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All questions of Money and Banking (Old Scheme) for CA Foundation Exam
Currency notes and coins are called as:- a)Flat money
- b)Legal tenders
- c)Fiat money
- d)Both b and c
Correct answer is option 'D'. Can you explain this answer?
Currency notes and coins are called as:
a)
Flat money
b)
Legal tenders
c)
Fiat money
d)
Both b and c
|
Jeeshan Ahmed answered |
Fiat money refers to any currency lacking intrinsic value that is declared legal tender by a government .so currency notes and coins are called as both legal tender and fiat money
Bank rate is for- a)Central banks by the central bank
- b)Commercial banks by the government
- c)Central bank by the commercial banks
- d)Commercial banks by the central bank
Correct answer is option 'D'. Can you explain this answer?
Bank rate is for
a)
Central banks by the central bank
b)
Commercial banks by the government
c)
Central bank by the commercial banks
d)
Commercial banks by the central bank
|
Tanya Mishra answered |
D is correct as it is for loans taken by commercial bank from reserve Bank of India
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.
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 '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
|
Nandini Iyer answered |
Under Section 22 of the Reserve Bank of India Act, RBI has sole right to issue currency notes of various denominations except one rupee notes.
The One Rupee note is issued by Ministry of Finance and It bears the signatures of Finance Secretary, while other notes bear the signature of Governor RBI.
However RBI is the only source of legal tender money because distribution of one rupee notes and coins and small coins all over the country is undertaken by the Reserve Bank as agent of the Government.
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 fraction of deposits kept as Cash Reserves by the commercial banks with themselves is called
- a)SLR
- b)LLR
- c)RR
- d)CRR
Correct answer is option 'D'. Can you explain this answer?
The fraction of deposits kept as Cash Reserves by the commercial banks with themselves is called
a)
SLR
b)
LLR
c)
RR
d)
CRR
|
Gowri Nambiar answered |
Definition of CRR
The Cash Reserve Ratio (CRR) is the fraction of deposits that commercial banks keep as reserves with themselves, either in cash or as deposits with the RBI. It is a monetary policy tool used by the central bank to regulate the money supply in the economy.
Importance of CRR
The CRR is an important tool for the RBI to regulate liquidity in the economy. By increasing the CRR, the RBI reduces the amount of money that commercial banks can lend, thereby reducing the money supply in the economy. Similarly, by decreasing the CRR, the RBI increases the amount of money that commercial banks can lend, thereby increasing the money supply in the economy.
Impact of CRR
The impact of CRR on the economy is significant. If the CRR is high, banks will have less money to lend, which can lead to a decrease in economic growth. On the other hand, if the CRR is low, banks will have more money to lend, which can lead to inflation.
Conclusion
In conclusion, the CRR is an important tool for the RBI to regulate the money supply in the economy. It is the fraction of deposits that commercial banks keep as reserves with themselves, either in cash or as deposits with the RBI. The impact of CRR on the economy is significant, and it is important for the RBI to use this tool wisely to achieve its monetary policy objectives.
The Cash Reserve Ratio (CRR) is the fraction of deposits that commercial banks keep as reserves with themselves, either in cash or as deposits with the RBI. It is a monetary policy tool used by the central bank to regulate the money supply in the economy.
Importance of CRR
The CRR is an important tool for the RBI to regulate liquidity in the economy. By increasing the CRR, the RBI reduces the amount of money that commercial banks can lend, thereby reducing the money supply in the economy. Similarly, by decreasing the CRR, the RBI increases the amount of money that commercial banks can lend, thereby increasing the money supply in the economy.
Impact of CRR
The impact of CRR on the economy is significant. If the CRR is high, banks will have less money to lend, which can lead to a decrease in economic growth. On the other hand, if the CRR is low, banks will have more money to lend, which can lead to inflation.
Conclusion
In conclusion, the CRR is an important tool for the RBI to regulate the money supply in the economy. It is the fraction of deposits that commercial banks keep as reserves with themselves, either in cash or as deposits with the RBI. The impact of CRR on the economy is significant, and it is important for the RBI to use this tool wisely to achieve its monetary policy objectives.
Which of the following is a qualitative method of credit control - a)Bank rate
- b)Open market operations
- c)Variation in the reserve requirement
- d)Regulation of consumer credit
Correct answer is option 'D'. Can you explain this answer?
Which of the following is a qualitative method of credit control
a)
Bank rate
b)
Open market operations
c)
Variation in the reserve requirement
d)
Regulation of consumer credit
|
Amita Das answered |
Credit control is most important function of Reserve Bank of India. Credit control in the economy is required for the smooth functioning of the economy. By using credit control methods RBI tries to maintain monetary stability. There are two types of methods: Quantitative control to regulates the volume of total credit.
Which one of the following statement defines the term “Reverse Repo Rate?- a)The rate at which the commercial banks borrow money from RBI
- b)The rate at which RBI borrows from other banks
- c)The rate at which the commercial banks borrow from each other
- d)None of the above.
Correct answer is option 'A'. Can you explain this answer?
Which one of the following statement defines the term “Reverse Repo Rate?
a)
The rate at which the commercial banks borrow money from RBI
b)
The rate at which RBI borrows from other banks
c)
The rate at which the commercial banks borrow from each other
d)
None of the above.
|
Arka Kaur answered |
Reverse repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) borrows money from commercial banks within the country. It is a monetary policy instrument which can be used to control the money supply in the country.
