Money and Financial System CDS Questions

CDS Economy

Money and Financial System MCQ Questions


13.
What is the relationship between interest rates and demand for money?
A.
Higher interest rates increase demand for money
B.
Lower interest rates decrease demand for money
C.
Higher interest rates decrease demand for money
D.
Interest rates do not affect demand for money
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ANSWER :
C. Higher interest rates decrease demand for money
14.
What is the full form of RBI?
A.
Reserve Bank of India
B.
Regional Bank of India
C.
Royal Bank of India
D.
Registered Bank of India
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ANSWER :
A. Reserve Bank of India
15.
What is the money multiplier effect?
A.
Increase in money supply through loans
B.
Decrease in money supply through withdrawals
C.
Control of money supply by central bank
D.
Stabilization of currency value
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ANSWER :
A. Increase in money supply through loans
16.
What is the purpose of open market operations?
A.
To issue currency
B.
To regulate money supply
C.
To manage bank liquidity
D.
To monitor inflation
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ANSWER :
B. To regulate money supply
17.
Which tool is used by the RBI to encourage banks to lend more?
A.
Increasing CRR
B.
Decreasing SLR
C.
Raising repo rate
D.
Issuing government bonds
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ANSWER :
B. Decreasing SLR
18.
Which of the following is an example of broad money?
A.
M1
B.
M2
C.
M3
D.
M4
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ANSWER :
C. M3