Consumer Credit Regulation - This refers to the regulation of credit facilities provided by banks to consumers. The central bank can regulate the amount of credit that banks can provide to consumers by imposing limits on interest rates, loan amounts, and repayment periods.
Not a Quantitative Measure of Credit Control
Consumer Credit Regulation is not a quantitative measure of credit control because it does not directly regulate the supply of money in the economy. Instead, it regulates the credit facilities provided by banks to consumers. While it can indirectly affect the supply of money in the economy by influencing the amount of credit provided by banks, it is not a direct tool used by the central bank to regulate the supply of money. Therefore, option 'C' is the correct answer.
Quantitative measures of credit control are the tools used by the central bank to regulate the supply of money in the economy. There are various quantitative measures of credit control, such as:
1. Bank Rate Policy - This is the interest rate at which the central bank lends money to commercial banks. By increasing or decreasing the bank rate, the central bank can control the amount of money in circulation in the economy.
2. Open Market Operations - This involves the buying and selling of government securities by the central bank. By buying government securities, the central bank injects money into the economy, while selling government securities withdraws money from the economy.
3. Repo Rate - This is the interest rate at which the central bank borrows money from commercial banks. By increasing or decreasing the repo rate, the central bank can influence the cost of borrowing for commercial banks and thereby regulate the supply of money in the economy.
4. Consumer Credit Regulation - This refers to the regulation of credit facilities provided by banks to consumers. The central bank can regulate the amount of credit that banks can provide to consumers by imposing limits on interest rates, loan amounts, and repayment periods.
Not a Quantitative Measure of Credit Control
Consumer Credit Regulation is not a quantitative measure of credit control because it does not directly regulate the supply of money in the economy. Instead, it regulates the credit facilities provided by banks to consumers. While it can indirectly affect the supply of money in the economy by influencing the amount of credit provided by banks, it is not a direct tool used by the central bank to regulate the supply of money. Therefore, option 'C' is the correct answer.
In the present context, total money stock in India refers to- a)M1
- b)M2
- c)M3
- d)M4
Correct answer is option 'C'. Can you explain this answer?
In the present context, total money stock in India refers to
a)
M1
b)
M2
c)
M3
d)
M4
|
|
Alok Mehta answered |
M3. The third measure of money supply in India is M3, which consists of M1, plus time deposits with commercial and cooperative banks, excluding interbank time deposits. The RBI calls M3 as broad money.
Bank Rate is also known as _______.- a)Discount Rate
- b)REPO Rate
- c)Reserve Repo Rate
- d)Lending Rate
Correct answer is option 'A'. Can you explain this answer?
Bank Rate is also known as _______.
a)
Discount Rate
b)
REPO Rate
c)
Reserve Repo Rate
d)
Lending Rate
|
|
Alok Mehta answered |
Bank rate, also referred to as the discount rate in American English, is the rate of interest which a central bank charges on its loans and advances to a commercial bank. ... Whenever a bank has a shortage of funds, they can typically borrow from the central bank based on the monetary policy of the country.
The Reserve Bank of India was nationalized in the year:- a)1935
- b)1949
- c)1969
- d)1991
Correct answer is option 'B'. Can you explain this answer?
The Reserve Bank of India was nationalized in the year:
a)
1935
b)
1949
c)
1969
d)
1991
|
Freedom Institute answered |
B: 1949
The Reserve Bank of India (RBI) was nationalized in the year 1949. Prior to nationalization, the RBI was a privately-owned institution that was established in 1935.
The nationalization of the RBI was carried out through the Reserve Bank of India (Transfer to Public Ownership) Act, 1948, which came into effect on 1 January 1949. Under the act, the RBI became a state-owned institution and the government of India acquired a controlling stake in the bank.
After nationalization, the RBI continued to perform its functions as the central bank of the country, including issuing and distributing currency notes, regulating and supervising the banking system, and managing the country's monetary policy.
The RBI was not nationalized in 1935, 1969, or 1991. These are all incorrect dates.
Central Bank of a country does not deal with ________.- a)State Government
- b)Public
- c)Central Government
- d)Commercial Banks
Correct answer is option 'B'. Can you explain this answer?
Central Bank of a country does not deal with ________.
a)
State Government
b)
Public
c)
Central Government
d)
Commercial Banks
|
Saumya Desai answered |
Central Bank of a country does not deal with State Government.
Explanation:
Central Bank is the apex financial institution of a country that controls and regulates the money supply in the economy. It performs various functions for maintaining the stability and growth of the economy. However, it does not deal with the State Government directly, as the state government has its own financial institution known as State Bank of India (SBI).
The Central Bank of a country deals with the following entities:
Public:
Central Bank of a country deals with the public directly by providing various financial services like opening bank accounts, providing loans, issuing currency notes, etc.
Central Government:
Central Bank is also responsible for dealing with the Central Government of the country. It performs various functions like managing the government's accounts, issuing and managing government securities like bonds and treasury bills, etc.
Commercial Banks:
Central Bank is responsible for regulating and supervising commercial banks in the country. It provides loans and advances to commercial banks and also acts as a lender of the last resort.
Conclusion:
Although the Central Bank of a country does not deal with the State Government directly, it indirectly affects the state government by regulating and controlling the money supply in the economy.
Explanation:
Central Bank is the apex financial institution of a country that controls and regulates the money supply in the economy. It performs various functions for maintaining the stability and growth of the economy. However, it does not deal with the State Government directly, as the state government has its own financial institution known as State Bank of India (SBI).
The Central Bank of a country deals with the following entities:
Public:
Central Bank of a country deals with the public directly by providing various financial services like opening bank accounts, providing loans, issuing currency notes, etc.
Central Government:
Central Bank is also responsible for dealing with the Central Government of the country. It performs various functions like managing the government's accounts, issuing and managing government securities like bonds and treasury bills, etc.
Commercial Banks:
Central Bank is responsible for regulating and supervising commercial banks in the country. It provides loans and advances to commercial banks and also acts as a lender of the last resort.
Conclusion:
Although the Central Bank of a country does not deal with the State Government directly, it indirectly affects the state government by regulating and controlling the money supply in the economy.
Money in traditional sense :- a)Serves as a medium of exchange.
- b)Serves as a store of value.
- c)Serves as both medium of exchange and store of value.
- d)Serves neither as medium of exchange and store of value.
Correct answer is option 'C'. Can you explain this answer?
Money in traditional sense :
a)
Serves as a medium of exchange.
b)
Serves as a store of value.
c)
Serves as both medium of exchange and store of value.
d)
Serves neither as medium of exchange and store of value.
|
Aleena Febin answered |
The server store in value because the value is not constant value maybe increase or decrease so the money tradition sense are store in value base
Which of the following is not qualitative credit control measure of the RBI?- a)Capital Rationing
- b)Moral Suasion
- c)SLR
- d)Margin requirement
Correct answer is option 'C'. Can you explain this answer?
Which of the following is not qualitative credit control measure of the RBI?
a)
Capital Rationing
b)
Moral Suasion
c)
SLR
d)
Margin requirement
|
Lakshmi Kaur answered |
The correct answer is option 'C' - SLR (Statutory Liquidity Ratio).
Explanation:
The Reserve Bank of India (RBI) uses various quantitative and qualitative measures to control credit in the economy. These measures are implemented to regulate the flow of credit and manage inflation.
Qualitative credit control measures are non-quantifiable measures that are aimed at influencing the credit behavior of banks and financial institutions. These measures are more flexible and discretionary compared to quantitative measures. They include:
a) Capital Rationing:
Capital rationing is a qualitative credit control measure where the RBI restricts or limits the amount of capital that banks can allocate for lending purposes. By imposing capital limits, the RBI ensures that banks have sufficient capital to meet regulatory requirements and maintain their financial stability. This measure helps in controlling excessive lending and prevents the banks from taking excessive risks.
b) Moral Suasion:
Moral suasion is a persuasive technique used by the RBI to influence the lending behavior of banks. It involves informal communication, discussions, meetings, and directives to convince banks to adopt certain credit policies. The RBI uses moral suasion to encourage banks to increase or decrease their lending activities in line with the monetary policy objectives.
c) SLR (Statutory Liquidity Ratio):
SLR is a quantitative credit control measure and not a qualitative measure. It refers to the percentage of a bank's net demand and time liabilities (NDTL) that it is required to maintain in the form of liquid assets such as cash, gold, government securities, etc. The purpose of SLR is to ensure the solvency and liquidity of banks. By adjusting the SLR, the RBI can control the flow of credit in the economy. An increase in the SLR reduces the funds available for lending, while a decrease in the SLR expands the lending capacity of banks.
d) Margin Requirement:
Margin requirement is a qualitative credit control measure that pertains to the lending against specific securities. The RBI can impose higher margin requirements, i.e., increasing the proportion of collateral that borrowers need to provide, to restrict the availability of credit for certain types of loans. Higher margin requirements reduce the amount of loans that can be availed against a given collateral, thus limiting credit expansion.
In conclusion, the correct answer is option 'C' - SLR, as it is a quantitative credit control measure rather than a qualitative measure.
Explanation:
The Reserve Bank of India (RBI) uses various quantitative and qualitative measures to control credit in the economy. These measures are implemented to regulate the flow of credit and manage inflation.