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
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
|
Meera Rane answered |
Most Liquid Asset: Money
Liquid assets are those assets that can be easily converted into cash without losing its value. The most liquid asset is considered to be money. Money is the most liquid of all assets because it is widely accepted in transactions for goods and services. It can be easily exchanged for goods and services, and it is universally recognized as a store of value.
Other assets such as gold, land, and treasury bonds may have value, but they are not as easily converted into cash as money. Gold, for instance, needs to be sold in the market, which may take time, and the value of land may vary depending on the location, demand, and other factors. Treasury bonds have a fixed maturity period and may not be easily sold in the market if the demand is low.
Money, on the other hand, can be readily used to settle debts, pay bills or purchase goods and services. It is widely accepted and can be used in any currency. Money can also be stored in different forms like cash, bank deposits, or other financial instruments. With the rise of digital payment systems, money can now be easily transferred electronically, making it even more liquid.
Conclusion
In conclusion, money is the most liquid asset because it can be easily converted into cash and is widely accepted in transactions. While other assets may have value, they are not as easily convertible into cash as money.
Liquid assets are those assets that can be easily converted into cash without losing its value. The most liquid asset is considered to be money. Money is the most liquid of all assets because it is widely accepted in transactions for goods and services. It can be easily exchanged for goods and services, and it is universally recognized as a store of value.
Other assets such as gold, land, and treasury bonds may have value, but they are not as easily converted into cash as money. Gold, for instance, needs to be sold in the market, which may take time, and the value of land may vary depending on the location, demand, and other factors. Treasury bonds have a fixed maturity period and may not be easily sold in the market if the demand is low.
Money, on the other hand, can be readily used to settle debts, pay bills or purchase goods and services. It is widely accepted and can be used in any currency. Money can also be stored in different forms like cash, bank deposits, or other financial instruments. With the rise of digital payment systems, money can now be easily transferred electronically, making it even more liquid.
Conclusion
In conclusion, money is the most liquid asset because it can be easily converted into cash and is widely accepted in transactions. While other assets may have value, they are not as easily convertible into cash as money.
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
The portion of total deposit of commercial banks which is required to be kept with Central Bank in the form of cash deposit is called _________.- a)SLR
- b)CRR
- c)Bank Rate
- d)Mandatory deposit
Correct answer is option 'B'. Can you explain this answer?
The portion of total deposit of commercial banks which is required to be kept with Central Bank in the form of cash deposit is called _________.
a)
SLR
b)
CRR
c)
Bank Rate
d)
Mandatory deposit
|
Anjana Sen answered |
Understanding CRR (Cash Reserve Ratio)
The Cash Reserve Ratio (CRR) is a crucial aspect of the banking system that regulates the amount of funds that commercial banks must hold in reserve with the Central Bank. Here’s a detailed look at the concept:
Definition of CRR
- CRR is the percentage of a bank's total deposits that must be maintained as reserves with the Central Bank in the form of cash.
- It is a regulatory requirement aimed at ensuring liquidity and stability within the banking system.
Purpose of CRR
- Liquidity Management: It ensures that banks have enough liquid cash to meet customer withdrawals and other obligations.
- Control Inflation: By adjusting the CRR, the Central Bank can influence the amount of money that banks can lend, thereby controlling inflation.
- Encourage Stability: A higher CRR can help prevent banks from overextending their loans, promoting financial stability.
Impact on Banking Operations
- Lending Capacity: A higher CRR means less money available for banks to lend, which may lead to higher interest rates for borrowers.
- Interest Rates: Changes in CRR directly affect the interest rates set by banks for loans and deposits.
Comparison with Other Terms
- SLR (Statutory Liquidity Ratio): Different from CRR, SLR is the ratio of liquid assets that banks must maintain. It includes cash, gold, and government securities.
- Bank Rate: This is the rate at which the Central Bank lends money to commercial banks. It impacts overall lending rates in the economy but is not a reserve requirement.
In summary, CRR is essential for maintaining the financial health of banks and the overall economy, ensuring that banks can meet their obligations while helping to regulate credit in the market.
The Cash Reserve Ratio (CRR) is a crucial aspect of the banking system that regulates the amount of funds that commercial banks must hold in reserve with the Central Bank. Here’s a detailed look at the concept:
Definition of CRR
- CRR is the percentage of a bank's total deposits that must be maintained as reserves with the Central Bank in the form of cash.
- It is a regulatory requirement aimed at ensuring liquidity and stability within the banking system.
Purpose of CRR
- Liquidity Management: It ensures that banks have enough liquid cash to meet customer withdrawals and other obligations.
- Control Inflation: By adjusting the CRR, the Central Bank can influence the amount of money that banks can lend, thereby controlling inflation.
- Encourage Stability: A higher CRR can help prevent banks from overextending their loans, promoting financial stability.
Impact on Banking Operations
- Lending Capacity: A higher CRR means less money available for banks to lend, which may lead to higher interest rates for borrowers.
- Interest Rates: Changes in CRR directly affect the interest rates set by banks for loans and deposits.
Comparison with Other Terms
- SLR (Statutory Liquidity Ratio): Different from CRR, SLR is the ratio of liquid assets that banks must maintain. It includes cash, gold, and government securities.
