Question 1

The most important features of money is

Accepted Answer

A

Question 2

Which movement encourage the formation of commercial banks

Accepted Answer

The Swadeshi Movement, which began as a part of the anti-partition movement in Bengal in 1905, encouraged the use of Swadeshi goods and the promotion of Indian industry and economy. This movement led to the establishment of many national banks, schools, and industries, including commercial banks, to support the Indian economy independently of British control.

Question 3

Banking sector comes under which of the following sectors?

Accepted Answer

The banking sector is part of the service sector because it provides financial services to individuals, businesses, and governments, rather than producing goods.

Question 4

Who is responsible for the supply of coins in India?

Accepted Answer

The Ministry of Finance is responsible for the supply of coins in India, while the Reserve Bank of India handles the distribution.

Question 5

The commercial banks in India are governed by

Accepted Answer

The primary legislation that governs commercial banks in India is the Indian Banking Regulation Act of 1949. This act provides a framework for the regulation and supervision of banking firms in India.

Question 6

Deposits which arise from granting of loans are called

Accepted Answer

Derivative deposits are the deposits that arise when banks grant loans to their customers. The process involves the bank creating a deposit in the borrower's account, which effectively increases the total amount of money in the banking system. This is different from primary deposits, which are the initial deposits made by customers directly. Fixed deposits are a type of savings account with a fixed term.

Question 7

In order to control credit and investment , the central bank of a country should

Accepted Answer

Selling securities in the open market and hiking the cash reserve ratio both reduce the money supply, thereby controlling credit and investment.

Question 8

Which one of the following is not an instrument of credit control in the banking system?

Accepted Answer

Tax rate is not an instrument of credit control in the banking system. Credit control instruments are primarily used by central banks to regulate the amount of money in circulation and include options like open market operations, cash reserve ratios, and the issuance or management of bonds and debentures. Tax rates are used by the government to influence the economy but are not a direct tool for controlling credit.

Question 9

The commercial bank do not perform one function out of the following

Accepted Answer

Commercial banks do not issue currency notes; this function is typically performed by a country's central bank or monetary authority.

Question 10

Credit creation power of the commercial banks gets limited by which of the following?

Accepted Answer

The credit creation power of commercial banks is limited by various factors including the banking habits of the people, the cash reserve ratio (CRR) set by the central bank, and the overall credit policy of the central bank. These factors influence how much banks can lend out from the deposits they receive.

Question 11

Number of times a unit of money change hands in the course of a year is called

Accepted Answer

The velocity of money refers to the frequency at which one unit of currency is used to purchase domestically-produced goods and services within a given time period. It is a measure of the rate at which money is exchanged in an economy.

Question 12

Assets - liability =

Accepted Answer

Assets minus liabilities equals capital, which represents the owner's equity or net worth in a business.

Question 13

Debentures is also name as

Accepted Answer

Debentures are a type of debt instrument that is not secured by physical assets or collateral. They are often referred to as bonds, especially in the context of corporate or government financing. Unlike shares or equity, which represent ownership in a company, debentures signify a loan to the company and provide the holders with a fixed or variable interest income.

Question 14

A bills of exchange when drawn requires

Accepted Answer

A bill of exchange requires acceptance by the drawee to signify their agreement to pay the specified amount on the due date. This acceptance is a crucial step for the bill to become a binding obligation.

Question 15

Which of the following money supply is used by RBI?

Accepted Answer

The answer of Which of the following money supply is...

Question 16

The term 'bank liquidity' means

Accepted Answer

Bank liquidity refers to a bank's ability to meet its financial obligations as they come due without incurring unacceptable losses. This typically involves the ability to convert assets into cash quickly.

Quiz 3: Money, Banking and Monetary Policy in India