Q.1 Which of the following measures are taken by the RBI to ease the liquidity crunch in the country ?

1) Cut in Cash Reserve Ratio & Statutory Liquidity Ratio

2) Supply of additional currency notes in the market

3) Increase the flow of FDI

Codes:

A) 1 & 3

B) Only 2

C) 2 & 3

D) Only 1

Ans. D

Q.2 Why RBI keeps on changing various ratio/rates frequently ?

1) To ensure that Indian rupee does not loose its market value

2) To keep Inflation under control

3) To ensure that banks do not earn huge profits at the cost of public money

Codes:

A) 1 & 3

B) 2 & 3

C) 1 & 2

D) 1,2,3

Ans. D

Q.3 Which of the following happens when the Interest rate goes up ?

1) Lending decreases

2) Cost of production increases

3) Saving increases

4) Return on Capital increases

Codes:

A) 2,3,4

B) 1,3,4

C) 1,2,3

D) 1,2,3,4

Ans. C

Q.4 Statements:

1) Taxes on transactions in stock exchange & future markets are levied by Union & collected by the states

2) Arbitrage is used for the purchase & sale of securities to make profits from price

Codes:

A) Only 1

B) Only 2

C) Both are correct

D) Both are incorrect

Ans. B

Taxes on transactions in stock exchange & future markets are levied by Union

Q.5 Which of the following measures will happen when money supply increases ?

1) Sale of government securities to the public by the Central Bank

2) Purchase of government securities from the public by the Central Bank

3) Deposit of currency in commercial banks by the public

4) Borrowing by the government from the Central Public

Codes:

A) 1,3,4

B) 2,3,4

C) 1,2,3

D) Only 2 & 4

Ans. D

Q.6 Which among the following is true regarding Foreign Exchange reserves ?

1) It is maintained by the RBI

2) It includes foreign currency assests & gold holdings of RBI

3) Special drawing Rights (SDR) are not included in it

4) Presently foreign exchange situation is satisfactory in India

Codes:

A) 1,3,4

B) 2,3,4

C) 1,2,4

D) 1,2,3,4

Ans. C

Q.7 Indian rupee is fully convertible into:

1) In respect of current accounts of balance of payment

2) In respect of Capital accounts of balance of Payment

3) Gold

Codes:

A) 1 & 3

B) 2 & 3

C) Only 1

D) 1,2,3

Ans. C

Q.8 Which of the following is a debt instrument ?

1) Bonds

2) Certificate of deposits

3) Commercial papers

4) Loans

5) Stocks

Codes:

A) 1,3,4,5

B) 1,2,3,4

C) 2,3,4,5

D) 1,2,3,4,5

Ans. B

Q.9 Statements:

1) Call money market is the part of Organised & unorganised sector

2) Participatory notes is an offshore derivative instrument used by overseas buyers /investors for shares of Indian companies listed in Stock exchange

Codes:

A) Only 1

B) Only 2

C) Both are correct

D) Both are incorrect

Ans. B

Call money market is the part of Organised sector

Q.10 Which of the following is correct regarding Hot Money ?

1) It is the fund which flows in the market to take advantage of high interest rates

2) It is used for the fresh currency notes issued by the RBI

3) It is the fund which is thrown in market to create imbalance in the stock markets

Codes:

A) 2 & 3

B) Only 1

C) 1 & 3

D) Only 3

Ans. B