- Bank Rate: This is the rate at which the Central Bank lends money to commercial banks. It impacts overall lending rates in the economy but is not a reserve requirement.
In summary, CRR is essential for maintaining the financial health of banks and the overall economy, ensuring that banks can meet their obligations while helping to regulate credit in the market.
The fraction of deposits kept as Cash Reserves by the commercial banks is called- a)LLR
- b)CRR
- c)PLR
- d)SLR
Correct answer is option 'B'. Can you explain this answer?
The fraction of deposits kept as Cash Reserves by the commercial banks is called
a)
LLR
b)
CRR
c)
PLR
d)
SLR
|
Vikas Kapoor answered |
Cash Reserve Ratio is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves with the central bank.
The portion of total deposit which a commercial bank has to keep with itself in liquid assets is known as - a)CRR
- b)SLR
- c)REPO
- d)Reverse REPO
Correct answer is option 'B'. Can you explain this answer?
The portion of total deposit which a commercial bank has to keep with itself in liquid assets is known as
a)
CRR
b)
SLR
c)
REPO
d)
Reverse REPO
|
Freedom Institute answered |
SLR means liquid statutory ratio. Every bank has to keep that amount of money every time. because customers can withdrew money any time. Bank can not give that money on loan or for any other purpose.
The RBI can decrease the money supply in the market by:
- a)Selling government securities
- b)buying government securities
- c)borrowing money from commercial banks
- d)none of the above
Correct answer is option 'A'. Can you explain this answer?
The RBI can decrease the money supply in the market by:
a)
Selling government securities
b)
buying government securities
c)
borrowing money from commercial banks
d)
none of the above
|
|
Arun Khanna answered |
RBI controls money supply in the market through various tools and measures.CRR - Cash Reserve Ratio is the proportion of
Which of the following will not come under narrow money?- a)Currency in circulation
- b)Demand deposit
- c)Time Deposit
- d)None of these
Correct answer is 'C'. Can you explain this answer?
Which of the following will not come under narrow money?
a)
Currency in circulation
b)
Demand deposit
c)
Time Deposit
d)
None of these
|
|
Arun Khanna answered |
Narrow money is the most liquid part of the money supply because the demand deposits can be withdrawn anytime during the banking hours. Time deposits on the other hand have a fixed maturity period and hence cannot be withdrawn before expiry of this period.
The fraction of deposits kept as Cash Reserves by the commercial banks are also called as- a)LRR
- b)CRR
- c)SLR
- d)PLR
Correct answer is option 'A'. Can you explain this answer?
The fraction of deposits kept as Cash Reserves by the commercial banks are also called as
a)
LRR
b)
CRR
c)
SLR
d)
PLR
|
Rajat Patel answered |
Fractional-reserve banking is the common practice by commercial banks of accepting deposits, and making loans or investments, while holding reserves at least equal to a fraction of the bank's deposit liabilities. Reserves are held as currency in the bank, or as balances in the bank's accounts at the central bank.
What among the following is NOT an example of 'public goods'?- a)National defense
- b)Roads
- c)Cars
- d)National Forests
Correct answer is option 'C'. Can you explain this answer?
What among the following is NOT an example of 'public goods'?
a)
National defense
b)
Roads
c)
Cars
d)
National Forests
|
|
Rajat Patel answered |
Examples. Common examples of public goods include: defence, public fireworks,
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.
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
|
Srsps 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.
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.
An increase in money supply ______ in a nation’s Economy will decrease the following.- a)Open market purchase by the nation’s Central Bank
- b)A deserve in the bank rate
- c)A decrease in the reserve ratio
- d)A decrease in the margin requirement.
Correct answer is option 'A'. Can you explain this answer?
An increase in money supply ______ in a nation’s Economy will decrease the following.
a)
Open market purchase by the nation’s Central Bank
b)
A deserve in the bank rate
c)
A decrease in the reserve ratio
d)
A decrease in the margin requirement.
|
|
Nikita Singh answered |
During open market situations the central bank sells the the securities which enables transfer of money from households to the central bank which reduces money supply in the economy and stabilizes the inflation
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.
What is the currency deposit ratio (cdr)?- a) ratio of money held in demand drafts to that of money held in treasury bonds
- b)ratio of money held by public in bank deposits to that of money held by public in currency
- c)the total proportion of money that commercial banks lend to the customers
- d)ratio of money held by the public in currency to that of money held in bank deposits
Correct answer is option 'D'. Can you explain this answer?
What is the currency deposit ratio (cdr)?
a)
ratio of money held in demand drafts to that of money held in treasury bonds
b)
ratio of money held by public in bank deposits to that of money held by public in currency
c)
the total proportion of money that commercial banks lend to the customers
d)
ratio of money held by the public in currency to that of money held in bank deposits
|
Aniket Nair answered |
Currency Deposit Ratio (CDR) refers to the ratio of money held by the public in currency to that of money held in bank deposits. It is an important indicator of the liquidity position of the economy.
Explanation:
CDR is a measure of the amount of currency that people hold relative to the amount of money they hold in bank deposits. It is calculated by dividing the total amount of currency in circulation by the total amount of bank deposits. CDR is an important indicator of the liquidity position of the economy, as it reflects the willingness of people to hold money in banks versus keeping it in the form of cash.
Factors affecting CDR:
The CDR is influenced by various factors, such as:
1. Interest rates: When interest rates are high, people tend to hold more money in bank deposits, which can lower the CDR.
