Money and banking questions

 

MONEY & BANKING

Mock Test

Q. 1: When the cash reserve ratio (CRR) is increased by the RBI, it will:

(a) Increase the supply of money in the economy

(b) Decrease the supply of money in the economy

(c) No impact on the supply of money in the economy

(d) Initially increase the supply but later on decrease automatically.

Q. 2: Open Market Operations means:      

(a) Sale of agricultural products in the government-regulated Mandis.

(b) Sale and purchase of bonds and securities to the commercial banks by the RBI.

(c) Sale and purchase of bonds and securities by the RBI to the government.

(d) Sale and purchase of bonds and securities by the commercial banks to the customers.

Q. 3: Which of the following is not the monetary tool?

(a) CRR

(b) SLR

(c) Deficit financing

(d) Open market operations

Q. 4: Consider the following statements regarding the National Payments Corporation of India (NPCI):

1.      It is an initiative of the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA).

2.      RuPay card payment scheme was launched by the NPCI.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c)  Both 1 and 2 

(d) Neither 1 nor 2

Q. 5: Consider the following statements regarding the EASE 2.0 Index:

1.      It provides Public Sector Banks a comparative evaluation showing where banks stand on the Reforms Agenda.

2.      It has been released by the NITI Aayog.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2 

(d) Neither 1 nor 2

Q. 6: Which of the following is/are the potential impact(s) of sale of Government securities by the Reserve Bank of India?

1.      Increase in liquidity in the market.

2.      Increase in interest rates.

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(C) Both 1 and 2 

(d) Neither 1 nor 2

Q. 7: The Committee on Financial Sector Reforms was headed by: 

(a) Rangarajan 

(b) Urjit Patel

(c) Raghuram Rajan 

(d) Viral Acharya

Q. 8: What is the mandate of the KV Kamath Committee formed by the Reserve Bank of India?

(a) Financial parameters for restructuring of loans

(b) Forex Reserve Management

(c) Potential impact of COVID-19 pandemic on MSME credit

(d) Monetary Policy Framework Targets

Q. 9: Which of the following markets are independently regulated by Forward Market Commission?

(a) Mutual Funds

(b) Commodity Futures Market

(c) Stock Market

(d) Foreign Exchange Markets

Q. 10: Which one of the following is not a feature of "Value Added Tax"?

(a) It is multi-point destination-based system of taxation.

(b) It is a tax levied on value addition at each stage of transaction in the production distribution chain.

(c) It is a tax on the final consumption of goods or services and must ultimately be borne by the consumer.

(d) It is basically a subject of the central government and the state governments are only a facilitator for its successful implementation.

Q. 11: Consider the following statements regarding the Priority Sector Lending (PSL) norms of RBI:

1. The small finance banks are required to extend 75 percent of their Adjusted Net Bank Credit (ANBC) to the priority sector.

2. The Housing and Renewable Energy sectors are included in the Priority Sector under PSL norms.

Which of the statements given above is/are correct?

A.    1 only

B.     2 only

C.    Both 1 and 2

D.    Neither 1 nor 2

Q. 12: What is the mandate of the recently constituted Rajiv Mehrishi committee?

A.      Economic impact of interest waivers under COVID-19 related loan moratorium

B.       Assess the adequate size of capital reserves that the RBI should hold

C.       Financial parameters for restructuring of loans impacted by the COVID-19 pandemic

D.      Constitution of the Public Debt Management Agency

Q. 13: Consider the following statements:

1. Currency revaluation refers to the increase in value of one currency relative to another based on supply and demand in the forex market.

2. A Currency appreciation is a calculated upward adjustment to a country’s official exchange rate by the central bank.

Which of the statements given above is/are correct?

A.      1 only

B.       2 only

C.       Both 1 and 2

D.      Neither 1 nor 2

Q. 14: India’s Forex Reserve comprises of which of the following assets?

1. Foreign Currency Assets

2. Gold

3. Special Drawing Rights (SDRs)

Select the correct answer using the code given below:

A.    1 and 2 only

B.     2 and 3 only

C.     1 and 3 only

D.    All of the above

Q. 15: Which of the following is/are dominant policy objectives of keeping forex reserves?

1. Maintaining confidence in monetary and exchange rate policies.

2. Reduce external vulnerability by maintaining foreign currency liquidity to absorb shocks during times of crisis.

Select the correct answer using the code given below:

A.      1 only

B.       2 only

C.      Both 1 and 2

D.      Neither 1 nor 2

Q. 16: Recently the Reserve Bank of India (RBI) has decided to change its accounting year from July-June to April- May on whom recommendations?

A.      Urjit Patel

B.       Ramesh Chand

C.      Bimal Jalan

D.      Shaktikant Das

Q. 17: Consider the following statements regarding the National Payments Corporation of India (NPCI):

1. It was created under the provisions of the Payment and Settlement Systems Act, 2007.

2. It has been incorporated as a not for profit organization under the provisions of Societies Registration Act, 1860.

Which of the statements given above is/are correct?

