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Ans – (b) Explanation:- Saving account and current account deposits are demand deposits as the account holder can withdraw money when needed (demanded) The account holder is issued a cheque book. With the help of this cheque book, he can…
Ans (a) Explanation:- (1) If the Reserve Bank of India injects more money into circulation, it will increase the cash reserve of the commercial bank. Now the commercial bank will be able to create more credit and it will increase…
Ans – (c) Explanation:- As per section 22 of the Reserve Bank of India Act, the Reserve Bank of India has the sole right to issue currency notes of different denominations except 1 rupee note. The One Rupee note is…
Ans (b) Explanation:- Statutory Liquidity Ratio (SLR): It refers to the minimum percentage of net demand and time liabilities that commercial banks are required to maintain with themselves. SLR is maintained in the form of designated liquid assets.
Ans – (c) Explanation:- Conditions for a Financial Institution to become a Bank: The main function of commercial banks is to accept deposits and advance loans. A financial institution can be a banking institution only when it performs both the…
Ans – (a) Explanation:- It is one of the most important activities of commercial banks. Through the process of money creation, commercial banks are able to create credit, which is in far excess of the initial or Primary Deposits.
Ans – (a) Explanation:- Margin Requirements:- The margin requirement refers to the difference between the current value of the security offered for a loan (called collateral and the value of the loan granted. Suppose, a person mortgages his house worth…
Ans – (c) Explanation:- Money Multiplier = 1/LRR Money Multiplier = 1/10% Money Multiplier = 100/10 Money Multiplier = 10 times
Ans – (a) Explanation:- The Central Bank is an Apex body that controls, operates, regulates, and directs the entire banking and monetary structure of the country. Central Bank:- It is known as the apex body as it occupies the topmost…
Ans – (d) Government spending is a measure of fiscal policy of the government to control the money supply. The government can increase its spending on infrastructure and subsidies to increase the money supply. On the other hand, the government…