2. Inflation: High inflation can increase the demand for currency, as people may prefer to hold cash rather than keeping it in bank deposits.
3. Economic conditions: During periods of economic uncertainty, people may prefer to hold more cash as a precautionary measure, which can increase the CDR.
4. Banking regulations: Banking regulations can influence the CDR by affecting people's confidence in the banking system.
Importance of CDR:
The CDR is an important indicator for policymakers, as it can provide insights into the liquidity position of the economy. A high CDR may indicate low levels of confidence in the banking system, while a low CDR may indicate a healthy level of liquidity.
Conclusion:
The CDR is an important indicator of the liquidity position of the economy. It reflects the willingness of people to hold money in banks versus keeping it in the form of cash. Factors such as interest rates, inflation, economic conditions, and banking regulations can influence the CDR. Policymakers can use the CDR to monitor the liquidity position of the economy and take appropriate measures to ensure its stability.
Explanation:
CDR is a measure of the amount of currency that people hold relative to the amount of money they hold in bank deposits. It is calculated by dividing the total amount of currency in circulation by the total amount of bank deposits. CDR is an important indicator of the liquidity position of the economy, as it reflects the willingness of people to hold money in banks versus keeping it in the form of cash.
Factors affecting CDR:
The CDR is influenced by various factors, such as:
1. Interest rates: When interest rates are high, people tend to hold more money in bank deposits, which can lower the CDR.
2. Inflation: High inflation can increase the demand for currency, as people may prefer to hold cash rather than keeping it in bank deposits.
3. Economic conditions: During periods of economic uncertainty, people may prefer to hold more cash as a precautionary measure, which can increase the CDR.
4. Banking regulations: Banking regulations can influence the CDR by affecting people's confidence in the banking system.
Importance of CDR:
The CDR is an important indicator for policymakers, as it can provide insights into the liquidity position of the economy. A high CDR may indicate low levels of confidence in the banking system, while a low CDR may indicate a healthy level of liquidity.
Conclusion:
The CDR is an important indicator of the liquidity position of the economy. It reflects the willingness of people to hold money in banks versus keeping it in the form of cash. Factors such as interest rates, inflation, economic conditions, and banking regulations can influence the CDR. Policymakers can use the CDR to monitor the liquidity position of the economy and take appropriate measures to ensure its stability.
Open market operations is- a)Buying and selling of securities by the central bank
- b)Buying and selling of foreign exchange by the central bank
- c)Buying and selling of securities by the commercial banks
- d)Buying and selling of currency by the central bank
Correct answer is option 'A'. Can you explain this answer?
Open market operations is
a)
Buying and selling of securities by the central bank
b)
Buying and selling of foreign exchange by the central bank
c)
Buying and selling of securities by the commercial banks
d)
Buying and selling of currency by the central bank
|
|
Alok Mehta answered |
Open market operations (OMO) refer to the buying and selling of government securities in the open market in order to expand or contract the amount of money in the banking system. Securities' purchases inject money into the banking system and stimulate growth, while sales of securities do the opposite and contract the economy.
The Federal Reserve (Fed) facilitates this process and uses this technique to adjust and manipulate the federal funds rate, which is the rate at which banks borrow reserves from one another.
The issue of one rupee currency note in India is the liability of the :- a)Issue Department of the RBI
- b)Government of India
- c)State Bank of India
- d)Banking department of the RBI
Correct answer is option 'B'. Can you explain this answer?
The issue of one rupee currency note in India is the liability of the :
a)
Issue Department of the RBI
b)
Government of India
c)
State Bank of India
d)
Banking department of the RBI
|
|
Rajat Patel answered |
The Reserve Bank of India has the sole right to issue bank notes of all denominations. Thus, Reserve Bank is responsible for the design, production and overall management of the nation’s currency, with the goal of ensuring an adequate supply of clean and genuine notes. In consultation with the Government, the Reserve Bank routinely addresses security issues and targets ways to enhance security features to reduce the risk of counterfeiting or forgery of currency notes. At present, currency notes are issued in the denominations of ₹5, 10, 20, 50, 100, 200, 500 and 2000. The printing of Rs. 1 and Rs. 2 denominations has been discontinued, though the notes in circulation are valid.
The coins are minted by The Ministry of Finance and RBI acts as a distribution agent on behalf of Govt of India.
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 rate at which the RBI rediscounts the Bills of Commercial banks is known as. - a)Repo rate
- b)Bank rate
- c)SLR
- d)CRR
Correct answer is option 'B'. Can you explain this answer?
The rate at which the RBI rediscounts the Bills of Commercial banks is known as.
a)
Repo rate
b)
Bank rate
c)
SLR
d)
CRR
|
|
Priya Patel answered |
Bank Rate refers to the official interest rate at which RBI will provide loans to the banking system which includes commercial / cooperative banks, development banks etc. Such loans are given out either by direct lending or by rediscounting (buying back) the bills of commercial banks and treasury bills. Thus, bank rate is also known as discount rate. Bank rate is used as a signal by the RBI to the commercial banks on RBI’s thinking of what the interest rates should be.
Impact of Bank Rate
When RBI increases the bank rate, the cost of borrowing for banks rises and this credit volume gets reduced leading to decline in supply of money. Thus, increase in Bank rate reflects tightening of RBI monetary policy.
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.
