Dear Readers,
Question 1: What is the primary purpose of the Cash Reserve Ratio (CRR) imposed by the central bank?
A) To regulate foreign exchange rates
B) To control inflation
C) To ensure liquidity in the banking system
D) To encourage bank mergers
E) None of these
Answer: C
Question 2: SLR (Statutory Liquidity Ratio) is calculated as a percentage of which type of liabilities of banks?
A) Fixed Deposits
B) Net Demand and Time Liabilities (NDTL)
C) Non-Performing Assets (NPA)
D) Shareholder Equity
E) None of these
Answer: B
Question 3: Which rate is often referred to as the "discount rate" and is the rate at which commercial banks can borrow short-term funds from the central bank?
A) Bank Rate
B) Repo Rate
C) Reverse Repo Rate
D) SLR Rate
E) None of these
Answer: A
Question 4: When the Reverse Repo Rate is increased by the central bank, what is the likely impact on the availability of credit in the economy?
A) Availability of credit increases
B) Availability of credit decreases
C) No impact on credit availability
D) It depends on other factors
E) None of these
Answer: B
Question 5: What is the term for the rate at which the central bank borrows money from commercial banks, usually for a short duration?
A) Repo Rate
B) Bank Rate
C) Reverse Repo Rate
D) SLR Rate
E) None of these
Answer: C
Question 6: What role does the Bank Rate play in the monetary policy of a country?
A) Regulating foreign exchange rates
B) Controlling inflation
C) Influencing lending and borrowing rates in the economy
D) Managing government expenditure
E) None of these
Answer: C
Question 7: Which of the following is a tool used by central banks to control the money supply through the buying and selling of government securities?
A) SLR Rate
B) Bank Rate
C) Open Market Operations (OMO)
D) Reverse Repo Rate
E) None of these
Answer: C
Question 8: When the central bank increases the Repo Rate, what is the likely impact on the economic growth of a country?
A) Economic growth accelerates
B) Economic growth decelerates
C) No impact on economic growth
D) It depends on other factors
E) None of these
Answer: B
Question 9: Which rate is often considered the "penal rate" at which banks can park surplus funds with the central bank?
A) SLR Rate
B) Bank Rate
C) Reverse Repo Rate
D) Repo Rate
E) None of these
Answer: C
Question 10: In the context of the banking system, what does the term "Repo" stand for?
A) Repurchase Operation
B) Reserve Position
C) Regulatory Procedure
D) Repayment Option
E) None of these
Answer: A
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MAHENDRA GURU