Eco Money And Banking MCQ Flashcards by Prajjwal Katiyar

What is Seigniorage

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How does RBI intervene in forex market?

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When we say that the currency of two countries are purchasing power parity

When PPP exchange rate is equal to nominal exchange rate

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Will the currency appreciate or depreciate if there is rise in interest rate in India?

It will appreciate because with the rise in interest, more people would want to invest in the bonds of the government of India. Hence rupee will appreciate.

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To judge a countries export competitiveness, which exchange rate should we use?

Real effective exchange rate

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If rupees depreciating, then it leads to increase in cost of imports in dollars.
If rupees depreciating, then it leads to earning more dollars per unit of exports.

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Are retail investors allowed to directly access government securities market?

Yes

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How are government securities issued through e Kuber by RBI

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Is cash management bills only issued by central government?
Is it used to fund fiscal deficit?
Is it used to fill the temporary mismatch in the cash flow of the government?

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Is SLR maintained as per RBI act 1934?
Can it be maintained as cash balance with RBI?
Is CMB, treasury bills, dated securities and state development loans considered under SLR?

No,
Yes,
Yes

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Is Waze and means advance available to both central and state governments?
To government need to pay interest rate on Waze and means advance?
Is it to meet the temporary mismatches of the receipts and payments?

Yes, yes, yes

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Can cash management bills be issued by state governments?
Which type of instruments are used to fill the temporary mismatch?
Which type of instruments are used to fill the fiscal deficit?

No,
Ways and means Advance and CMB.
Tbills and dated securities

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Definition of legal tender money

The money which a creditor is under compulsion to accept in settlement of claims

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Who guarantees currency notes?

Government of India

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Are all the currency notes and coins circulated by RBI?
Is all the currency in circulation part of municipal supply?
Is all the currency in circulation liability of RBI?

Yes
No,
No
Currency in circulation equals currency with public plus currency in bank

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Who is the author authority to issue currency notes?

RBI

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Denomination of to which coins can issued?
Who has the sole right to mint coins?
Coins are issued as per which act?

Rupees thousand
Government of India,
RBI act 1934

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If new currency is being issued, then who has the authority to decide its denomination?

Central government

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PM told that ₹500 and thousand notes will not be legal tender under which act

RBI act 1934

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Does RBI has to necessarily undertake the receipt and payments and other banking operations of central government?
Is RBI under obligation to act as a banker to state government?

Yes, yes, yes, yes, yes, yes, yes

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What are agency banks?

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Does RBI float loans and manage them on behalf of the government?

Yes, it does, but when it floats loans, it acts as debt manager and not banker to givernment

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Does RBI maintains CFI and contingency fund and public account of India? Does RBI act as advisor to the government on monetary and banking related issues? RBI provide ways and means advances to the government.

Yes, yes, yes, yes, yes, yes, yes, yes, yes

Is notice money a secured instrument?

Is commercial paper and unsecured debt instrument? Is it a short-term money market instrument? Does NBFC issue commercial papers?

Yes, yes, yes, yes

Is certificate of deposit secured instrument? Is it a money market instrument? Is it a traditional instrument?

No, it is unsecured. Yes, it is a money market instrument. It is traidable

Cash management bills, Treasury bills. Certificate of deposits, State development loans. Which of the above are instruments of money market?

Cash management bills, Treasury bills. Certificate of deposit

Whose approvL is req for mergers and aquisitions?

Tell about FSIB

To which committee are the names selected by FSIB sent for approval?

Appointments committee of the cabinet

What is deposit insurance and credit guarantee Corporation? Who incur the premium insurance premium burden?

Can payment banks open demand and time deposits? Is a learning activity in the scope of payments bank? Can the issue credit cards?

No No No

Does India post payment bank accepts demand and fixed deposits? Does it allow both savings and current account? Is it a public sector company?

No, it only accepts demand deposits and not fixed deposits. Both savings and current account are allowed. Yes, it is a public sector company under Department of post

What are the scope of activities of small finance banks? What is the objective of setting up small finance bank? What is on tap licensing of small finance bank?

Are all cooperative banks under dual regulation of RBI and government? Are all cooperative banks supervised by NABARD?

No No

Does NABARD provides refinance to commercial banks, regional rural banks, State cooperative banks and land development, banks, and non-banking financial companies?

Yes

Does Mudra bank provide direct lending to small entrepreneurs? Is it available to small businesses related to agriculture?

No No

Who regulates the housing finance companies? Does national housing bank provides direct finance for individual housing loans?

RBI No

Who regulates housing finance companies and our housing finance companies, a category of non-financial company?

RBI regulates it and yes, they are a category of NBFC

Can pair to pair lending platforms lend on their own? Can they raise deposits? Can they provide any trade guarantee?

No No No

How can NBFC borrow money?

Reliance digital bank units fixed point business units?

Yes

Who regulates real estate investment trust?

Sebi

Is angel investment regulated by SEBI?

Yes yes

What are anchor investors?

