Banking and Finance Quiz

Name the institution which performs the functions of accepting deposits, granting loans and making investments, with the aim of earning profits.

• Commercial Bank

• Central Bank

• Neither (a) nor (b)

• Both (a) and (b)

This function of Central Bank involves buying and selling of government securities from or to the public and commercial banks.

• a. Selective Credit Controls

• b. Legal Reserve Requirements

• c. Open Market operations

• d. None of these

This bank operates in public interest without any profit motive.

• Reserve Bank of India

• State Bank of India

• Bank of Baroda

• Punjab National Bank

What will be the effect of increase in the 'Repo Rate' on the money supply?

• Money supply will increase

• Money supply will decrease

• Money supply will remain same

• Money supply will initially increase and then it will decrease

Which of the following will increase the money supply?

• Fall in repo rate

• Purchase of securities in open market

• Decrease in cash reserve ratio

• All of these

Credit creation by commercial banks is determined by: (Choose the correct alternative)

• Cash Reserve Ratio (CRR)

• Statutory Liquidity Ratio (SLR)

• Initial Deposits

• All of the above

In order to encourage investment in the economy, the Central Bank may ____. (Choose the correct alternative)

• Reduce Cash Reserve Ratio

• Increase Cash Reserve Ratio

• Increase Bank Rate

• Sell Government securities in open market

If legal reserve ratio is 20%, the value of money multiplier would be ____. (Choose the correct alternative)

• 2

• 3

• 5

• 4

9. The lender of last resort is the function of:

• a. Central Government

• b. Central Bank

• c. Commercial Bank

• d. None of these

Which of the following statement is correct?

• a. Bank rate is the rate at which Central Bank is ready to give credit to Commercial Banks

• b. Bank rate and market interest rates are different

• c. Bank rate is the discount rate of the Central Bank

• d. All of the above