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Ans: (i) – c (ii) – d (iii) – a (iv) – b Explanation:- (i) – c Bank rate is also called Discount Rate. (ii) – d Money Multiplier is also called Deposit Multiplier. (iii) – a Open Market operations…

Ans: (i) – c (ii) – d (iii) – a (iv) – b Explanation:- (i) – c The Central Bank is called the Reserve Bank of India in India. (ii) – d Bank of issue is one of the functions…

Ans: (i) – b (ii) – a Explanation:- According to Legal reserve requirements, commercial banks are obliged to maintain reserves. It is a very quick and direct method for controlling the credit-creating power of commercial banks. Commercial Bank is required…

Repo Rate:- The rate at which the RBI (Central Bank) offers short-period loans to commercial banks by buying government securities in the open market. In fact, the Repo rate is the Repurchase Rate. A repurchase agreement is signed by both…

Ans – (i) – a Explanation:- Repurchase rate is the other name of Repo Rate. Repo Rate is the rate at which RBI lends money to commercial bank to meet their short-term needs. Repo (Repurchase) Rate:- Repo rate is the…

Ans – (b) – (ii) Explanation:- (a) Central bank is the banker to the government not the commercial bank. (b) Central Bank has the authority to issue currency in the country. (c) Money multiplier = 1/LRR (d) Bank rate is…

True, Secondary Deposits are those deposits that arise due to loans given by the banks to the people. Explanation:- Primary Deposits are the cash deposits of people with Commercial Banks in different deposit accounts such as savings accounts, current accounts, term deposit accounts, and other…

False, Margin requirement is reduced by the Central Bank to increase money supply. Explanation:- Margin Requirements: Margin is the difference between the amount of the loan and the market value of the security offered by the borrower against the loan.…

False, Demand deposits are equal to sum total of primary deposits (i.e. cash deposits) and Secondary Deposits (i.e. deposits which arise due to loans).

False, The higher the value of the Legal Reserve Ratio, the lower the value of the money multiplier, and less money is created by the banking system. Explanation:- Credit or Money Multiplier is inversely related to LRR. Credit (Money) Multiplier…