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Ans – (d) Explanation:- One of the functions of the Central bank is Currency Authority (or Bank of Issue): The Central Bank has the sole authority for the issue of currency in the country. In India, the Reserve Bank of…

Ans – (c) Explanation:- One Rupee note bears the signature of the Finance Secretary while other currency notes bear the signature of the Governor of RBI. One rupee note is issued by the Ministery of Finance, thus it bears the…

Ans – (b) Explanation:- The Ministry of Finance department of the Government of India has the sole right to mint coins. The Coinage Act, of 1906 authorized the responsibility for coinage the coins to the government of India. All kinds…

Ans (a) Explanation:- Credit creation means the creation of Secondary Deposits. Commercial banks create credit by offering loans to the public from the cash reserves of the primary deposits. But loans are not provided in cash. The amount is deposited…

Ans – (a) Explanation:- Demand deposits can be withdrawn from the banks as and when needed by writing a cheque anytime. For example, Savings and current accounts are the demand deposits with commercial banks. The commercial banks issue a leaf…

Ans – (c) As Commercial banks are the bank of the public, the Same RBI is the bank of the commercial banks. Explanation:- As public relies on commercial banks for their bank accounts and loans. Same Commercial banks open their…

Ans – (b) Explanation:- Open Market Operations:- Open market operations (OMO) refer to the buying and selling of government securities by the Central bank from/to the public and commercial banks. RBI is authorised to sell or purchase treasury bills and…

Ans – (a) or (b) or (c) or (d) Explanation:- Money supply can be controlled by: Buying securities in the open market. It increases the cash reserves of the commercial bank. It increases the credit-creating capacity and thus money supply…

Ans – (a) The main aim of monetary policy is to bring price stability in the economy. Explanation:- The central bank uses monetary policy to control the money supply. money supply is controlled by controlling the credit-creating capacity of the…

Ans – (a) or (c) Explanation:- Statutory Liquidity Ratio (SLR): If refers to the minimum percentage of net demand and time deposit liabilities that commercial banks are required to maintain with themselves. SLR is maintained in the form of designated…