M2 is defined as : - a)M1 + net time deposits
- b)M1 + total deposit with post office
- c)M1 + saving deposit with post office
- d)Currency plus demand deposits in banks
Correct answer is option 'C'. Can you explain this answer?
M2 is defined as :
a)
M1 + net time deposits
b)
M1 + total deposit with post office
c)
M1 + saving deposit with post office
d)
Currency plus demand deposits in banks
|
Jayant Mishra answered |
M2 is a calculation of the money supply that includes all elements of M1 as well as "near money." M1 includes cash and checking deposits, while near money refers to savings deposits, money market securities, mutual funds and other time deposits. These assets are less liquid than M1 and not as suitable as exchange mediums, but they can be quickly converted into cash or checking deposits.
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
|
Divesh Gupta answered |
1949 after independence of India
Who works as RBI's agent at places where it has no office of its own?- a)State Bank of India
- b)Ministry of Finance
- c)Government of India
- d)International Monetary Fund
Correct answer is option 'A'. Can you explain this answer?
Who works as RBI's agent at places where it has no office of its own?
a)
State Bank of India
b)
Ministry of Finance
c)
Government of India
d)
International Monetary Fund
|
|
Freedom Institute answered |
Answer : a)
The State Bank of India
works as RBI's agent at places where it has no office of its own.
Which one of the following measures is not adopted by RBI for controlling credit in India?- a)Cash Deposit ratio
- b)Cash Reserve ratio
- c)Statutory Liquidity ratio
- d)Selective credit control
Correct answer is 'A'. Can you explain this answer?
Which one of the following measures is not adopted by RBI for controlling credit in India?
a)
Cash Deposit ratio
b)
Cash Reserve ratio
c)
Statutory Liquidity ratio
d)
Selective credit control
|
|
Hrishikesh Mukherjee answered |
Introduction:
The Reserve Bank of India (RBI) is the central bank of India, responsible for controlling and regulating the monetary policy of the country. One of the key roles of the RBI is to control credit in order to maintain stability in the financial system. To achieve this, the RBI adopts various measures, including cash deposit ratio, cash reserve ratio, statutory liquidity ratio, and selective credit control.
Cash Deposit Ratio:
The cash deposit ratio refers to the ratio of cash deposits that commercial banks are required to maintain with the RBI as a percentage of their net demand and time liabilities. This measure helps in controlling credit by reducing the availability of funds with commercial banks for lending purposes. When the cash deposit ratio is increased, banks have to keep a larger portion of their deposits with the RBI, reducing the amount of money available for lending.
Cash Reserve Ratio:
The cash reserve ratio is the percentage of net demand and time liabilities that commercial banks are required to maintain as cash reserves with the RBI. This measure also helps in controlling credit by reducing the lendable resources of the banks. When the cash reserve ratio is increased, banks have to maintain a larger portion of their deposits as cash reserves, limiting their ability to lend.
Statutory Liquidity Ratio:
The statutory liquidity ratio refers to the percentage of net demand and time liabilities that banks are required to maintain in the form of liquid assets, such as cash, gold, and government securities. This measure also helps in controlling credit by restricting the lendable resources of the banks. When the statutory liquidity ratio is increased, banks have to maintain a higher proportion of their liabilities in the form of liquid assets, reducing the amount available for lending.
Selective Credit Control:
Selective credit control refers to the measures adopted by the RBI to regulate the flow of credit to specific sectors or activities. This includes prescribing the maximum loan-to-value ratio for certain types of loans, setting limits on sectoral lending, and imposing restrictions on the purchase of certain types of assets. Selective credit control helps in directing credit towards priority sectors and preventing excessive lending to sectors that may pose risks to the financial system.
Conclusion:
Among the measures mentioned, the cash deposit ratio is not adopted by the RBI for controlling credit in India. The RBI primarily uses the cash reserve ratio, statutory liquidity ratio, and selective credit control to regulate credit and maintain financial stability in the country.
The Reserve Bank of India (RBI) is the central bank of India, responsible for controlling and regulating the monetary policy of the country. One of the key roles of the RBI is to control credit in order to maintain stability in the financial system. To achieve this, the RBI adopts various measures, including cash deposit ratio, cash reserve ratio, statutory liquidity ratio, and selective credit control.
Cash Deposit Ratio:
The cash deposit ratio refers to the ratio of cash deposits that commercial banks are required to maintain with the RBI as a percentage of their net demand and time liabilities. This measure helps in controlling credit by reducing the availability of funds with commercial banks for lending purposes. When the cash deposit ratio is increased, banks have to keep a larger portion of their deposits with the RBI, reducing the amount of money available for lending.
Cash Reserve Ratio:
The cash reserve ratio is the percentage of net demand and time liabilities that commercial banks are required to maintain as cash reserves with the RBI. This measure also helps in controlling credit by reducing the lendable resources of the banks. When the cash reserve ratio is increased, banks have to maintain a larger portion of their deposits as cash reserves, limiting their ability to lend.
Statutory Liquidity Ratio:
The statutory liquidity ratio refers to the percentage of net demand and time liabilities that banks are required to maintain in the form of liquid assets, such as cash, gold, and government securities. This measure also helps in controlling credit by restricting the lendable resources of the banks. When the statutory liquidity ratio is increased, banks have to maintain a higher proportion of their liabilities in the form of liquid assets, reducing the amount available for lending.