Qualitative credit control measures are non-quantifiable measures that are aimed at influencing the credit behavior of banks and financial institutions. These measures are more flexible and discretionary compared to quantitative measures. They include:
a) Capital Rationing:
Capital rationing is a qualitative credit control measure where the RBI restricts or limits the amount of capital that banks can allocate for lending purposes. By imposing capital limits, the RBI ensures that banks have sufficient capital to meet regulatory requirements and maintain their financial stability. This measure helps in controlling excessive lending and prevents the banks from taking excessive risks.
b) Moral Suasion:
Moral suasion is a persuasive technique used by the RBI to influence the lending behavior of banks. It involves informal communication, discussions, meetings, and directives to convince banks to adopt certain credit policies. The RBI uses moral suasion to encourage banks to increase or decrease their lending activities in line with the monetary policy objectives.
c) SLR (Statutory Liquidity Ratio):
SLR is a quantitative credit control measure and not a qualitative measure. It refers to the percentage of a bank's net demand and time liabilities (NDTL) that it is required to maintain in the form of liquid assets such as cash, gold, government securities, etc. The purpose of SLR is to ensure the solvency and liquidity of banks. By adjusting the SLR, the RBI can control the flow of credit in the economy. An increase in the SLR reduces the funds available for lending, while a decrease in the SLR expands the lending capacity of banks.
d) Margin Requirement:
Margin requirement is a qualitative credit control measure that pertains to the lending against specific securities. The RBI can impose higher margin requirements, i.e., increasing the proportion of collateral that borrowers need to provide, to restrict the availability of credit for certain types of loans. Higher margin requirements reduce the amount of loans that can be availed against a given collateral, thus limiting credit expansion.
In conclusion, the correct answer is option 'C' - SLR, as it is a quantitative credit control measure rather than a qualitative measure.
The RBI can decrease the bank credit by:
- a)Maintaining the bank rate at the same level
- b)Increasing the Bank rate, Lowering the Bank rate and Lowering the CRR
- c)Increasing the CRR
- d)None of these
Correct answer is option 'B'. Can you explain this answer?
The RBI can decrease the bank credit by:
a)
Maintaining the bank rate at the same level
b)
Increasing the Bank rate, Lowering the Bank rate and Lowering the CRR
c)
Increasing the CRR
d)
None of these
|
|
Pranav Gupta answered |
Decreasing Bank Credit through RBI Policy Measures
The Reserve Bank of India (RBI) can influence the level of bank credit in the economy through various policy measures. One of the primary objectives of RBI is to maintain price stability and promote economic growth.
One of the ways RBI can decrease the bank credit is by reducing the flow of funds to the banks. This can be achieved through the following measures:
1. Increasing Bank Rate: RBI can increase the bank rate, which is the rate at which the central bank lends money to the commercial banks. When the bank rate is increased, the cost of borrowing for the banks increases, which leads to a decrease in the credit available for the customers.
2. Lowering Bank Rate: On the other hand, RBI can also decrease the bank rate. This would encourage the banks to borrow more from the central bank at a lower rate and lend more to the customers, thus increasing the credit available in the economy.
3. Lowering Cash Reserve Ratio: RBI can also lower the cash reserve ratio (CRR), which is the percentage of deposits that banks are required to maintain with the central bank. When the CRR is lowered, banks have more funds available to lend, which leads to an increase in the credit available in the economy.
Conclusion
Thus, it can be concluded that RBI can decrease the bank credit by increasing the bank rate or lowering the CRR, or even by lowering the bank rate. Option 'B' is the correct answer.
The Reserve Bank of India (RBI) can influence the level of bank credit in the economy through various policy measures. One of the primary objectives of RBI is to maintain price stability and promote economic growth.
One of the ways RBI can decrease the bank credit is by reducing the flow of funds to the banks. This can be achieved through the following measures:
1. Increasing Bank Rate: RBI can increase the bank rate, which is the rate at which the central bank lends money to the commercial banks. When the bank rate is increased, the cost of borrowing for the banks increases, which leads to a decrease in the credit available for the customers.
2. Lowering Bank Rate: On the other hand, RBI can also decrease the bank rate. This would encourage the banks to borrow more from the central bank at a lower rate and lend more to the customers, thus increasing the credit available in the economy.
3. Lowering Cash Reserve Ratio: RBI can also lower the cash reserve ratio (CRR), which is the percentage of deposits that banks are required to maintain with the central bank. When the CRR is lowered, banks have more funds available to lend, which leads to an increase in the credit available in the economy.
Conclusion
Thus, it can be concluded that RBI can decrease the bank credit by increasing the bank rate or lowering the CRR, or even by lowering the bank rate. Option 'B' is the correct answer.
Which of the following of credit control?- a)Credit Rationing
- b)Change in Cash Reserves of Commercial Banks
- c)Publicity and Notifications
- d)Regulation of Consumer Credit.
Correct answer is option 'B'. Can you explain this answer?
Which of the following of credit control?
a)
Credit Rationing
b)
Change in Cash Reserves of Commercial Banks
c)
Publicity and Notifications
d)
Regulation of Consumer Credit.
|
|
Freedom Institute answered |
The different instruments of credit control used by the Reserve Bank of India are Statutory Liquidity Ratio (SLR), Cash Reserve Ratio (CRR), the Bank Rate Policy, Selective Credit Control (SCC), Open Market Operations (OMOs).
Which of the following statements is correct?- a)The RBI is just like any ordinary commercial bank in India.
- b)The RBI is responsible for the overall monetary policy in India.
- c)Selective credit control measures affect all banks in a similar manner.
- d)A high rate of interest encourages new investment.
Correct answer is option 'B'. Can you explain this answer?
Which of the following statements is correct?
a)
The RBI is just like any ordinary commercial bank in India.
b)
The RBI is responsible for the overall monetary policy in India.
c)
Selective credit control measures affect all banks in a similar manner.
d)
A high rate of interest encourages new investment.
|
|
Jatin Mehta answered |
RBI regulates commercial banks and non-banking finance companies working in India. It serves as the leader of the banking system and the money market. It regulates money supply and credit in the country. The RBI carries out India's monetary policy and exercises supervision and control over banks and non-banking finance companies in India. RBI was set up in 1935 under the Reserve Bank of India Act,1934.
During depression, it is advisable to- a)Lower Bank Rate and purchase securities in the market.
- b)Increase Bank Rate and purchase securities in the open market.
- c)Decrease Bank Rate and sell securities in the open market
- d)Increase Bank Rate and sell securities in the open market.
Correct answer is option 'A'. Can you explain this answer?
During depression, it is advisable to
a)
Lower Bank Rate and purchase securities in the market.
b)
Increase Bank Rate and purchase securities in the open market.
c)
Decrease Bank Rate and sell securities in the open market
d)
Increase Bank Rate and sell securities in the open market.
|
|
Freedom Institute answered |
During depression, it is advisable to lower bank rate and purchase securities in the market because it will encourage borrowings and investment.
Who is the custodian of national reserves of international currency?- a)SBI
- b)RBI
- c)ICICI
- d)World Bank
Correct answer is option 'B'. Can you explain this answer?
Who is the custodian of national reserves of international currency?
a)
SBI
b)
RBI
c)
ICICI
d)
World Bank
|
|
Amrutha Goyal answered |
Custodian of National Reserves of International Currency
The Reserve Bank of India (RBI) is the custodian of national reserves of international currency. The RBI is the central bank of India, responsible for regulating the country's monetary and financial system. It plays a crucial role in maintaining the country's foreign exchange reserves, which are essential for international trade and economic stability.
Functions of RBI as custodian of national reserves of international currency:
1. Maintaining Foreign Exchange Reserves: The RBI holds and manages India's foreign exchange reserves, which consist of various foreign currencies, gold, and Special Drawing Rights (SDRs) allocated by the International Monetary Fund (IMF). These reserves are used to finance the country's imports and debt obligations, and to maintain the stability of the rupee in the foreign exchange market.
2. Managing Exchange Rate: The RBI manages the exchange rate of the Indian rupee against other major currencies. It intervenes in the foreign exchange market to buy or sell foreign currencies to maintain the desired exchange rate level.
3. Regulating Foreign Exchange Transactions: The RBI regulates all foreign exchange transactions in India, including imports, exports, and remittances. It also sets the guidelines for foreign investment in the country.
4. Representing India in International Financial Institutions: The RBI represents India in various international financial institutions, such as the IMF, World Bank, and Asian Development Bank. It participates in the decision-making process of these institutions and helps to shape global economic policies.
Conclusion
In summary, the RBI plays a crucial role as the custodian of national reserves of international currency. It manages India's foreign exchange reserves, regulates foreign exchange transactions, maintains exchange rate stability, and represents India in international financial institutions. These functions are essential for maintaining the country's economic stability and promoting international trade and investment.
The Reserve Bank of India (RBI) is the custodian of national reserves of international currency. The RBI is the central bank of India, responsible for regulating the country's monetary and financial system. It plays a crucial role in maintaining the country's foreign exchange reserves, which are essential for international trade and economic stability.
Functions of RBI as custodian of national reserves of international currency:
1. Maintaining Foreign Exchange Reserves: The RBI holds and manages India's foreign exchange reserves, which consist of various foreign currencies, gold, and Special Drawing Rights (SDRs) allocated by the International Monetary Fund (IMF). These reserves are used to finance the country's imports and debt obligations, and to maintain the stability of the rupee in the foreign exchange market.
2. Managing Exchange Rate: The RBI manages the exchange rate of the Indian rupee against other major currencies. It intervenes in the foreign exchange market to buy or sell foreign currencies to maintain the desired exchange rate level.
3. Regulating Foreign Exchange Transactions: The RBI regulates all foreign exchange transactions in India, including imports, exports, and remittances. It also sets the guidelines for foreign investment in the country.
4. Representing India in International Financial Institutions: The RBI represents India in various international financial institutions, such as the IMF, World Bank, and Asian Development Bank. It participates in the decision-making process of these institutions and helps to shape global economic policies.
