 |  Money & Banking 20 Flashcards |  Start |
 | Fill in the blank: The Cash Reserve Ratio (CRR) is a percentage of deposits that banks must keep as ___ with the central bank. |  Card: 1 / 20 |
| Reserves | Card: 2 / 20 |
| True or False: The demand for money decreases when interest rates rise, because people prefer to hold cash instead of earning interest. | Card: 3 / 20 |
| False. The demand for money decreases when interest rates rise because people prefer to invest in interest-earning accounts rather than hold cash. | Card: 4 / 20 |
| How does demonetization impact the circulation of black money in an economy? | Card: 5 / 20 |
| Demonetization reduces black money circulation.
| Card: 6 / 20 |
| Fill in the blank: The Reserve Bank of India was established in ___ and plays a key role in issuing currency. | Card: 7 / 20 |
| 1935 | Card: 8 / 20 |
| What is the effect of an increase in the Cash Reserve Ratio (CRR) on banks' lending capacity? | Card: 9 / 20 |
| An increase in the CRR reduces the amount of money banks can lend, thereby decreasing the overall money supply in the economy. | Card: 10 / 20 |
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| Define 'liquidity preference' in the context of money demand. | Card: 11 / 20 |
| Liquidity preference affects money demand.
| Card: 12 / 20 |
| True or False: Time deposits are considered part of M1 money supply. | Card: 13 / 20 |
| False. Time deposits are included in M3, not in M1, which consists only of currency and demand deposits. | Card: 14 / 20 |
| Explain how banks create money through the lending process. | Card: 15 / 20 |
| Banks create money by lending.
| Card: 16 / 20 |
| What are the two main types of monetary policy tools used by the Reserve Bank of India? | Card: 17 / 20 |
| Monetary policy tools include quantitative and qualitative.
| Card: 18 / 20 |
| What are the primary functions of money in an economy? | Card: 19 / 20 |
| Money has three main functions.
| Card: 20 / 20 |
| Completed! Keep practicing to master all of them. |  Restart |