Selective Credit Control:
Selective credit control refers to the measures adopted by the RBI to regulate the flow of credit to specific sectors or activities. This includes prescribing the maximum loan-to-value ratio for certain types of loans, setting limits on sectoral lending, and imposing restrictions on the purchase of certain types of assets. Selective credit control helps in directing credit towards priority sectors and preventing excessive lending to sectors that may pose risks to the financial system.
Conclusion:
Among the measures mentioned, the cash deposit ratio is not adopted by the RBI for controlling credit in India. The RBI primarily uses the cash reserve ratio, statutory liquidity ratio, and selective credit control to regulate credit and maintain financial stability in the country.
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.
Land Development Bank provide loans for a period of - a)One year
- b)Two to five years
- c)Five to seven years
- d)Fifteen to twenty years.
Correct answer is 'D'. Can you explain this answer?
Land Development Bank provide loans for a period of
a)
One year
b)
Two to five years
c)
Five to seven years
d)
Fifteen to twenty years.
|
|
Rajat Patel answered |
Indian farmers need three types of credit, viz., short-term, medium-term and long-term. Their short-term and medium-term credit requirements are fulfilled by the co-operative banking institutions like PACs, CCBs and SCBs.Farmers have to borrow also for the long-term (for a period of 5 years to 20 years) for buying equipment like pump sets, tractors, etc., and for other development purposes, such as reclamation of land, fencing, digging of new wells, construction of a tank or tube-well, or buying additional land. Thus, a need for a special kind of institution to provide long-term finance to the Indian agriculturists was earnestly felt. Consequently, land development banks came into existence.
Oudh Commercial Bank was founded in _______.- a)1913
- b)1917
- c)1894
- d)1881
Correct answer is option 'D'. Can you explain this answer?
Oudh Commercial Bank was founded in _______.
a)
1913
b)
1917
c)
1894
d)
1881
|
|
Arjun Singhania answered |
Oudh Commercial Bank or Awadh Commercial Bank was established in 1881 in Faizabad. At the time, it was the first commercial bank in India having limited liability and an entirely Indian board of directors. It was a small bank that had no branches and that served only local needs. It failed in 1958.
Which of the following measures of money supply is considered narrow concept of money supply? - a)M1
- b)M2
- c)M3
- d)M4
Correct answer is option 'A'. Can you explain this answer?
Which of the following measures of money supply is considered narrow concept of money supply?
a)
M1
b)
M2
c)
M3
d)
M4
|
Aastha Arora answered |
A is the correct answer.. according to books, it is a narrow money
Out of 5.6 lakh villages how many are served by the commercial bank:- a)1 Lakh
- b)10000
- c)5000
- d)None
Correct answer is option 'C'. Can you explain this answer?
Out of 5.6 lakh villages how many are served by the commercial bank:
a)
1 Lakh
b)
10000
c)
5000
d)
None
|
|
Ipsita Rane answered |
The correct answer is option 'C' - 5000 villages.
Explanation:
In India, there are approximately 5.6 lakh (560,000) villages. These villages are spread across the country and are home to a large portion of the population. Commercial banks play a crucial role in providing financial services to rural areas, including villages. However, due to various factors such as infrastructure limitations and low population density, not all villages have access to commercial banks.
To determine the number of villages served by commercial banks, we need to consider the outreach and coverage of these banks in rural areas. While commercial banks have been expanding their presence in rural areas, it is important to note that not all villages have a branch of a commercial bank.
Here's a breakdown of the options:
a) 1 Lakh villages: This option suggests that 100,000 villages are served by commercial banks. However, this number seems too high considering the infrastructure and outreach limitations. Therefore, this option is not the correct answer.
b) 10,000 villages: This option suggests that 10,000 villages are served by commercial banks. While this number is more reasonable than option 'a', it still seems relatively high considering the challenges in reaching remote areas. Therefore, this option is not the correct answer.
c) 5000 villages: This option suggests that 5000 villages are served by commercial banks. This number seems more plausible, considering the challenges in reaching rural areas and the limited presence of commercial banks. Therefore, this option is the correct answer.
d) None: This option suggests that none of the villages are served by commercial banks. While it is true that not all villages have access to commercial banks, it is unlikely that none of the villages are served. Therefore, this option is not the correct answer.
In conclusion, out of the 5.6 lakh villages in India, approximately 5000 villages are served by commercial banks.
Explanation:
In India, there are approximately 5.6 lakh (560,000) villages. These villages are spread across the country and are home to a large portion of the population. Commercial banks play a crucial role in providing financial services to rural areas, including villages. However, due to various factors such as infrastructure limitations and low population density, not all villages have access to commercial banks.
To determine the number of villages served by commercial banks, we need to consider the outreach and coverage of these banks in rural areas. While commercial banks have been expanding their presence in rural areas, it is important to note that not all villages have a branch of a commercial bank.
Here's a breakdown of the options:
a) 1 Lakh villages: This option suggests that 100,000 villages are served by commercial banks. However, this number seems too high considering the infrastructure and outreach limitations. Therefore, this option is not the correct answer.
b) 10,000 villages: This option suggests that 10,000 villages are served by commercial banks. While this number is more reasonable than option 'a', it still seems relatively high considering the challenges in reaching remote areas. Therefore, this option is not the correct answer.
c) 5000 villages: This option suggests that 5000 villages are served by commercial banks. This number seems more plausible, considering the challenges in reaching rural areas and the limited presence of commercial banks. Therefore, this option is the correct answer.
d) None: This option suggests that none of the villages are served by commercial banks. While it is true that not all villages have access to commercial banks, it is unlikely that none of the villages are served. Therefore, this option is not the correct answer.