Conclusion
In summary, the RBI plays a crucial role as the custodian of national reserves of international currency. It manages India's foreign exchange reserves, regulates foreign exchange transactions, maintains exchange rate stability, and represents India in international financial institutions. These functions are essential for maintaining the country's economic stability and promoting international trade and investment.
The CRR is determined in India by:- a)Ministry of finance
- b)State Bank of India
- c)Reserve Bank of India
- d)Parliament
Correct answer is option 'C'. Can you explain this answer?
The CRR is determined in India by:
a)
Ministry of finance
b)
State Bank of India
c)
Reserve Bank of India
d)
Parliament
|
|
Anjali Sharma answered |
C: Reserve Bank of India
The cash reserve ratio (CRR) is determined by the Reserve Bank of India (RBI), which is the central bank of India. The CRR is the percentage of deposits that commercial banks are required to hold with the RBI as a reserve.
The RBI uses the CRR as a tool to regulate the supply of credit in the economy. By increasing the CRR, the RBI can reduce the amount of money that commercial banks have available to lend, which can reduce the supply of credit in the economy. By decreasing the CRR, the RBI can increase the amount of money that commercial banks have available to lend, which can increase the supply of credit in the economy.
The Ministry of Finance, State Bank of India (SBI), and Parliament are not responsible for determining the CRR in India. Only the RBI has this authority as the central bank of the country.
Commercial banks suffer from- a)Regional imbalances.
- b)Increasing overdues.
- c)Lower inefficiency.
- d)All of the above
Correct answer is option 'D'. Can you explain this answer?
Commercial banks suffer from
a)
Regional imbalances.
b)
Increasing overdues.
c)
Lower inefficiency.
d)
All of the above
|
Rohini Desai answered |
Commercial banks suffer from:
- Regional imbalances: Commercial banks may face challenges due to regional imbalances in terms of economic development, population distribution, and infrastructure. This can affect their ability to attract deposits, provide loans, and offer financial services in certain regions.
- Increasing overdues: Banks may experience an increase in overdue loans, which can lead to a rise in non-performing assets (NPAs). This can negatively impact the profitability and financial stability of commercial banks.
- Lower inefficiency: Inefficiencies in operations, management, and regulatory compliance can hinder the smooth functioning of commercial banks. This can result in higher costs, lower productivity, and reduced customer satisfaction.
- All of the above: The correct answer is option D, as all the mentioned factors contribute to the challenges faced by commercial banks.
Overall, commercial banks need to address these issues in order to maintain their competitiveness, profitability, and sustainability in the banking industry. They can adopt strategies such as improving risk management practices, enhancing customer service, expanding their presence in under-served areas, and implementing efficient operational processes to mitigate the impact of these challenges.
- Regional imbalances: Commercial banks may face challenges due to regional imbalances in terms of economic development, population distribution, and infrastructure. This can affect their ability to attract deposits, provide loans, and offer financial services in certain regions.
- Increasing overdues: Banks may experience an increase in overdue loans, which can lead to a rise in non-performing assets (NPAs). This can negatively impact the profitability and financial stability of commercial banks.
- Lower inefficiency: Inefficiencies in operations, management, and regulatory compliance can hinder the smooth functioning of commercial banks. This can result in higher costs, lower productivity, and reduced customer satisfaction.
- All of the above: The correct answer is option D, as all the mentioned factors contribute to the challenges faced by commercial banks.
Overall, commercial banks need to address these issues in order to maintain their competitiveness, profitability, and sustainability in the banking industry. They can adopt strategies such as improving risk management practices, enhancing customer service, expanding their presence in under-served areas, and implementing efficient operational processes to mitigate the impact of these challenges.
Ten rupee note has been issued by ______:- a)RBI
- b)Government
- c)Commercial banks
- d)Any one of above
Correct answer is option 'A'. Can you explain this answer?
Ten rupee note has been issued by ______:
a)
RBI
b)
Government
c)
Commercial banks
d)
Any one of above
|
|
Freedom Institute answered |
A: RBI
The 10 rupee note has been issued by the Reserve Bank of India (RBI), which is the central bank of India. The RBI is responsible for issuing and distributing currency notes in India, including the 10 rupee note.
The RBI is an autonomous institution that is responsible for managing the country's monetary policy, including the issuance and circulation of currency notes. It is also responsible for regulating and supervising the country's banking system and for maintaining the stability of the financial system.
The government of India and commercial banks do not issue currency notes in India. The government, through the Ministry of Finance, is responsible for issuing the 1 rupee note, which is the only currency note in India that is not issued by the RBI. Commercial banks are not authorized to issue currency notes and can only lend money to their customers.
What is the currency deposit ratio (cdr)?- a)ratio of money held by the public in currency to that of money held in bank deposits
- b)ratio of money held by public in bank deposits to that of money held by public in currency
- c)ratio of money held in demand drafts to that of money held in treasury bonds
- d)none of the above
Correct answer is option 'A'. Can you explain this answer?
What is the currency deposit ratio (cdr)?
a)
ratio of money held by the public in currency to that of money held in bank deposits
b)
ratio of money held by public in bank deposits to that of money held by public in currency
c)
ratio of money held in demand drafts to that of money held in treasury bonds
d)
none of the above
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|
Arjun Singhania answered |
The currency deposit ratio shows the amount of currency that people hold as a proportion of aggregate deposits.
An increase in cash deposit ratio leads to a decrease in money multiplier. An increase in deposit rates will induce depositors to deposit more, thereby leading to a decrease in Cash to Aggregate Deposit ratio. This will in turn lead to a rise in Money Multiplier.
The ‘lender of last resort’ means. - a)The Government coming to the rescue of sick industries
- b)Commercial Banks coming to the rescue of the Cooperative banks
- c)Central Bank coming to the rescue of banks in times of financial crisis
- d)None of the above
Correct answer is option 'C'. Can you explain this answer?
The ‘lender of last resort’ means.
a)
The Government coming to the rescue of sick industries
b)
Commercial Banks coming to the rescue of the Cooperative banks
c)
Central Bank coming to the rescue of banks in times of financial crisis
d)
None of the above
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|
Sahil Malik answered |
The what? Could you please provide more context or information about what you are referring to?
What is Bank rate?- a)The rate of interest at which commercial banks give loan to their customers
- b)The rate of interest at which Banks invite long term deposits of the public
- c)The rate at which the Central Bank of a country discounts the bills of commercial banks
- d)The rate at which Central Bank of a country sells its securities to the public.
Correct answer is option 'C'. Can you explain this answer?
What is Bank rate?
a)
The rate of interest at which commercial banks give loan to their customers
b)
The rate of interest at which Banks invite long term deposits of the public
c)
The rate at which the Central Bank of a country discounts the bills of commercial banks
d)
The rate at which Central Bank of a country sells its securities to the public.
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|
Maheshwar Sharma answered |
**Bank Rate**
The bank rate is the rate at which the central bank of a country discounts the bills of commercial banks. It is an important tool used by the central bank to control the money supply and interest rates in the economy. The bank rate is also known as the discount rate or the rediscount rate.
**Explanation:**
The bank rate is the rate at which the central bank lends money to commercial banks against the collateral of government securities or bills of exchange. When commercial banks have a shortage of funds, they can borrow from the central bank at the bank rate. This helps in meeting their liquidity requirements and ensures the smooth functioning of the banking system.
The central bank uses the bank rate as a monetary policy tool to influence the money supply and interest rates in the economy. By changing the bank rate, the central bank can affect the cost of borrowing for commercial banks, which in turn affects the interest rates offered to customers.
When the central bank increases the bank rate:
1. **Impact on commercial banks:** Commercial banks will have to pay a higher interest rate when borrowing from the central bank. This increases their cost of funds and makes borrowing more expensive for them.
2. **Impact on customers:** Commercial banks will also increase their lending rates to customers to maintain their profitability. This leads to higher interest rates for loans and other credit facilities for customers.
3. **Impact on money supply:** Higher interest rates discourage borrowing and lending, which reduces the money supply in the economy. This helps in controlling inflation and stabilizing the economy.
When the central bank decreases the bank rate:
1. **Impact on commercial banks:** Commercial banks will have access to cheaper funds from the central bank. This lowers their cost of funds and makes borrowing more affordable for them.
2. **Impact on customers:** Commercial banks may lower their lending rates to customers, making loans and other credit facilities more affordable.
3. **Impact on money supply:** Lower interest rates encourage borrowing and lending, which increases the money supply in the economy. This stimulates economic growth and investment.
By adjusting the bank rate, the central bank can influence the cost of funds, interest rates, and money supply to achieve its monetary policy objectives such as price stability, economic growth, and financial stability. The bank rate is an important tool in the central bank's toolkit for managing the economy.
The bank rate is the rate at which the central bank of a country discounts the bills of commercial banks. It is an important tool used by the central bank to control the money supply and interest rates in the economy. The bank rate is also known as the discount rate or the rediscount rate.
**Explanation:**
The bank rate is the rate at which the central bank lends money to commercial banks against the collateral of government securities or bills of exchange. When commercial banks have a shortage of funds, they can borrow from the central bank at the bank rate. This helps in meeting their liquidity requirements and ensures the smooth functioning of the banking system.
The central bank uses the bank rate as a monetary policy tool to influence the money supply and interest rates in the economy. By changing the bank rate, the central bank can affect the cost of borrowing for commercial banks, which in turn affects the interest rates offered to customers.
When the central bank increases the bank rate:
1. **Impact on commercial banks:** Commercial banks will have to pay a higher interest rate when borrowing from the central bank. This increases their cost of funds and makes borrowing more expensive for them.
