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Ans – (c) Explanation:- Deposits are liabilities of banks as it belong to the general public Commercial banks create money by offering the loan to the general public and depositing it into a new demand deposit. Commercial banks accept deposits…

Ans – (c) Explanation:- Extending loans to the commercial bank does not come under the supervisor function of the RBI. Extending loans to the commercial bank comes under the credit controlling function of the central bank.

Ans – (a) Solution:- Money Multiplier = 1/LRR Money Multiplier = 1/20% Money Multiplier = 100/20 = 5 times Total Credit Creation = Initial Deposits Money Multiplier Total Credit Creation = 2,000 5 Total Credit Creation = ₹ 10,000

Ans – (b) Explanation:- Banker to the Government:- The Reserve Bank of India acts as a banker, agent, and financial advisor to the Central Government and all the State Governments. As a banker, it carries out all banking business of…

Ans – (b) Explanation:- Fiscal Deficit is the policy of the government to control the money supply in the country. Bank rate and Cash Reserve Ratio are the monetary policy of the reserve bank of india cotnrol the credit creation…

Ans – (b) Explanation:- (a) Statutory Liquidity Ratio is fixed by the Central bank in the case of India by the Reserve Bank of India (b) The Ministry of Finance of Government of India issues 1 rupee note and coins…

Ans – (b) Solution:- If LRR is 25% Money Multiplier = 1/LRR Money Multiplier = 1/25% Money Multiplier = 4 times If LRR is 20% Money Multiplier = 1/LRR Money Multiplier = 1/20% Money Multiplier = 5 times Money Multiplier…

Ans – (c) Explanation:- The Reserve bank of India is authorised to issue the paper current notes except one rupee note. Ministry of Finance is authorized to issue one rupee note and coins of all denominations. The coins issued by…

Ans – (d) Explanation:- Bank Rate is a Quantitative method of the Monetary policy of the RBI to control the money supply. Monetary Policy is the measure taken by the Reserve Bank of India to control the money supply or…

Ans – (b) 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. If the margin fixed by the Central bank is 40%,…