Money and Banking online Test

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Money and Banking online Test - 45

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Weekly Quiz Competition

Question 1
1 / -0

Which of the following come under the monetary aggregate M3?

1. Recurring deposits

2. Postal savings

3. Saving accounts

4. Current accounts

A
1,2 and 3

B
2,3 and 4

C
1,3 and 4

D
1,2 and 4

Solution

Postal savings either come under M: (demand deposits) or M4M4 (total deposits).

M3 is a collection of the money supply that includes M2 money as well as large time deposits, institutional money market funds, short-term repurchase agreements, and larger liquid funds.
Question 2
1 / -0

Which of the following is/are the important component(s) of credit creation process?

A
Legal reserves

B
Bank rate

C
Primary deposits

D
Both (A) and (C)

Solution

The entire credit creation process majorly depends upon two components i.e., legal reserve ratio and amount of primary deposits.
Question 3
1 / -0

Choose the incorrect statement about securities.

A
In order to use dematerialising facilities one has to open a demat account.

B
Change from electronic format to physical form is called re-materialisation.

C
Once you dematerialise your securities you cannot rematerialise.

D
Change from physical form to electronic format is called dematerialisation.

Solution

Dematerialisation is the process of converting physical shares into electronic format however, reconversion to physical form or rematerialisation is also possible.
Question 4
1 / -0

The capital market consists of:

A
Stock exchanges

B
Development banks

C
Commercial banks

D
All of the above

Solution

The term capital market refers to facilities and institutional arrangements through which long-term funds, both debt and equity are raised and invested. It consists of development banks, commercial banks and stock exchanges.
Question 5
1 / -0

Select the functions of the RBI, which are correct using the code given below:

1. as 'banker to the Government' it performs merchant banking function for the central and the state governments and also acts are their 'banker'.

2. As 'banker to banks', it maintains banking accounts of all scheduled banks.

A
Only 1

B
Only 2

C
1 and 2

D
Neither 1 nor 2

Solution

It means the RBI functions as the body, which manage the borrowing programmes of the government in India. Statement-2 talks about the 'banker of the last resort' function of the RBI under which it lends money to all operating banks and the financial institutions in the country.
Question 6
1 / -0

Cheques are examples of _______________ money.

A
Fiduciary

B
Legal

C
Fiat

D
None of these

Solution

Fiduciary money refers to the money which is backed by the trust between payer and payee and not by any government.
Question 7
1 / -0

Which of the following systems is followed by Reserve Bank of India for issuing currency?

A
Minimum reserve system

B
Proportionate system

C
Fixed fiduciary issue system

D
Simple deposit system

Solution

Minimum reserve system is the one in which Central Bank get any amount of current printed against a minimum amount reserve.
Question 8
1 / -0

Non-Chequable deposits are those:

A
Against which no money can be withdrawn

B
Against which money can be withdrawn but cheque

C
They have a fixed maturity

D
Both (A) and (C)

Solution

Time or Term deposits are for a fixed period of time, thus money cannot be withdrawn using mode like cheque.
Question 9
1 / -0

Which one of the following International institutions has offered the concessional loans and grants to the world's poorest developing countries?

A
IFC

B
IDA

C
IMF

D
WB

Solution

International Developing Association has offered the concessional loans and grants to the world's poorest developing countries. The IDA is a member of the World Bank Group and is administered by the International Bank for Reconstruction and Development (IBRD).
Question 10
1 / -0

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

A
Reduce Cash Reserve Ratio

B
Increase Cash Reserve Ratio

C
Sell Government securities in open market

D
Increase Bank Rate

Solution

In order to encourage investment in the economy, the Central Bank may reduce Cash Reserve Ratio. Hence, A is the correct option.

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Re-Attempt Weekly Quiz Competition

Money and Banking online Test - 45

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Money and Banking online Test - 45

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SHARING IS CARING

Question 1

1,2 and 3

2,3 and 4

1,3 and 4

1,2 and 4

Solution

Question 2

Legal reserves

Bank rate

Primary deposits

Both (A) and (C)

Solution

Question 3

In order to use dematerialising facilities one has to open a demat account.

Change from electronic format to physical form is called re-materialisation.

Once you dematerialise your securities you cannot rematerialise.

Change from physical form to electronic format is called dematerialisation.

Solution

Question 4

Stock exchanges

Development banks

Commercial banks

All of the above

Solution

Question 5

Only 1

Only 2

1 and 2

Neither 1 nor 2

Solution

Question 6

Fiduciary

Legal

Fiat

None of these

Solution

Question 7

Minimum reserve system

Proportionate system

Fixed fiduciary issue system

Simple deposit system

Solution

Question 8

Against which no money can be withdrawn

Against which money can be withdrawn but cheque

They have a fixed maturity

Both (A) and (C)

Solution

Question 9

IFC

IDA

IMF

WB

Solution

Question 10

Reduce Cash Reserve Ratio

Increase Cash Reserve Ratio

Sell Government securities in open market

Increase Bank Rate

Solution

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