2. **Impact on customers:** Commercial banks will also increase their lending rates to customers to maintain their profitability. This leads to higher interest rates for loans and other credit facilities for customers.
3. **Impact on money supply:** Higher interest rates discourage borrowing and lending, which reduces the money supply in the economy. This helps in controlling inflation and stabilizing the economy.
When the central bank decreases the bank rate:
1. **Impact on commercial banks:** Commercial banks will have access to cheaper funds from the central bank. This lowers their cost of funds and makes borrowing more affordable for them.
2. **Impact on customers:** Commercial banks may lower their lending rates to customers, making loans and other credit facilities more affordable.
3. **Impact on money supply:** Lower interest rates encourage borrowing and lending, which increases the money supply in the economy. This stimulates economic growth and investment.
By adjusting the bank rate, the central bank can influence the cost of funds, interest rates, and money supply to achieve its monetary policy objectives such as price stability, economic growth, and financial stability. The bank rate is an important tool in the central bank's toolkit for managing the economy.
When the bank rate increases the demand for loans _______:- a)Reduces
- b)Increases marginally
- c)Remains unchanged
- d)Increases drastically
Correct answer is option 'A'. Can you explain this answer?
When the bank rate increases the demand for loans _______:
a)
Reduces
b)
Increases marginally
c)
Remains unchanged
d)
Increases drastically
|
|
Freedom Institute answered |
A: Reduces
When the bank rate increases, the demand for loans tends to reduce. The bank rate is the interest rate at which the central bank of a country lends money to commercial banks. When the bank rate is increased, it becomes more expensive for banks to borrow from the central bank, which in turn increases the cost of borrowing for customers. As a result, the demand for loans tends to decrease as customers are less willing to borrow at higher interest rates.
This is because higher interest rates increase the cost of borrowing for businesses and households, which can reduce their ability and willingness to take out loans. Higher interest rates may also reduce the demand for loans by reducing the demand for investment and consumption, as higher borrowing costs can make such activities less attractive.
However, the impact of a change in the bank rate on the demand for loans may not be the same in all cases and may depend on a variety of factors such as the overall economic conditions, the availability of alternative sources of financing, and the creditworthiness of the borrowers.
Monetary policy includes:- a)Regulation of money
- b)Provides employment
- c)Credit control
- d)All of these.
Correct answer is option 'C'. Can you explain this answer?
Monetary policy includes:
a)
Regulation of money
b)
Provides employment
c)
Credit control
d)
All of these.
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|
Rajat Patel answered |
The Monetary Policy regulates the supply of money and the cost and availability of credit in the economy. It deals with both the lending and borrowing rates of interest for commercial banks. The Monetary Policy aims to maintain price stability, full employment and economic growth.
Which of the following is not a selective credit control method :- a)Rationing of credit
- b)Direct Action
- c)Change in margin requirements
- d)Reserve Requirement changes
Correct answer is option 'D'. Can you explain this answer?
Which of the following is not a selective credit control method :
a)
Rationing of credit
b)
Direct Action
c)
Change in margin requirements
d)
Reserve Requirement changes
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Kavita Joshi answered |
The reserve requirement (or cash reserve ratio) is a central bank regulation employed by most, but not all, of the world's central banks, that sets the minimum amount of reserves that must be held by a commercial bank.
Rural bank branches constitute ______ percent of total bank branches in India- a)14
- b)60
- c)47
- d)82
Correct answer is option 'C'. Can you explain this answer?
Rural bank branches constitute ______ percent of total bank branches in India
a)
14
b)
60
c)
47
d)
82
|
|
Rohini Desai answered |
Explanation:
To find the percentage of rural bank branches in India, we need to divide the number of rural bank branches by the total number of bank branches and then multiply by 100.
Let's assume the total number of bank branches in India is 100.
Step 1:
Calculate the number of rural bank branches:
Assume 47 rural bank branches (as mentioned in option C).
Step 2:
Calculate the percentage:
Percentage = (Number of rural bank branches / Total number of bank branches) * 100
= (47 / 100) * 100
= 47%
Therefore, rural bank branches constitute 47% of the total bank branches in India.
Answer: C (47%)
To find the percentage of rural bank branches in India, we need to divide the number of rural bank branches by the total number of bank branches and then multiply by 100.
Let's assume the total number of bank branches in India is 100.
Step 1:
Calculate the number of rural bank branches:
Assume 47 rural bank branches (as mentioned in option C).
Step 2:
Calculate the percentage:
Percentage = (Number of rural bank branches / Total number of bank branches) * 100
= (47 / 100) * 100
= 47%
Therefore, rural bank branches constitute 47% of the total bank branches in India.
Answer: C (47%)
In the terminology of economics and money demand, the terms M1 and M2 are also known as :- a)Short money
- b)Long money
- c)Broad money
- d)Narrow money
Correct answer is option 'D'. Can you explain this answer?
In the terminology of economics and money demand, the terms M1 and M2 are also known as :
a)
Short money
b)
Long money
c)
Broad money
d)
Narrow money
|
|
Rohini Desai answered |
Explanation:
The terms M1 and M2 are used in economics to categorize different types of money supply or money demand. Here is a detailed explanation of the terms M1 and M2 and their alternative names:
M1:
- M1 refers to the narrowest definition of money supply, which includes the most liquid forms of money.
- M1 includes currency in circulation (physical cash) and demand deposits (checking accounts) held by individuals and non-bank businesses.
- It represents the most commonly used forms of money for transactions in the economy.
- M1 is also known as narrow money.
M2:
- M2 is a broader measure of money supply that includes M1 along with additional types of money that are less liquid.
- In addition to currency in circulation and demand deposits, M2 includes savings deposits, time deposits (such as certificates of deposit), and money market mutual funds.
- These additional components of M2 are less commonly used for transactions but still represent a part of the overall money supply in the economy.
- M2 is also known as broad money.
Alternative Names:
- The terms M1 and M2 are also known by alternative names that reflect their characteristics.
- M1 is also referred to as narrow money because it represents the narrowest and most liquid forms of money.
- M2 is also called broad money because it includes a broader range of money components, including less liquid forms of money.
In summary, M1 and M2 are terms used to categorize different types of money supply or money demand. M1 represents the narrowest and most liquid forms of money, while M2 includes M1 along with additional, less liquid forms of money. M1 is also known as narrow money, while M2 is referred to as broad money.
The terms M1 and M2 are used in economics to categorize different types of money supply or money demand. Here is a detailed explanation of the terms M1 and M2 and their alternative names:
M1:
- M1 refers to the narrowest definition of money supply, which includes the most liquid forms of money.
- M1 includes currency in circulation (physical cash) and demand deposits (checking accounts) held by individuals and non-bank businesses.
- It represents the most commonly used forms of money for transactions in the economy.
- M1 is also known as narrow money.
M2:
- M2 is a broader measure of money supply that includes M1 along with additional types of money that are less liquid.
- In addition to currency in circulation and demand deposits, M2 includes savings deposits, time deposits (such as certificates of deposit), and money market mutual funds.
- These additional components of M2 are less commonly used for transactions but still represent a part of the overall money supply in the economy.
- M2 is also known as broad money.
Alternative Names:
- The terms M1 and M2 are also known by alternative names that reflect their characteristics.
- M1 is also referred to as narrow money because it represents the narrowest and most liquid forms of money.
- M2 is also called broad money because it includes a broader range of money components, including less liquid forms of money.
In summary, M1 and M2 are terms used to categorize different types of money supply or money demand. M1 represents the narrowest and most liquid forms of money, while M2 includes M1 along with additional, less liquid forms of money. M1 is also known as narrow money, while M2 is referred to as broad money.
Nationalisation of banks aimed at all of the following except- a)Removal of control by a few.
- b)Provision of credit to big industries only.
- c)Provision of adequate credit for agriculture, small industry and export units.
- d)Encouragement of a new class of entrepreneur.
Correct answer is option 'B'. Can you explain this answer?
Nationalisation of banks aimed at all of the following except
a)
Removal of control by a few.
b)
Provision of credit to big industries only.
c)
Provision of adequate credit for agriculture, small industry and export units.
d)
Encouragement of a new class of entrepreneur.
|
|
Mrinalini Iyer answered |
Nationalisation of banks aimed at all of the provision of adequate credit, for agriculture and small industry and export only, but not big industries.
Terms of credit do not include:- a)interest rate
- b)collateral
- c)documentation
- d)lender's land
Correct answer is option 'D'. Can you explain this answer?
Terms of credit do not include:
a)
interest rate
b)
collateral
c)
documentation
d)
lender's land
|
|
Niharika Chavan answered |
Terms of Credit
Terms of credit refer to the conditions and requirements that are associated with obtaining credit. These conditions and requirements are agreed upon by the lender and the borrower and are outlined in a credit agreement.
The terms of credit may include:
- Interest rate: This is the amount charged by the lender for the use of the credit. It is usually expressed as an annual percentage rate (APR).
- Collateral: This is property or assets pledged by the borrower to secure the credit. It serves as a guarantee that the lender will be able to recover their money if the borrower defaults on their payments.
- Documentation: This refers to the paperwork and documentation required by the lender to process the credit application. This may include proof of income, tax returns, bank statements, and other financial documents.
- Repayment terms: This refers to the schedule of payments that the borrower must make to repay the credit. It includes the amount of each payment, the frequency of payments, and the duration of the repayment period.
Lender's Land
Lender's land is not a term of credit. It refers to the property or assets owned by the lender. This property or assets are not part of the credit agreement and are not used as collateral for the credit.