In conclusion, out of the 5.6 lakh villages in India, approximately 5000 villages are served by commercial banks.
Which of the following functions, modern banks do not perform?- a)Issue of letter of credit
- b)Publishing of statistics
- c)Handing of Foreign Exchange Reserves
- d)Conducting Enquiry Survey
Correct answer is option 'C'. Can you explain this answer?
Which of the following functions, modern banks do not perform?
a)
Issue of letter of credit
b)
Publishing of statistics
c)
Handing of Foreign Exchange Reserves
d)
Conducting Enquiry Survey
|
|
Pallabi Khanna answered |
Functions of modern banks
Modern banks perform a wide range of functions, including:
1. Accepting Deposits: Banks accept deposits from individuals and businesses, which can be withdrawn as and when required.
2. Lending Money: Banks provide loans and credit facilities to individuals and businesses for various purposes, such as purchasing a house, starting a business, or buying a car.
3. Issuing Credit and Debit Cards: Banks issue credit and debit cards to their customers, which can be used to make purchases or withdraw cash from ATMs.
4. Providing Investment Services: Banks offer investment services, such as mutual funds, stocks, and bonds, to their customers.
5. Issuing Letters of Credit: Banks issue letters of credit to facilitate international trade between buyers and sellers.
6. Conducting Enquiry Surveys: Banks conduct enquiry surveys to assess the creditworthiness of their customers and to evaluate the risk involved in lending money.
7. Publishing Statistics: Banks publish statistical data on various economic indicators, such as inflation, GDP growth, and unemployment rate.
8. Handling Foreign Exchange Reserves: Banks are responsible for managing the foreign exchange reserves of their respective countries.
Modern banks do not handle foreign exchange reserves
Out of the functions listed above, the function that modern banks do not perform is handling foreign exchange reserves. This function is performed by the central bank of the country, which is responsible for managing the country's monetary policy and maintaining the stability of the currency. The central bank holds the foreign exchange reserves in order to ensure that the country can meet its international obligations and to provide a buffer against external shocks. While commercial banks may deal in foreign exchange transactions, they do not hold foreign exchange reserves as this is the responsibility of the central bank.
Modern banks perform a wide range of functions, including:
1. Accepting Deposits: Banks accept deposits from individuals and businesses, which can be withdrawn as and when required.
2. Lending Money: Banks provide loans and credit facilities to individuals and businesses for various purposes, such as purchasing a house, starting a business, or buying a car.
3. Issuing Credit and Debit Cards: Banks issue credit and debit cards to their customers, which can be used to make purchases or withdraw cash from ATMs.
4. Providing Investment Services: Banks offer investment services, such as mutual funds, stocks, and bonds, to their customers.
5. Issuing Letters of Credit: Banks issue letters of credit to facilitate international trade between buyers and sellers.
6. Conducting Enquiry Surveys: Banks conduct enquiry surveys to assess the creditworthiness of their customers and to evaluate the risk involved in lending money.
7. Publishing Statistics: Banks publish statistical data on various economic indicators, such as inflation, GDP growth, and unemployment rate.
8. Handling Foreign Exchange Reserves: Banks are responsible for managing the foreign exchange reserves of their respective countries.
Modern banks do not handle foreign exchange reserves
Out of the functions listed above, the function that modern banks do not perform is handling foreign exchange reserves. This function is performed by the central bank of the country, which is responsible for managing the country's monetary policy and maintaining the stability of the currency. The central bank holds the foreign exchange reserves in order to ensure that the country can meet its international obligations and to provide a buffer against external shocks. While commercial banks may deal in foreign exchange transactions, they do not hold foreign exchange reserves as this is the responsibility of the central bank.
Money is most liquid of all assets because _______.- a)It has portability
- b)It can be easily stored
- c)It is readily convertible into others assets
- d)It is generally acceptable
Correct answer is 'C'. Can you explain this answer?
Money is most liquid of all assets because _______.
a)
It has portability
b)
It can be easily stored
c)
It is readily convertible into others assets
d)
It is generally acceptable
|
Mahavir Jain answered |
As we know that money is most liquid asset of all. if we buy the asset then it converted into it that's why ans C
Which of the following is a tool of monetary policy that a nation’s Central Bank could use to stabilize the economy during an inflationary period?- a)Selling Government Securities
- b)Lowering banks reserve requirements
- c)Lowering bank discount rate
- d)None of the above.
Correct answer is option 'A'. Can you explain this answer?
Which of the following is a tool of monetary policy that a nation’s Central Bank could use to stabilize the economy during an inflationary period?
a)
Selling Government Securities
b)
Lowering banks reserve requirements
c)
Lowering bank discount rate
d)
None of the above.
|
|
Niharika Datta answered |
Central banks use contractionary monetary policy to reduce inflation. They reduce the money supply by restricting the amo of money banks can lend. The banks charge a higher interest rate, making loans more expensive. Fewer businesses and individuals borrow, slowing growth.
CRR according to July 2013, was:- a)4%
- b)7%
- c)10%
- d)2%
Correct answer is option 'A'. Can you explain this answer?
