Money and Banking

1

With reference to digital payments, consider the following statements:

  1. BHIM app allows the user to transfer money to anyone with a UPI-enabled bank account.
  2. While a chip-pin debit card has four factors of authentication, BHIM app has only two factors of authentication.

Which of the statements given above is/are correct?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2
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2

Which one of the following statements correctly describes the meaning of legal tender money?

  1. The money which is tendered in courts of law to defray the fee of legal cases.
  2. The money which a creditor is under compulsion to accept in settlement of his claims.
  3. The bank money in the form of cheques, drafts, bills of exchange, etc.
  4. The metallic money in circulation in a country.
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3

The lowering of Bank Rate by the Reserve Bank of India leads to

  1. More liquidity in the market
  2. Less liquidity in the market
  3. No change in the liquidity in the market
  4. Mobilization of more deposits by commercial banks
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4

Economic growth is usually coupled with

  1. Deflation
  2. Inflation
  3. Stagflation
  4. Hyperinflation
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5

The establishment of 'Payment Banks' is being allowed in India to promote financial inclusion. Which of the following statements is/are correct in this context?

  1. Mobile telephone companies and supermarket chains that are owned and controlled by residents are eligible to be promoters of Payment Banks.
  2. Payment Banks can issue both credit cards and debit cards.
  3. Payment Banks cannot undertake lending activities.

Select the correct answer using the code given below.

  1. 1 and 2 only
  2. 1 and 3 only
  3. 2 only
  4. 1, 2 and 3
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6

What is/are the purpose/purposes of the 'Marginal Cost of Funds based Lending Rate (MCLR)' announced by RBI?

  1. These guidelines help improve the transparency in the methodology followed by banks for determining the interest rates on advances.
  2. These guidelines help ensure availability of bank credit at interest rates which are fair to the borrowers as well as the banks.

Select the correct answer using the code given below.

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2
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7

A rise in general level of prices may be caused by

  • 1. an increase in the money supply
  • 2. a decrease in the aggregate level of output
  • 3. an increase in the effective demand

Select the correct answer using the codes given below.

  1. 1 and 2 only
  2. 2 and 3 only
  3. 1, 2 and 3
  4. 1 only
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8

The basic aim of Lead Bank Scheme is that

  1. there should be stiff competition among the various nationalized banks
  2. big banks should try to open offices in each district
  3. individual banks should adopt particular districts for intensive development
  4. all the banks should make intensive efforts to mobilize deposits
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9

Consider the following liquid assets:

  • 1. Demand deposits with the banks
  • 2. Time deposits with the bank
  • 3. Savings deposits with the bank
  • 4. Currency

The correct sequence of these assets in the decreasing order of liquidity is

  1. 4-3-2-1
  2. 1-4-3-2
  3. 4-1-3-2
  4. 2-3-1-4
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10

If the interest rate is decreased in an economy, it will

  1. increase the tax collection of the Government
  2. decrease the consumption expenditure in the economy
  3. increase the total savings in the economy
  4. increase the investment expenditure in the economy
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11

Why is the offering of "teaser loans" by commercial banks a cause of economic concern?

  • 1. The teaser loans are considered to be an aspect of sub-prime lending and banks may be exposed to the risk of defaulters in future.
  • 2. In India, the teaser loans are mostly given to inexperienced entrepreneurs to set up manufacturing or export units.

Which of the statements given above is/are correct?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2
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12

Priority Sector Lending by banks in India constitutes the lending to

  1. Agriculture
  2. Micro and small enterprises
  3. Weaker section
  4. All of the above
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13

The Reserve Bank of India (RBI) acts as a bankers' bank. This would imply which of the following?

  • 1. Other banks retain their deposits with the RBI.
  • 2. The RBI lends funds to the commercial banks in times of need.
  • 3. The RBI advises the commercial banks on monetary matters.

Select the correct answer using the codes given below:

  1. 1 and 3 only
  2. 2 and 3 only
  3. 1, 2 and 3
  4. 1 and 2 only
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14

Supply of money remaining the same when there is an increase in demand for money, there will be

  1. a fall in the level of prices
  2. an increase in the rate of interest
  3. a decrease in the rate of interest
  4. an increase in the level of income and employment
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15

What does venture capital mean?

  1. Funds provided to industries at times of incurring losses
  2. A short-term capital provided to industries
  3. A long-term start-up capital provided to new entrepreneurs
  4. Funds provided for replacement and renovation of industries
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16

With reference to Indian economy, consider the following:

  1. Bank rate 
  2. Open market operations 
  3. Public debt 
  4. Public revenue

Which of the above is/are component / components of Monetary Policy?

  1. 1 only
  2. 2, 3 and 4
  3. 1 and 2
  4. 1, 3 and 4
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17

Convertibility of rupee implies

  1. being able to convert rupee notes into gold
  2. allowing the value of rupee to be fixed by market forces 
  3. freely permitting the conversion of rupee to other currencies and vice versa 
  4. developing an international market for currencies in India
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