Concept launched by SEBI in 2009. Anchor investors are institutional investors and not individual were invited to subscribe/purchase the shares before IPO. There is some lock in period before which they cannot exit their investment.

Which two funds come under alternate investment fund?

Venture capital fund and angel investor fund

Is crowd funding also known as marketplace financing?

Yes

Can exchange traded funds be credit like stocks and be bought and sold throughout the day?

Yes

Impact bonds? Our impact wants subscribed by government ?

Our insurance companies allowed to show bonds for infrastructure projects? Can it be issued as a bank guarantee? Will it reduce the indirect cost for contractors?

Tes yes yes

Can everybody import gold in India?

No, only the entities notified by directorate general of foreign trade that is DGFT are permitted to import go to India after the issue of license by DGFT. Gold is tightly regulated in India and currently only nominated banks and agencies approved by RBI can import gold and sell to dealers and Jewellers across the country.

Is RBI governor eligible for reappointment?

Yes, the term of appointment can be five years, but generally the practice is to appoint for three years and then extend

Does banks require prior approval of RBI for appointment of directors? Management of which bank is under dual regulation of central government and RBI?

Yes, Public sector banks

What are the two clear objectives of economic capital framework?

What is hardening of interest rate?

Increase in interest rate

Definition of monetary base

Currency held by public+ currency held by bank+ Deposits of banks with RBI

Formula of money multiplier

Money supply = money supply/monetary base

Will money multiplier, increase or decrease monetary base?

It will neither increase, not decrease because cash with public and cash with banks, both are part of monetary base

How many multiply depends upon currency, deposit ratio and reserve deposit ratio

What is considered as part of money supply? What is not a part of money supply?

Money supply is defined as the stock of money in circulation among the public. Deposits of commercial banks with other commercial banks, money, Central Bank, and money language, government is not considered as part of money supply

Does money supply mean money with public either in cash firm or in deposit firm?

Yes, yes, yes Balle Balle Shaba Shaba

What are the two types of open market operations?

In what ways can RBI pump more money?

Does RBI perform open market operations in secondary market?

Yes

Is RBI empowered to issue market stabilisation bonds? The interest payment on these bonds is it made by government from its budgetary resources?

Yes ges

What is the main purpose of statutory reserve requirements?

Monetary stability

Provide important points of monetary policy framework

What is weighted average called rate?

Does monetary policy committee has authority decide a repo rate, CRR and SLR?

No, monetary policy, committee has the authority decide only the repo rate and not CRR and SLR or even reverse separate

How are monetary policy committee members selected?

Is MSF and SDF at the discretion of banks?

Yes

Who conducts consumer confidence survey?

RBI

Who conducts inflation expectation survey?

Reserve bank of India

If RBI is very of rupee, depreciation, will it allow importers to directly buy foreign currency from RBI?

Yes, because when importers by dollars in foreign exchange market, repeat appreciate as demand of dollars increase in the forex market. But if they directly deal with RBI and don’t go to forex market, then it may not impact rupee dollar rate

What is operation twist

When central bank uses proceeds/money from sale of short-term securities to buy long-term government debt papers, leading to easing of long-term interest rates in the economy

Is the interest rate above repo rate in long-term repo operations?

Yes

What is the exclusive aim of monetary policy?

Price stability, and not financial stability

Base rate and MCLR ka kya chudaap hai

External benchmark rate ke baar emein pura batao

Are NBFC is also mandated to link their lending rates

Nopes

MCLR is an external benchmark or internal benchmark rate

Internal benchmark rate

What place major role in transmission of monetary policy?

Money market

When will people deposit money. The question is regarding whether real and nominal interest rate would be positive or negative to increase saving and reduce consumption.

When will the savings in the economy increase? Positive real interest rate, Low inflation rate, Horizon Rise in per capita income Growth of financial intermediaries.

All of the abive

What is inflation premium

Which conditions lead to liquidity trap?

Explain deflation, galloping, inflation, or hyper inflation

Is moderate level of inflation good for economy?

Yes It increases consumption levels It keeps businesses profitable It induces people to save more

Integrated ombudsman scheme ke baare mein kuchh batao

Kisan credit card ke baare mein batao thoda

When does RBI take prompt corrective action?

Is supervisory action framework applicable for urban cooperative banks? Can it be initiated in case of serious governance issues?

Yes yes

How reserve bank manages its forex? Components of forex What js line of credit

What is teaser loans?

What is FLDG(first loss default guarantee?) Who approves it? Is the loan shared on the books of banks and Finn Tech?

What is the definition of capital adequacy ratio? Who decides the value of CR to be maintained by banks? What are additional tire 1 bonds?

Rbi decides

What type of foreign investment in an Indian company is allowed?

Is financial lease a part of FDI?

Is investment in central and state government securities part of FDI?

Government cannot issue equity securities and hence government securities are always of debt in nature. Hence, investment in government securities cannot be classified as FDI.

What is considered part of FDI?