CRR according to July 2013, was:
a)
4%
b)
7%
c)
10%
d)
2%
|
|
Jayant Mishra answered |
In addition to the mandatory amount of 4.5% of common equity tier 1 capital requirement set out in the capital requirements regulation (CRR), all banks are required to hold a capital conservation buffer and a counter cyclical capital buffer, to ensure that they accumulate a sufficient capital base in prosperous times to.
Buying and selling of securities or bills in open market is called:- a)Cash Reserve Ratio
- b)Open Market operation
- c)Bank rate policy
- d)None of these
Correct answer is option 'B'. Can you explain this answer?
Buying and selling of securities or bills in open market is called:
a)
Cash Reserve Ratio
b)
Open Market operation
c)
Bank rate policy
d)
None of these
|
Sameer Jain answered |
Open Market Operation
Open market operation refers to the buying and selling of securities or bills by a central bank in the open market. It is one of the important tools used by central banks to control the money supply and influence interest rates in an economy. Open market operations are conducted regularly to manage liquidity in the banking system and achieve desired monetary policy objectives.
How Open Market Operations Work
Open market operations involve the central bank buying or selling government securities, such as bonds or treasury bills, from or to commercial banks and other financial institutions. These transactions are typically conducted through auctions, where the central bank specifies the amount, maturity, and interest rate of the securities it wishes to buy or sell.
Objectives of Open Market Operations
The central bank carries out open market operations to achieve various monetary policy objectives, including:
1. Controlling Inflation: By buying securities, the central bank increases the money supply, allowing banks to lend more. This stimulates economic activity and can help combat deflation. Conversely, by selling securities, the central bank reduces the money supply, which can help control inflationary pressures.
2. Managing Interest Rates: Open market operations influence interest rates by affecting the amount of money available for lending. When the central bank buys securities, it injects funds into the banking system, increasing liquidity and lowering interest rates. Conversely, when it sells securities, it reduces liquidity, leading to higher interest rates.
3. Ensuring Financial Stability: Open market operations help maintain stability in the financial system by providing liquidity to banks and financial institutions when needed. By buying securities during times of financial stress, the central bank supports the functioning of the banking sector and ensures the smooth operation of financial markets.
Impact of Open Market Operations
Open market operations have a direct impact on the money supply and interest rates, which in turn affect economic activity. When the central bank buys securities, it increases the money supply, leading to lower interest rates, increased borrowing, and higher investment and consumption. Conversely, when the central bank sells securities, it decreases the money supply, resulting in higher interest rates, reduced borrowing, and lower investment and consumption.
Conclusion
Open market operations play a crucial role in the implementation of monetary policy. By buying and selling securities in the open market, central banks can effectively manage liquidity, control inflation, influence interest rates, and ensure financial stability. These operations are an essential tool for central banks to achieve their monetary policy objectives and promote economic stability.
Open market operation refers to the buying and selling of securities or bills by a central bank in the open market. It is one of the important tools used by central banks to control the money supply and influence interest rates in an economy. Open market operations are conducted regularly to manage liquidity in the banking system and achieve desired monetary policy objectives.
How Open Market Operations Work
Open market operations involve the central bank buying or selling government securities, such as bonds or treasury bills, from or to commercial banks and other financial institutions. These transactions are typically conducted through auctions, where the central bank specifies the amount, maturity, and interest rate of the securities it wishes to buy or sell.
Objectives of Open Market Operations
The central bank carries out open market operations to achieve various monetary policy objectives, including:
1. Controlling Inflation: By buying securities, the central bank increases the money supply, allowing banks to lend more. This stimulates economic activity and can help combat deflation. Conversely, by selling securities, the central bank reduces the money supply, which can help control inflationary pressures.
2. Managing Interest Rates: Open market operations influence interest rates by affecting the amount of money available for lending. When the central bank buys securities, it injects funds into the banking system, increasing liquidity and lowering interest rates. Conversely, when it sells securities, it reduces liquidity, leading to higher interest rates.
3. Ensuring Financial Stability: Open market operations help maintain stability in the financial system by providing liquidity to banks and financial institutions when needed. By buying securities during times of financial stress, the central bank supports the functioning of the banking sector and ensures the smooth operation of financial markets.
Impact of Open Market Operations
Open market operations have a direct impact on the money supply and interest rates, which in turn affect economic activity. When the central bank buys securities, it increases the money supply, leading to lower interest rates, increased borrowing, and higher investment and consumption. Conversely, when the central bank sells securities, it decreases the money supply, resulting in higher interest rates, reduced borrowing, and lower investment and consumption.
Conclusion
Open market operations play a crucial role in the implementation of monetary policy. By buying and selling securities in the open market, central banks can effectively manage liquidity, control inflation, influence interest rates, and ensure financial stability. These operations are an essential tool for central banks to achieve their monetary policy objectives and promote economic stability.
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
|
Hari Sri answered |
It includes time deposits so only it's considered as broad money and narrow money s known s m1
Guess so it lol hlp u dude
Chapter doubts & questions for Money and Banking (Old Scheme) - Business Economics for CA Foundation 2025 is part of CA Foundation exam preparation. The chapters have been prepared according to the CA Foundation exam syllabus. The Chapter doubts & questions, notes, tests & MCQs are made for CA Foundation 2025 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests here.
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