Monetary Policy - Banking Awareness Quiz

Published on Saturday, August 29, 2015
Monetary Policy quiz. Read Monetary policy notes here.

monetary policy quiz

Q1. Monetary Policy is a regulatory policy by which the ______or monetary authority of a country controls the supply of money, availability of bank credit and cost of money that is the rate of interest:
a) Central Bank (RBI)
b) SBI
c) IBA
d) None of These

Q2. _______controls the supply of money and bank credit:
a) RBI
b) Indian Banking Association
d) None of These

Q3. Which of the following is correct:
a) The Central Bank has the duty to see that legitimate credit requirements are met
b) And at the same credit is not used for unproductive and speculative purposes.
c) RBI rightly calls its credit policy as one of controlled expansion
d) All of the Above
d) None of These

Q4. The main objective of monetary policy in India is_______:
a) Growth with Stability
b) Reduce Poverty and Achieve Stability
c) Overall Monetary Stability 
d) None of These

Q5. The monetary management regulates:
a) Availability of Money and Credit only
b) Cost of Money and Credit Only
c) Use of Money and Credit Only
d) All of the Above
e) None of These

Q6. Price Stability implies promoting ______with considerable emphasis on price stability:
a) Financial Development
b) Economic Development
c) Strategic Financial Development
d) None of These

Q7. Restriction of Inventories and stock means:
a) Central Monetary authority carries out this essential function of restricting the development of the economy and all social and economic class of people
b) Ban on Huge amount of Inventories by Central Monetary Authority
c) Both of Above
d) None of These

Q8. An open market operation is an instrument of monetary policy which involves buying or selling of ________from or to the public and banks:
a) Bonds and Other local securities 
b) Debentures and Shares
c) Government Securities
d) None of These

Q9. The RBI sells government securities to control the _______:
a) Flow of Finance in banks
b) Flow of Credit
c) Flow of Governmental Securities 
d) None of These

Q10. If RBI wants to increase the credit flow it buys ______:
a) Government Securities
b) Shares and Debentures
c) Other Local and Short term securities 
d) None of These

Q11. The Cash Reserve Ratio is an effective instrument of credit control. Under the RBI Act, 1934 every ______bank has to keep certain minimum cash reserves with RBI:
a) Public Bank
b) Commercial Bank
c) Industrial and Agricultural Banks
d) None of These

Q12. The RBI is empowered to vary the CRR between:
a) 2 % and 16%
b) 3% and 15%
c) 5% and 25%
d) None of These

Q13. Cash Reserve Ratio increases the cash for ____:
a) Lending
b) Borrowing
c) Mortgaging 
d) None of These

Q14. LAF stands for:
a) Liquidity Adjustment Facility
b) Liquidity Adjustment Finance
c) Lending Adjustment Facility
d) None of These

Q15. In 1999 RBI introduced ILAF. ILAF stands for:
a) Internal Liquidity Adjustment Facility
b) Interim Liquidity Adjustment Facility
c) Investing Liquidity Adjustment Facility
d) None of These

Q16. Which among the following is correct about Sterlization:
a) Sterlization means re-cycling of foreign capital inflows to prevent appreciation of domestic currency and to check the inflationary impact of such capital
b) Sterlization is carried out through open market operations. 
c) To reduce the hurdles for implementation of sterlization, RBI uses a variety of other measures to manage interest rates.
d) All of the Above
d) None of These

Q17. Every financial institution has to maintain a certain quantity of liquid assets with themselves at any point of time of their total time and demand liabilities. These assets have to be kept in non cash form such as G - secs precious metals, approved securities like bonds etc. The ratio of the liquid assets to time and demand liabilities is termed as _____:
a) Statutory Liquidity Ratio
b) Cash Reserve Ratio
c) Reverse Repo
d) None of These

Q18. Credit Authorization Scheme was introduced in :
a) November, 1965
b) December, 1965
c) September, 1965
d) None of These

Q19. Which among the following is incorrect among Moral Suasion:
a) RBI may request commercial banks to not to give loans for unproductive purpose
b) So that which may increases inflation
c) Because it does not add to economic development 
d) All of the Above
e) None of These

Q20. Find the wrong one:
a) Repo means Sale and Repurchase Agreement
b) Repo is a swap deal involving the immediate Sale of Securities and simultaneous purchase of those securities at a future date, at a predetermined price
c) Repo rate helps commercial banks to acquire funds from RBI by selling securities and also agreeing to repurchase at  a later date.
d) All of the Above
e) None of These

Take previous Banking quiz :-

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