A.      1 only

B.       2 only

C.       Both 1 and 2

D.      Neither 1 nor 2

Q. 18: Consider the following statements regarding the Open Market Operations (OMOs):

1.      These are the market operations conducted by the RBI by way of sale/ purchase of Government Securities to/ from the market.

2.      RBI resorts to the sale of securities if there is excess liquidity in the market.

Which of the statements given above is/are correct?

A.      1 only

B.       2 only

C.      Both 1 and 2

D.      Neither 1 nor 2

Q. 19: Consider the following statements regarding the Insolvency and Bankruptcy Code 2016:

1.The code applies to companies as well as individuals.

2. Insolvency Professionals administer the resolution process and manage the assets of the debtor.

3. The Insolvency and Bankruptcy Board of India is the regulator over Insolvency Professionals, Insolvency Professional Agencies and Information Utilities.

Which of the statements given above is/are correct?

A.       1 and 2 only

B.       2 and 3 only

C.     1 and 3 only

D.    All of the above

Q. 20: Consider the following statements regarding the State Development Loans (SDL):

1. These are Government Securities (G-Sec) issued by State governments in India.

2. These are eligible for meeting the Statutory Liquidity Ratio (SLR) requirements of banks.

Which of the statements given above is/are correct?

A.      1 only

B.       2 only

C.      Both 1 and 2

D.      Neither 1 nor 2

Q. 21: Which among the following is considered to be the most liquid asset?

a) Gold
b) Money
c) Land
d) Treasury bonds

Q. 22: The number of times a unit of money exchanges hands during a unit period of time is known as:

a) velocity of circulation of money
b) speed of circulation of money
c) momentum of circulation of money
d) count of circulation of money

Q.23: Currency notes and coins are called as:

a) Flat money
b) Legal tenders
c) Fiat money
d) Both b and c

Q. 24: 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

Q. 25: 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 the public in bank deposits to that of money held by the public in currency
c) ratio of money held in demand drafts to that of money held in treasury bonds
d) none of the above

Q. 26: In monetary terminology, what is called the 'monetary base' or 'high powered money'?

a) the total assets of RBI
b) the total liability of RBI
c) the total debt of the government
d) the total foreign exchange of RBI

Q. 27: By increasing the 'Bank Rate', the RBI can:

a) provide incentives to commercial banks to lend more to public
b) provide incentives to commercial banks to lend less to public
c) increase the money supply in the market
d) none of the above

Q. 28: The process by which RBI or any Central bank protects the economy against adverse economic shocks is known as:

a) protection
b) liberalization
c) stabilization
d) sterilization

Q.29: Consider the following statements.

(1) Scheduled Banks are those banks that are included in the Second Scheduled of the Reserve Bank Act, 1934.

(2) There are 10 Non-Scheduled Commercial Banks operating in the country.

(3) Co-operative banks are organized &managed on the principle of co-operation, self-help, and mutual help.

(a) only 1 and 3 are correct.

(b) only 2 are correct.

(c) all the above are correct.

(D) none of these

Q. 30: what is “Hard currency”?
a) Whose exchange rate has the tendency to fluctuate
b) which is used in time of war
c) which is traded in the foreign exchange market and for which demand is persistently high related to supply
d) which loses its value very fast

Q. 31: What is high-powered Money?
a) Money circulating as a parallel economy
b) Money consisting of foreign exchange reserves of a country
c) Money issued by the Central Bank of the country
d) Money used to fund elections

Q.32. Broad Money (M3) measures of the Money supply does not include:

a) Currency with Public
b) Demand deposits of Public in Banks
c) Post office savings deposits
d) Time deposits of the Public with Banks

Q. 33. What is call money market?

(a) Market for Inter-Bank loans on day to day basis
(b) Market arrangement for going loans to people
(c) Market in which Black money is exchanged for white money
(d) Market for Hawala.

Q. 34:  when was RBI Nationalized?

(a) 1945

 (b) 1935

 (c) 1938

 (d) 1949

Q. 35: A ‘debt trap’ means:

(a) Inability to repay the credit amount

(b) Ability to pay the credit amount

(c) Overspending till no money is left

 (d) None of these

Q. 36: To control inflationary trends in the economy RBI will

A.    Reduce repo rate and bank rate

B.     Reduce CRR and LR

C.     Increase repo rate and reduce bank rate

D.    Increase both repo  and bank rate

Q. 37: Reverse repo rate aims to

A.    Increase money supply in the economy

B.     Reduce excess money supply in the economy

C.     RBI provides loans to commercial banks at low rate

D.    All of the above

Q. 38: Dearer monetary policy of RBI aims to

A.    Extension of credit

B.     Contraction of credit

C.     Both A and B

D.    None

Q. 39: In India economy small coins are considered as

A.    Coins up to one rupee and less

B.     Coins up to  50 paise and less

C.     Coins up to 5 rupees and less

D.    Coins up to 10 rupees and less

Q. 40: RBI was set up on the recommendation of

A.    Hilton young commission

B.     Shivraman commission

C.     Narshimahm commission

D.    National commission on finance 

Author 

TheEconomics hub 

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*Sources: Different webpages