Money and Banking

Which of the following is a step that the central bank will take to encourage greater investment in the economy?

• (a) It will look to increase the cash reserve ratio

• (b) It will look to reduce the cash reserve ratio

• (c) It will look to increase the bank rate

• (d) It will look to sell the government securities in the open market

Which of the following is a step that the central bank will take to increase the overall availability of credit?

• (a) It will sell the government securities in the market

• (b) It will buy more government securities from the market

• (c) It will raise the reverse repo rate

• (d) It will raise the repo rate

Which of the following statements is true about the Indian monetary system?

• (a) The Indian monetary system is based on the gold standard.

• (b)The Indian monetary system is based on the credit money standard.

• (c)The Indian monetary system is based on the minimum reserve system.

• (d) The Indian monetary system is based on the metallic standard.

Which of the following statements represents the main function of the central bank in a country?

• (a). It is responsible for the regulation over the supply of money in the market.

• (b). It is responsible for the issuance of notes within the country.

• (c). It acts as a banker both to the government and to other banks in the country.

• (d) All of the above.

Which of the following statements is true about demand deposits?

• (a) It includes both fixed deposits and current account deposits.

• (b)It includes both savings account deposits and fixed deposits.

• (c)It includes both current account deposits and savings account deposits.

• (d)It includes fixed deposits, current account deposits and savings account deposits

Assertion (A): The central bank issues currency notes in an economy.

Reason (R): The central bank ensures adequate cash flow in the economy by directly printing and distributing money to the public.

• (A) Both A and R are true, and R is the correct explanation of A.

• (B) Both A and R are true, but R is not the correct explanation of A.

• (C) A is true, but R is false.

• (D) A is false, but R is true.

Which of the following is NOT a function of money?

• a. Medium of exchange

• b. Measure of value

• c. Store of value

• d. Providing free goods.

Who among the following issues Re.1 currency note?

• a. President

• b. Prime Minister

• c. RBI

• d. Ministry of Finance, Government of India.

Which form of money is issued by the central bank?

• a. Fiat money

• b. Commodity money

• c. Token money

• d. Digital money

“Money is an asset which can be stored for use in future‟. In light of the above statement, identify the function of money.

• a. A measure of value.

• b. A standard of deferred payments.

• c. A store of value.

• d. Medium of exchange.