Banking Quiz on Policy Rates of RBI and it’s Tools

My Dear Banking Aspirants,

Awareness in Banking as well as Economics is very important for all kind of Bank exams ie Private as well as Public sector banks. This Banking Quiz comprises Questions from Recent Banking Affairs. Hope it helps you all.

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1. When the RBI will raise the bank rate or discount rate consequently
a) Lending rate of commercial banks will go up
b) Businessmen and industrialists would feel discouraged to borrow from commercial banks
c) The reduction in the supply of money would reduce aggregate demand or money expenditure
d) This would reduce price and check inflation in the economy
e) All the above

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Answer e) All the above

2. Suppose that the central bank of country -say RBI in India – is under the impression that bank credit is excessive and that inflationary conditions are present in the country. At that situation RBI or Central Bank will
a) Reduce the Bank Rate
b) Raise the Bank Rate
c) Only A
d) None of the above

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Answer b) Raise the Bank Rate

3. When the Bank Rate or discount rate increase by RBI as a result
a) The price reduces
b) To contract bank credit
c) The reduction of money supply
d) All the above

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Answer d) All the above

4. When there is recession or depression in the economy the RBI will
a) To increase the Bank Rate
b) To reduce the Bank Rate
c) No changes in Bank Rate
d) None of the above

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Answer b) To reduce the Bank Rate

5. In the case of controlling deflation The RBI will reduce the bank rate consequently
a) Commercial banks will reduce their interest rate
b) Businessmen and industrialists would feel encourage to borrow from commercial banks
c) Increase investment & production
d) To increase employment and prices
e) All the above

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Answer e) All the above

6. Inflation denotes the following situation
a) Price level increases – money value falls
b) Price level rises – money value rises
c) Price level falls – money value falls
d) Price level falls – money value rises

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Answer a) Price level increases – money value falls

7. Deflation denotes the following situation
a) Money value falls – price increases
b) Price level rises – money value falls
c) Money value rises – price level falls
d) Price level falls – money value falls

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Answer c) Money value rises – price level falls

8. Cheap Money Policy is adopted during the
a) Inflation
b) Deflation
c) Stagflation
d) All the above

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Answer b) Deflation

9. Cheap Money Policy is that monetary policy in which loans and advances are made available on low interest rate consequently
a) Consumers encourage to borrow from banks
b) Businessmen and industrialists would feel encourage to borrow from commercial banks
c) To increase the inflation in the economy
d) To increase production in the economy
e) All the above

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Answer e) All the above

10. Fiscal Policy in India is formulated by
a) RBI
b) Planning Commission
c) The Finance Ministry
d) SEBI

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Answer c) The Finance Ministry

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