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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Ans – (a) Explanation:- Demand deposits can be withdrawn from the banks as and when needed by writing a cheque anytime.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…

Ans – (c) Explanation:- Bank Rate:- The bank rate is the rate at which the central bank of a country lends money to commercial banks to meet their long-term needs. RBI uses bank rate to control credit and it has…

Ans – (d) Explanation:- (a) Bank rate is the rate at which the Central Bank is ready to give credit to Commercial banks for long-term needs. (b) Bank rate is the interest rate at which the central bank provides loans…

Ans – (d) Explanation:- Commercial banks open following types of accounts 1. Savings Deposits Account 2. Current Deposits Account 3. Time Deposits Account