Therefore, the correct answer is option D - Lender's land.
Terms of credit refer to the conditions and requirements that are associated with obtaining credit. These conditions and requirements are agreed upon by the lender and the borrower and are outlined in a credit agreement.
The terms of credit may include:
- Interest rate: This is the amount charged by the lender for the use of the credit. It is usually expressed as an annual percentage rate (APR).
- Collateral: This is property or assets pledged by the borrower to secure the credit. It serves as a guarantee that the lender will be able to recover their money if the borrower defaults on their payments.
- Documentation: This refers to the paperwork and documentation required by the lender to process the credit application. This may include proof of income, tax returns, bank statements, and other financial documents.
- Repayment terms: This refers to the schedule of payments that the borrower must make to repay the credit. It includes the amount of each payment, the frequency of payments, and the duration of the repayment period.
Lender's Land
Lender's land is not a term of credit. It refers to the property or assets owned by the lender. This property or assets are not part of the credit agreement and are not used as collateral for the credit.
Therefore, the correct answer is option D - Lender's land.
The rate at which discounting of bills of first class is done by RBI is called- a)Bank rate
- b)Prime Lending rate
- c)Repo rate
- d)None of the above
Correct answer is option 'A'. Can you explain this answer?
The rate at which discounting of bills of first class is done by RBI is called
a)
Bank rate
b)
Prime Lending rate
c)
Repo rate
d)
None of the above
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|
Arun Khanna answered |
A bank rate is the interest rate at which a nation's central bank lends money to domestic banks, often in the form of very short-term loans. Managing the bank rate is a method by which central banks affect economic activity. Lower bank rates can help to expand the economy by lowering the cost of funds for borrowers, and higher bank rates help to reign in the economy when inflation is higher than desired.
In order to encourage investment in the country, the RBI may- a)Reduce CRR.
- b)Increase CRR.
- c)Sell securities in the open market.
- d)Increase Bank Rat.
Correct answer is option 'A'. Can you explain this answer?
In order to encourage investment in the country, the RBI may
a)
Reduce CRR.
b)
Increase CRR.
c)
Sell securities in the open market.
d)
Increase Bank Rat.
|
Yash Kumar answered |
Understanding CRR and Investment Encouragement
To encourage investment in the country, the Reserve Bank of India (RBI) can take several measures, one of which is reducing the Cash Reserve Ratio (CRR). Here’s how this works:
What is CRR?
- CRR is the percentage of a bank's total deposits that must be maintained in reserve with the RBI.
- It is a tool used by the RBI to control liquidity in the economy.
Impact of Reducing CRR
- Increased Liquidity: When the RBI reduces the CRR, banks have more money available to lend. This increases the overall liquidity in the economy.
- Lower Interest Rates: With more funds to lend, banks are likely to lower interest rates on loans. This makes borrowing cheaper for businesses and individuals.
- Encouragement for Investment: Lower interest rates incentivize businesses to take loans for expansion, which can lead to increased investment in infrastructure, technology, and human resources.
Comparison with Other Options
- Increasing CRR (Option B): This would reduce the amount of funds available for lending, tightening liquidity and discouraging investment.
- Selling Securities (Option C): This action would absorb cash from the banking system, similarly reducing liquidity and hindering investment.
- Increasing Bank Rate (Option D): This would also result in higher borrowing costs, further disincentivizing investment.
Conclusion
In conclusion, reducing the CRR is a strategic move by the RBI to increase liquidity, lower interest rates, and ultimately encourage investment in the economy. This approach stimulates growth and development, making it a favorable option for economic enhancement.
To encourage investment in the country, the Reserve Bank of India (RBI) can take several measures, one of which is reducing the Cash Reserve Ratio (CRR). Here’s how this works:
What is CRR?
- CRR is the percentage of a bank's total deposits that must be maintained in reserve with the RBI.
- It is a tool used by the RBI to control liquidity in the economy.
Impact of Reducing CRR
- Increased Liquidity: When the RBI reduces the CRR, banks have more money available to lend. This increases the overall liquidity in the economy.
- Lower Interest Rates: With more funds to lend, banks are likely to lower interest rates on loans. This makes borrowing cheaper for businesses and individuals.
- Encouragement for Investment: Lower interest rates incentivize businesses to take loans for expansion, which can lead to increased investment in infrastructure, technology, and human resources.
Comparison with Other Options
- Increasing CRR (Option B): This would reduce the amount of funds available for lending, tightening liquidity and discouraging investment.
- Selling Securities (Option C): This action would absorb cash from the banking system, similarly reducing liquidity and hindering investment.
- Increasing Bank Rate (Option D): This would also result in higher borrowing costs, further disincentivizing investment.
Conclusion
In conclusion, reducing the CRR is a strategic move by the RBI to increase liquidity, lower interest rates, and ultimately encourage investment in the economy. This approach stimulates growth and development, making it a favorable option for economic enhancement.
The effect of increase CRR will be reduced or nullified if :- a)Bank rate is reduced.
- b)Securities are sold in the open market.
- c)SLR is increased.
- d)People do not borrow from non-banking institutions.
Correct answer is option 'A'. Can you explain this answer?
The effect of increase CRR will be reduced or nullified if :
a)
Bank rate is reduced.
b)
Securities are sold in the open market.
c)
SLR is increased.
d)
People do not borrow from non-banking institutions.
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Bhavana Chauhan answered |
Effect of Increase in CRR:
The Cash Reserve Ratio (CRR) is the percentage of a bank's total deposit that it must hold as reserves in the form of cash. When the CRR is increased, banks are required to hold a higher proportion of their deposits in cash, which reduces the amount of money available for lending and investment.
Options to Reduce or Nullify the Effect of Increase in CRR:
a) Bank Rate is Reduced:
The bank rate is the rate at which the central bank lends money to commercial banks. When the bank rate is reduced, it becomes cheaper for banks to borrow from the central bank. This can encourage banks to borrow more from the central bank and compensate for the reduction in their lending capacity due to the increased CRR. As a result, the effect of the increase in CRR on the availability of funds for lending can be reduced or nullified.
b) Securities are Sold in the Open Market:
When the central bank sells securities in the open market, it absorbs excess liquidity from the banking system. This reduces the amount of money available with banks for lending and investment. By selling securities in the open market, the central bank can counterbalance the impact of the increased CRR, thereby reducing its effect on the lending capacity of banks.
c) SLR is Increased:
The Statutory Liquidity Ratio (SLR) is the percentage of a bank's total deposit that it must maintain in the form of specified liquid assets like cash, gold, or government securities. If the SLR is increased, banks are required to hold a higher proportion of their deposits in these liquid assets, which reduces the amount of money available for lending. By increasing the SLR, the central bank can counterbalance the impact of the increased CRR and mitigate its effect on the availability of funds for lending.
d) People Do Not Borrow from Non-Banking Institutions:
If people choose not to borrow from non-banking institutions, they are more likely to borrow from commercial banks. This increases the demand for loans from banks and compensates for the reduced lending capacity due to the increased CRR. As a result, the effect of the increase in CRR on the availability of funds for lending can be reduced or nullified.
Conclusion:
Among the given options, reducing the bank rate is the most effective way to reduce or nullify the effect of an increase in the Cash Reserve Ratio (CRR) on the lending capacity of banks. By reducing the bank rate, banks can borrow more from the central bank, which compensates for the reduction in their lending capacity due to the increased CRR. However, it is important for the central bank to assess the overall economic conditions and adopt a balanced approach in implementing monetary policy measures to ensure financial stability and promote economic growth.
The Cash Reserve Ratio (CRR) is the percentage of a bank's total deposit that it must hold as reserves in the form of cash. When the CRR is increased, banks are required to hold a higher proportion of their deposits in cash, which reduces the amount of money available for lending and investment.
Options to Reduce or Nullify the Effect of Increase in CRR:
a) Bank Rate is Reduced:
The bank rate is the rate at which the central bank lends money to commercial banks. When the bank rate is reduced, it becomes cheaper for banks to borrow from the central bank. This can encourage banks to borrow more from the central bank and compensate for the reduction in their lending capacity due to the increased CRR. As a result, the effect of the increase in CRR on the availability of funds for lending can be reduced or nullified.
b) Securities are Sold in the Open Market:
When the central bank sells securities in the open market, it absorbs excess liquidity from the banking system. This reduces the amount of money available with banks for lending and investment. By selling securities in the open market, the central bank can counterbalance the impact of the increased CRR, thereby reducing its effect on the lending capacity of banks.
c) SLR is Increased:
The Statutory Liquidity Ratio (SLR) is the percentage of a bank's total deposit that it must maintain in the form of specified liquid assets like cash, gold, or government securities. If the SLR is increased, banks are required to hold a higher proportion of their deposits in these liquid assets, which reduces the amount of money available for lending. By increasing the SLR, the central bank can counterbalance the impact of the increased CRR and mitigate its effect on the availability of funds for lending.
d) People Do Not Borrow from Non-Banking Institutions:
If people choose not to borrow from non-banking institutions, they are more likely to borrow from commercial banks. This increases the demand for loans from banks and compensates for the reduced lending capacity due to the increased CRR. As a result, the effect of the increase in CRR on the availability of funds for lending can be reduced or nullified.
Conclusion:
Among the given options, reducing the bank rate is the most effective way to reduce or nullify the effect of an increase in the Cash Reserve Ratio (CRR) on the lending capacity of banks. By reducing the bank rate, banks can borrow more from the central bank, which compensates for the reduction in their lending capacity due to the increased CRR. However, it is important for the central bank to assess the overall economic conditions and adopt a balanced approach in implementing monetary policy measures to ensure financial stability and promote economic growth.
