Economics (Part – XII)

Total Questions: 50

21. Which of the following is used as a primary means of implementing the monetary policy of the Reserve Bank of India? [S.S.C. Online CHSL (T-I) 04.08.2021 (Shift-III)]

(a) Repo rate
(b) Mumbai Interbank Offer Rate
(c) Promissory notes
(d) Call money

Correct Answer: (a) Repo rate

Solution:The repo rate is used as the primary instrument of im-plementing the monetary policy of the Reserve Bank of India. Repo rate is the rate at which the Reserve Bank of India (RBI) provides short term loans to commercial banks. It also affects the credit generating capacity of scheduled banks.

22. When an economy is facing inflation, what will the central bank of the country do? [S.S.C. Online CHSL (T-I) 09.08.2021 (Shift-II)]

(a) Reduce the cost of money by reducing rates
(b) Raise the cost of money by raising rates
(c) Set up more ATMs to help the public
(d) Print more notes

Correct Answer: (b) Raise the cost of money by raising rates

Solution:When the economy is experiencing inflation, the country's central bank will try to address it by increasing the cost of the currency by raising the rate. Inflation causes profit to the borrower and loss to the lender.

23. In which of the following years did the Government of India set up the Monetary Policy Committee? [S.S.C. Online CHSL (T-I) 11.08.2021 (Shift-I)]

(a) 2019
(b) 2008
(c) 2016
(d) 2010

Solution:The Monetary Policy Committee came into force on 27th June 2016. The Monetary Policy Committee is responsible for fixing the benchmark interest rate in India. The meetings of the Monetary Policy Committee are held at least 4 times a year (specifically, at least once a QUARTER) and it publishes its decisions after each such meeting.

24. Which of the following formulas related to monetary and liquidity aggregates is NOT correct? [S.S.C. Online CHSL (T-I) 12.04.2021 (Shift-III)]

(a) M2 = M1 Savings deposits with post office savings banks
(b) M1 = Currency (notes + coins) + Demand deposits
(c) M4 = M3+ Total deposits with post office savings organisations (excluding national savings certificates)
(d) M3 = M1+ Net time deposits of post office savings

Correct Answer: (d) M3 = M1+ Net time deposits of post office savings

Solution:Money supply in India is measured in four measures-

(1) M1 = Currency (Note + Coins) + Demand Deposit,

(2) M2 = M1+ savings deposits with post office savings banks,

(3) M3 = M1+ Net Term Deposits of commercial banks

(4) M4 = M3+Total deposits with Post Office Savings organizations (excluding National Savings Certificates)

Hence it is clear that option (d) is not correct.

25. Which of the following is NOT an instrument of the monetary policy of the Reserve Bank of India? [S.S.C. Online MTS (T-I) 20.10.2021 (Shift-III)]

(a) Liquidity Adjustment Facility (LAF)
(b) Repo Rate
(c) Goods and Services Tax (GST)
(d) Cash Reserve Ratio (CRR)

Correct Answer: (c) Goods and Services Tax (GST)

Solution:The Goods and Services Tax (GST) is not an instru-ment of monetary policy of the Reserve Bank of India, while the Liquidity Adjustment (LAF), the Repo Rate, the Cash Reserve Ratio (CRR), the Statutory Liquidity Ratio (SLR) and the Bank Rate, are the Reserve Bank of India's Monetary policy instruments.

26. The Reserve Bank of India also acted as the central bank for_______ till April, 1947. [SS.C. Online MTS (T-I) 22.10.2021 (Shift-I)]

(a) Sri Lanka
(b) Burma
(c) Nepal
(d) Bhutan

Correct Answer: (b) Burma

Solution:The Reserve Bank of India (RBI) served as the central bank for Burma (Myanmar) until April 1947 and also for Pakistan until June 1948.

27. What is the role of "Ombudsman" in a bank? [S.S.C. Online C.G.L. (T-I) 8.09.2016 (Shift-II)]

(a) To provide quality and speedy redressal of grievances of customers.
(b) To provide suggestions for innovative schemes in the banks.
(c) To inspect the internal working of the branches.
(d) To monitor the poverty alleviation programs undertaken by or implemented by the bank.

Correct Answer: (a) To provide quality and speedy redressal of grievances of customers.

Solution:The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complaints against deficiency in certain banking services covered under the grounds of complaint specified under Clause 8 of the Banking Ombudsman Scheme 2006 (As amended upto July 1, 2017).

28. Open Market Operations conducted by the Reserve Bank of India (RBI) are of______ types. [S.S.C. Online MTS (T-I) 08.07.2022 (Shift-II)]

(a) two
(b) three
(c) five
(d) four

Correct Answer: (a) two

Solution:Open Market Operations (OMOs) conducted by the Reserve Bank of India (RBI) are of two types:

Purchase: In this type of OMO, the RBI buys govern-ment securities from the market and injects liquidity into the system.

Sale: In this type of OMO, the RBI sells government securities to the market and absorbs liquidity from the system

29. _________ is an alphanumeric code that uniquely identifies a bank-branch participating in the NEFT system. [S.S.C. Online C.G.L. (T-I) 18.08.2021 (Shift-I)]

(a) SFMS
(b) STP
(c) RTGS
(d) IFSC

Correct Answer: (d) IFSC

Solution:IFSC is an alphanumeric code that uniquely identifies a bank-branch participating in the NEFT system.

30. Unique Transaction Reference number is a character code used to uniquely identify a trans-action in the RTGS system. [S.S.C. Online CGL (T-I) 13.08.2021 (Shift-I)]

(a) 45
(b) 22
(c) 34
(d) 17

Correct Answer: (b) 22

Solution:Unique Transaction Reference number is a 22 char-acter code used to uniquely identify a transaction in the RTGS system.

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