Who is the official “lender of the last resort” in India?- a)SBI
- b)PNB
- c)RBI
- d)OBC
Correct answer is option 'C'. Can you explain this answer?
Who is the official “lender of the last resort” in India?
a)
SBI
b)
PNB
c)
RBI
d)
OBC
|
|
Rohini Desai answered |
The official "lender of the last resort" in India is the Reserve Bank of India (RBI).
The RBI is the central bank of India and has the authority to act as the lender of the last resort in times of financial crisis or liquidity crunch. Here is a detailed explanation:
What is the lender of the last resort?
The lender of the last resort is an institution, typically a central bank, that provides emergency liquidity assistance to banks or financial institutions facing severe financial distress. It acts as a backstop to prevent systemic risks and maintain stability in the financial system.
Why is RBI the lender of the last resort in India?
The RBI is designated as the lender of the last resort in India due to several reasons:
1. Regulatory Authority: The RBI is the apex regulatory authority for banks and financial institutions in India. It has the expertise and knowledge to assess the financial health of these entities and determine the need for liquidity support.
2. Monetary Control: As the central bank, the RBI has the authority to control the money supply and manage interest rates in the economy. This makes it well-positioned to provide liquidity during times of crisis.
3. Financial Stability: The RBI's primary objective is to maintain financial stability in the country. Being the lender of the last resort enables it to fulfill this mandate by ensuring the smooth functioning of the financial system.
Roles and Functions of RBI as the lender of the last resort:
When acting as the lender of the last resort, the RBI performs the following functions:
1. Emergency Liquidity Assistance: The RBI provides emergency loans and liquidity support to banks and financial institutions facing cash shortages or solvency issues.
2. Collateral Management: The RBI accepts eligible securities as collateral for providing liquidity assistance. This helps mitigate the risk associated with lending funds to distressed institutions.
3. Monitoring and Supervision: The RBI closely monitors the financial health of banks and financial institutions to identify early signs of distress. It conducts regular inspections and stress tests to assess their resilience.
4. Crisis Management: In the event of a financial crisis, the RBI takes proactive measures to stabilize the system. It may intervene through open market operations, policy rate adjustments, or other regulatory measures to restore confidence and liquidity.
In conclusion, the Reserve Bank of India (RBI) is the official "lender of the last resort" in India. It plays a crucial role in maintaining financial stability and providing emergency liquidity assistance to banks and financial institutions in times of crisis.
The RBI is the central bank of India and has the authority to act as the lender of the last resort in times of financial crisis or liquidity crunch. Here is a detailed explanation:
What is the lender of the last resort?
The lender of the last resort is an institution, typically a central bank, that provides emergency liquidity assistance to banks or financial institutions facing severe financial distress. It acts as a backstop to prevent systemic risks and maintain stability in the financial system.
Why is RBI the lender of the last resort in India?
The RBI is designated as the lender of the last resort in India due to several reasons:
1. Regulatory Authority: The RBI is the apex regulatory authority for banks and financial institutions in India. It has the expertise and knowledge to assess the financial health of these entities and determine the need for liquidity support.
2. Monetary Control: As the central bank, the RBI has the authority to control the money supply and manage interest rates in the economy. This makes it well-positioned to provide liquidity during times of crisis.
3. Financial Stability: The RBI's primary objective is to maintain financial stability in the country. Being the lender of the last resort enables it to fulfill this mandate by ensuring the smooth functioning of the financial system.
Roles and Functions of RBI as the lender of the last resort:
When acting as the lender of the last resort, the RBI performs the following functions:
1. Emergency Liquidity Assistance: The RBI provides emergency loans and liquidity support to banks and financial institutions facing cash shortages or solvency issues.
2. Collateral Management: The RBI accepts eligible securities as collateral for providing liquidity assistance. This helps mitigate the risk associated with lending funds to distressed institutions.
3. Monitoring and Supervision: The RBI closely monitors the financial health of banks and financial institutions to identify early signs of distress. It conducts regular inspections and stress tests to assess their resilience.
4. Crisis Management: In the event of a financial crisis, the RBI takes proactive measures to stabilize the system. It may intervene through open market operations, policy rate adjustments, or other regulatory measures to restore confidence and liquidity.
In conclusion, the Reserve Bank of India (RBI) is the official "lender of the last resort" in India. It plays a crucial role in maintaining financial stability and providing emergency liquidity assistance to banks and financial institutions in times of crisis.
Monetary Policy in India is regulated by :- a)Ministry of Finance
- b)R.B.I
- c)Planning Commission
- d)SEBI
Correct answer is 'B'. Can you explain this answer?
Monetary Policy in India is regulated by :
a)
Ministry of Finance
b)
R.B.I
c)
Planning Commission
d)
SEBI
|
Nandini Iyer answered |
The Reserve Bank of India (RBI) uses the monetary policy to regulate liquidity in a manner that balances inflation and help in GDP growth and development.
Which of the following statements about banks is incorrect?- a)Banks encourage saving habits among people.
- b)Banks mobilise savings and make them available for production.
- c)Banks help in creating credit money.
- d)None of the above.
Correct answer is option 'D'. Can you explain this answer?
Which of the following statements about banks is incorrect?
a)
Banks encourage saving habits among people.
b)
Banks mobilise savings and make them available for production.
c)
Banks help in creating credit money.
d)
None of the above.
|
|
Dushyant Jha answered |
Answer is (d)
The basic distinction between narrow and broad monies is the- a)Treatment of post office deposits.
- b)Treatment of time deposits of banks.
- c)Treatment of savings deposits of banks.
- d)Treatment of currency.
Correct answer is option 'B'. Can you explain this answer?
The basic distinction between narrow and broad monies is the
a)
Treatment of post office deposits.
b)
Treatment of time deposits of banks.
c)
Treatment of savings deposits of banks.
d)
Treatment of currency.
|
|
Sameer Basu answered |
Explanation:
Narrow Money:
- Narrow money consists of currency in circulation plus demand deposits, which are funds held in checking accounts.
- Time deposits of banks are not included in narrow money.
- Narrow money focuses on liquid assets that are easily accessible for transactions.
Broad Money:
- Broad money includes not only narrow money components but also time deposits of banks.
- Time deposits of banks are considered less liquid than demand deposits but are still a part of broad money.
- Broad money provides a more comprehensive measure of the money supply in an economy.
Explanation of Answer:
The basic distinction between narrow and broad monies lies in the treatment of time deposits of banks. Narrow money includes only currency in circulation and demand deposits, while broad money incorporates not only these components but also time deposits of banks. This difference highlights the varying degrees of liquidity and accessibility of funds within each measure of the money supply. Time deposits are excluded from narrow money as they are less liquid than demand deposits, which are the primary focus of narrow money. On the other hand, broad money includes time deposits to provide a more inclusive measure of the money supply that accounts for both liquid and less liquid assets held by the public.
Narrow Money:
- Narrow money consists of currency in circulation plus demand deposits, which are funds held in checking accounts.
- Time deposits of banks are not included in narrow money.
- Narrow money focuses on liquid assets that are easily accessible for transactions.
Broad Money:
- Broad money includes not only narrow money components but also time deposits of banks.
- Time deposits of banks are considered less liquid than demand deposits but are still a part of broad money.
- Broad money provides a more comprehensive measure of the money supply in an economy.
Explanation of Answer:
The basic distinction between narrow and broad monies lies in the treatment of time deposits of banks. Narrow money includes only currency in circulation and demand deposits, while broad money incorporates not only these components but also time deposits of banks. This difference highlights the varying degrees of liquidity and accessibility of funds within each measure of the money supply. Time deposits are excluded from narrow money as they are less liquid than demand deposits, which are the primary focus of narrow money. On the other hand, broad money includes time deposits to provide a more inclusive measure of the money supply that accounts for both liquid and less liquid assets held by the public.
__________ is the Banker’s Bank in India:- a)SBI
- b)PNB
- c)RBI
- d)OBC
Correct answer is option 'C'. Can you explain this answer?
__________ is the Banker’s Bank in India:
a)
SBI
b)
PNB
c)
RBI
d)
OBC
|
|
Rohini Desai answered |
C: RBI
The Reserve Bank of India (RBI) is the banker's bank in India. This means that the RBI acts as a central bank for all the commercial banks in the country and performs a variety of functions on their behalf.
Some of the key functions of the RBI as the banker's bank in India include:
- Providing liquidity support to commercial banks: The RBI acts as a lender of last resort for commercial banks, providing them with financial assistance in times of need.
- Regulating and supervising the banking system: The RBI is responsible for regulating and supervising the activities of commercial banks to ensure the stability of the financial system.
- Acting as a clearinghouse for interbank transactions: The RBI acts as a clearinghouse for interbank transactions, facilitating the settlement of transactions between banks and helping to maintain the smooth functioning of the payment and settlement system.
- Providing a variety of services to commercial banks: The RBI provides a range of services to commercial banks, such as currency management, government securities operations, and foreign exchange operations.
The State Bank of India (SBI), Punjab National Bank (PNB), and Oriental Bank of Commerce (OBC) are all commercial banks in India and are not responsible for performing the functions of a central bank.
Broad money refers to- a)M1
- b)M2
- c)M3
- d)M4
Correct answer is option 'C'. Can you explain this answer?
Broad money refers to
a)
M1
b)
M2
c)
M3
d)
M4
|
|
Freedom Institute answered |
Broad money refers to:
Broad money is a term used in economics to refer to the total supply of money in an economy. It encompasses various types of money, including both physical currency and deposits held in financial institutions. In the United States, the measure of broad money is typically referred to as M3.
The components of broad money include:
- M1: M1 is a narrow definition of money that includes physical currency (coins and banknotes) held by individuals and businesses, as well as demand deposits held in banks. It represents the most liquid form of money.
- M2: M2 includes all the components of M1, but also adds certain types of savings deposits, such as money market deposits and retail money market mutual funds. These types of deposits are less liquid than M1 but can still be readily converted into cash or used for transactional purposes.
- M3: M3 is a broader measure of money that includes M2 plus large time deposits, institutional money market funds, and other types of relatively less liquid financial assets. M3 is considered to be the most comprehensive measure of the money supply and includes a wider range of financial instruments.
- M4: M4 is an even broader measure of money that includes M3 plus additional financial assets, such as repurchase agreements and debt securities. M4 is less commonly used and is not as widely recognized as M1, M2, and M3.
In summary:
- Broad money refers to the total supply of money in an economy.
- It includes various types of money, such as physical currency and deposits held in financial institutions.
- The components of broad money include M1, M2, M3, and sometimes M4.
- M1 is the most liquid form of money, while M3 is the most comprehensive measure of the money supply.
Therefore, the correct answer to the question is C: M3.
Broad money is a term used in economics to refer to the total supply of money in an economy. It encompasses various types of money, including both physical currency and deposits held in financial institutions. In the United States, the measure of broad money is typically referred to as M3.
The components of broad money include:
- M1: M1 is a narrow definition of money that includes physical currency (coins and banknotes) held by individuals and businesses, as well as demand deposits held in banks. It represents the most liquid form of money.
- M2: M2 includes all the components of M1, but also adds certain types of savings deposits, such as money market deposits and retail money market mutual funds. These types of deposits are less liquid than M1 but can still be readily converted into cash or used for transactional purposes.
- M3: M3 is a broader measure of money that includes M2 plus large time deposits, institutional money market funds, and other types of relatively less liquid financial assets. M3 is considered to be the most comprehensive measure of the money supply and includes a wider range of financial instruments.
- M4: M4 is an even broader measure of money that includes M3 plus additional financial assets, such as repurchase agreements and debt securities. M4 is less commonly used and is not as widely recognized as M1, M2, and M3.
In summary:
- Broad money refers to the total supply of money in an economy.
- It includes various types of money, such as physical currency and deposits held in financial institutions.
- The components of broad money include M1, M2, M3, and sometimes M4.
- M1 is the most liquid form of money, while M3 is the most comprehensive measure of the money supply.
Therefore, the correct answer to the question is C: M3.
Who is called the ‘bank of issue’?- a)RBI
- b)SBI
- c)IDBI
- d)ICICI
Correct answer is option 'A'. Can you explain this answer?
Who is called the ‘bank of issue’?
a)
RBI
b)
SBI
c)
IDBI
d)
ICICI
|
|
Rohini Desai answered |
Who is called the 'bank of issue'?
The bank that is called the 'bank of issue' is the Reserve Bank of India (RBI). It is the central banking institution of India and is responsible for the issue and supply of the Indian rupee. Here are some key points to explain why RBI is called the 'bank of issue':
1. Role of RBI:
- RBI acts as the sole authority for issuing currency notes in India.
- It is responsible for the production, distribution, and management of currency in the country.
2. Currency Issuance:
- RBI has the exclusive right to issue currency notes of various denominations in India.
- It determines the volume and value of currency to be printed and circulated in the economy.
3. Currency Management:
- RBI is responsible for maintaining the integrity and security of the currency in circulation.
- It ensures that counterfeit currency is detected and removed from circulation.
4. Monetary Policy:
- As the 'bank of issue', RBI formulates and implements the monetary policy of India.
- It regulates the money supply in the economy to control inflation, interest rates, and economic stability.
5. Banker to Banks:
- RBI acts as a banker to all commercial banks in India.
- It maintains accounts of all banks and facilitates their transactions.
6. Regulatory Authority:
- RBI has regulatory authority over the banking and financial system in India.
- It supervises and regulates banks, financial institutions, and non-banking financial companies.
In conclusion, the Reserve Bank of India (RBI) is called the 'bank of issue' because it has the authority and responsibility for issuing and managing the currency in India. It plays a crucial role in maintaining the stability and integrity of the Indian financial system.
The bank that is called the 'bank of issue' is the Reserve Bank of India (RBI). It is the central banking institution of India and is responsible for the issue and supply of the Indian rupee. Here are some key points to explain why RBI is called the 'bank of issue':
1. Role of RBI:
- RBI acts as the sole authority for issuing currency notes in India.
- It is responsible for the production, distribution, and management of currency in the country.
2. Currency Issuance:
- RBI has the exclusive right to issue currency notes of various denominations in India.
- It determines the volume and value of currency to be printed and circulated in the economy.
3. Currency Management:
- RBI is responsible for maintaining the integrity and security of the currency in circulation.
- It ensures that counterfeit currency is detected and removed from circulation.
4. Monetary Policy:
- As the 'bank of issue', RBI formulates and implements the monetary policy of India.
- It regulates the money supply in the economy to control inflation, interest rates, and economic stability.
5. Banker to Banks:
- RBI acts as a banker to all commercial banks in India.
- It maintains accounts of all banks and facilitates their transactions.
6. Regulatory Authority:
- RBI has regulatory authority over the banking and financial system in India.
- It supervises and regulates banks, financial institutions, and non-banking financial companies.
In conclusion, the Reserve Bank of India (RBI) is called the 'bank of issue' because it has the authority and responsibility for issuing and managing the currency in India. It plays a crucial role in maintaining the stability and integrity of the Indian financial system.
In terms of deposit mobilisation, _____________ leads other states.- a)U.P
- b)Maharashtra
- c)Kerala
- d)Bihar
Correct answer is option 'B'. Can you explain this answer?
In terms of deposit mobilisation, _____________ leads other states.
a)
U.P
b)
Maharashtra
c)
Kerala
d)
Bihar
|
|
Rohini Desai answered |
Deposit Mobilisation in Indian States:
1. U.P (Uttar Pradesh):
- Uttar Pradesh is one of the largest states in terms of population.
- The state has a vast agricultural sector, contributing to the economy.
- However, it does not lead other states in terms of deposit mobilization.
2. Maharashtra:
- Maharashtra is one of the most developed states in India.
- It has a strong industrial and service sector, attracting investments.
- The state has a higher rate of deposit mobilization compared to other states.
- Maharashtra leads other states in terms of deposit mobilization.
3. Kerala:
- Kerala is known for its high literacy rate and human development index.
- The state has a strong banking culture, with a focus on savings and deposits.
- Kerala has a higher rate of deposit mobilization compared to many other states.
4. Bihar:
- Bihar is one of the least developed states in India.
- It has a predominantly agricultural economy with limited industrial and service sectors.
- Bihar does not lead other states in terms of deposit mobilization.
Therefore, the correct answer is Maharashtra.
1. U.P (Uttar Pradesh):
- Uttar Pradesh is one of the largest states in terms of population.
- The state has a vast agricultural sector, contributing to the economy.
- However, it does not lead other states in terms of deposit mobilization.
2. Maharashtra:
- Maharashtra is one of the most developed states in India.
- It has a strong industrial and service sector, attracting investments.
- The state has a higher rate of deposit mobilization compared to other states.
- Maharashtra leads other states in terms of deposit mobilization.
3. Kerala:
- Kerala is known for its high literacy rate and human development index.
- The state has a strong banking culture, with a focus on savings and deposits.
- Kerala has a higher rate of deposit mobilization compared to many other states.
4. Bihar:
- Bihar is one of the least developed states in India.
- It has a predominantly agricultural economy with limited industrial and service sectors.
- Bihar does not lead other states in terms of deposit mobilization.
Therefore, the correct answer is Maharashtra.
Which among the following is considered to be the most liquid asset?- a)Gold
- b)Money
- c)Land
- d)Treasury bonds
Correct answer is option 'B'. Can you explain this answer?
Which among the following is considered to be the most liquid asset?
a)
Gold
b)
Money
c)
Land
d)
Treasury bonds
|
|
Rohini Desai answered |
The most liquid asset among the given options is Money.
Explanation:
- Liquidity: It refers to the ease with which an asset can be converted into cash without any significant loss in value.
- Money: Money is considered the most liquid asset because it is widely accepted as a medium of exchange and can be easily used to purchase goods and services.
- Gold: Although gold is valuable and widely traded, it is not as liquid as money. Selling gold may involve finding a buyer and going through a process, which may take time and may not guarantee the full value of the asset.
- Land: Land is a relatively illiquid asset as it may take time to find a buyer and complete the legal process of transferring ownership.
- Treasury bonds: Treasury bonds are considered relatively liquid as they can be bought and sold in the financial markets. However, they may not be as liquid as money, as selling bonds may involve finding a buyer and going through the process of selling securities.
Therefore, money is the most liquid asset among the given options as it can be easily converted into cash and used for immediate transactions.
Population per bank in India is- a)5000
- b)20000
- c)12000
- d)45000
Correct answer is option 'C'. Can you explain this answer?
Population per bank in India is
a)
5000
b)
20000
c)
12000
d)
45000
|
|
Nikita Singh answered |
Population per bank in India
To determine the population per bank in India, we can divide the total population of India by the number of banks in the country. However, the total population of India is not provided in the question. Therefore, we need to use the given options to find the answer.
Given options:
A: 5000
B: 20000
C: 12000
D: 45000
To find the correct answer, we need to choose the option that provides a realistic population per bank. Here's a detailed explanation:
A: 5000
- If the population per bank is 5000, it means that there are only 5000 people for each bank in India. This seems unlikely as India has a large population.
B: 20000
- If the population per bank is 20000, it means that there are 20000 people for each bank in India. This also seems unlikely as it would suggest a smaller number of banks in the country.
C: 12000
- If the population per bank is 12000, it means that there are 12000 people for each bank in India. This option seems more reasonable and could reflect the average population per bank in the country.
D: 45000
- If the population per bank is 45000, it means that there are 45000 people for each bank in India. This option seems too high and unlikely.
Therefore, based on the given options, the answer is C: 12000. This implies that there are approximately 12000 people per bank in India.
To determine the population per bank in India, we can divide the total population of India by the number of banks in the country. However, the total population of India is not provided in the question. Therefore, we need to use the given options to find the answer.
Given options:
A: 5000
B: 20000
C: 12000
D: 45000
To find the correct answer, we need to choose the option that provides a realistic population per bank. Here's a detailed explanation:
A: 5000
- If the population per bank is 5000, it means that there are only 5000 people for each bank in India. This seems unlikely as India has a large population.
B: 20000
- If the population per bank is 20000, it means that there are 20000 people for each bank in India. This also seems unlikely as it would suggest a smaller number of banks in the country.
C: 12000
- If the population per bank is 12000, it means that there are 12000 people for each bank in India. This option seems more reasonable and could reflect the average population per bank in the country.
D: 45000
- If the population per bank is 45000, it means that there are 45000 people for each bank in India. This option seems too high and unlikely.
Therefore, based on the given options, the answer is C: 12000. This implies that there are approximately 12000 people per bank in India.
Money includes :- a)Currencies and demand deposits.
- b)Bonds, government securities.
- c)Equity shares.
- d)All of the above
Correct answer is option 'D'. Can you explain this answer?
Money includes :
a)
Currencies and demand deposits.
b)
Bonds, government securities.
c)
Equity shares.
d)
All of the above
|
|
Simran Pillai answered |
Money- An Overview
Money is a medium of exchange that is widely accepted as a means of payment for goods and services. It is an essential element of any modern economy as it facilitates exchange, trade, and commerce.
Forms of Money
Money can take many forms, including:
1. Currencies and Demand Deposits
Currencies, including coins and banknotes, are the most common form of money. Demand deposits are also a form of money that allows individuals to withdraw funds from their bank accounts at any time.
2. Bonds and Government Securities
Bonds and government securities are financial instruments that represent a loan to an organization or government. They are a form of money because they can be bought and sold like other assets.
3. Equity Shares
Equity shares represent ownership in a company and are another form of money. They can be bought and sold on stock exchanges, and their value can fluctuate depending on market conditions.
All of the Above
Money includes currencies and demand deposits, bonds and government securities, and equity shares. Hence, option 'D' is the correct answer.
Money is a medium of exchange that is widely accepted as a means of payment for goods and services. It is an essential element of any modern economy as it facilitates exchange, trade, and commerce.
Forms of Money
Money can take many forms, including:
1. Currencies and Demand Deposits
Currencies, including coins and banknotes, are the most common form of money. Demand deposits are also a form of money that allows individuals to withdraw funds from their bank accounts at any time.
2. Bonds and Government Securities
Bonds and government securities are financial instruments that represent a loan to an organization or government. They are a form of money because they can be bought and sold like other assets.
3. Equity Shares
Equity shares represent ownership in a company and are another form of money. They can be bought and sold on stock exchanges, and their value can fluctuate depending on market conditions.
All of the Above
Money includes currencies and demand deposits, bonds and government securities, and equity shares. Hence, option 'D' is the correct answer.
Banks perform the function of- a)Receiving deposits
- b)Lending of money
- c)Agency services
- d)All of the above
Correct answer is option 'D'. Can you explain this answer?
Banks perform the function of
a)
Receiving deposits
b)
Lending of money
c)
Agency services
d)
All of the above
|
|
Nikita Singh answered |
Banks perform the function of:
There are several functions that banks perform in order to fulfill the financial needs of individuals, businesses, and the economy as a whole. These functions include:
1. Receiving deposits:
- Banks provide a safe place for individuals, businesses, and other entities to deposit their money.
- They accept various types of deposits, such as savings accounts, current accounts, fixed deposits, and recurring deposits.
2. Lending of money:
- Banks play a crucial role in providing loans to individuals and businesses.
- They lend money for various purposes, such as personal loans, home loans, car loans, business loans, and working capital loans.
- Banks charge interest on these loans, which is a key source of revenue for them.
3. Agency services:
- Banks act as agents for their customers in various financial transactions.
- They facilitate the transfer of funds through checks, demand drafts, and electronic transfers.
- Banks also provide services like bill payment, collection of dividends, and purchase/sale of securities.
4. All of the above:
- Banks perform all the functions mentioned above simultaneously.
- They provide a comprehensive range of financial services to meet the diverse needs of their customers.
In conclusion, banks perform the functions of receiving deposits, lending money, and providing agency services. These functions are essential for the smooth functioning of the economy and meeting the financial needs of individuals and businesses.
There are several functions that banks perform in order to fulfill the financial needs of individuals, businesses, and the economy as a whole. These functions include:
1. Receiving deposits:
- Banks provide a safe place for individuals, businesses, and other entities to deposit their money.
- They accept various types of deposits, such as savings accounts, current accounts, fixed deposits, and recurring deposits.
2. Lending of money:
- Banks play a crucial role in providing loans to individuals and businesses.
- They lend money for various purposes, such as personal loans, home loans, car loans, business loans, and working capital loans.
- Banks charge interest on these loans, which is a key source of revenue for them.
3. Agency services:
- Banks act as agents for their customers in various financial transactions.
- They facilitate the transfer of funds through checks, demand drafts, and electronic transfers.
- Banks also provide services like bill payment, collection of dividends, and purchase/sale of securities.
4. All of the above:
- Banks perform all the functions mentioned above simultaneously.
- They provide a comprehensive range of financial services to meet the diverse needs of their customers.
In conclusion, banks perform the functions of receiving deposits, lending money, and providing agency services. These functions are essential for the smooth functioning of the economy and meeting the financial needs of individuals and businesses.
_______________ controls affect indiscriminately all sectors of the economy.- a)Selective credit.
- b)Quantitative.
- c)Margin requirements.
- d)None of the above.
Correct answer is option 'B'. Can you explain this answer?
_______________ controls affect indiscriminately all sectors of the economy.
a)
Selective credit.
b)
Quantitative.
c)
Margin requirements.
d)
None of the above.
|
|
Freedom Institute answered |
Explanation:
The correct answer is B: Quantitative.
Quantitative controls refer to measures taken by the government or central bank to regulate the overall supply of money and credit in the economy. These controls affect all sectors of the economy indiscriminately. Here's a detailed explanation of each option:
- Selective credit: Selective credit controls refer to measures taken by the government or central bank to regulate the flow of credit to specific sectors or industries. These controls are targeted and do not affect all sectors of the economy indiscriminately.
- Quantitative: Quantitative controls, also known as monetary policy, involve actions such as changing interest rates, reserve requirements, and open market operations to control the money supply and credit availability in the economy. These controls are broad-based and affect all sectors of the economy.
- Margin requirements: Margin requirements are regulations set by regulatory authorities that determine the minimum amount of funds an investor must contribute to a transaction. Margin requirements are specific to the financial markets and do not affect all sectors of the economy indiscriminately.
- None of the above: This option is incorrect as the correct answer is B: Quantitative controls.
In conclusion, quantitative controls are the controls that affect all sectors of the economy indiscriminately.
The correct answer is B: Quantitative.
Quantitative controls refer to measures taken by the government or central bank to regulate the overall supply of money and credit in the economy. These controls affect all sectors of the economy indiscriminately. Here's a detailed explanation of each option:
- Selective credit: Selective credit controls refer to measures taken by the government or central bank to regulate the flow of credit to specific sectors or industries. These controls are targeted and do not affect all sectors of the economy indiscriminately.
- Quantitative: Quantitative controls, also known as monetary policy, involve actions such as changing interest rates, reserve requirements, and open market operations to control the money supply and credit availability in the economy. These controls are broad-based and affect all sectors of the economy.
- Margin requirements: Margin requirements are regulations set by regulatory authorities that determine the minimum amount of funds an investor must contribute to a transaction. Margin requirements are specific to the financial markets and do not affect all sectors of the economy indiscriminately.
- None of the above: This option is incorrect as the correct answer is B: Quantitative controls.
In conclusion, quantitative controls are the controls that affect all sectors of the economy indiscriminately.
In the terminology of economics and money demand, the terms M1 and M2 are also known as :- a)Short money
- b)Long money
- c)Broad money
- d)Narrow money
Correct answer is option 'D'. Can you explain this answer?
In the terminology of economics and money demand, the terms M1 and M2 are also known as :
a)
Short money
b)
Long money
c)
Broad money
d)
Narrow money
|
|
Rohini Desai answered |
Explanation:
- M1: M1 is a measure of the money supply that includes physical currency and coins, demand deposits (checking accounts), and traveler's checks. It represents the most liquid form of money in an economy.
- M2: M2 is a broader measure of the money supply that includes M1 plus savings accounts, time deposits, and money market mutual funds. It represents a broader definition of money that includes less liquid forms of assets.
- Narrow money: M1 is often referred to as narrow money because it includes only the most liquid forms of money.
- Broad money: M2 is often referred to as broad money because it includes a broader range of assets that can be used as a medium of exchange.
Therefore, the terms M1 and M2 are also known as narrow money and broad money, respectively.
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