It the rate at which the central bank of a nation borrows money from commercial banks within a country. 3. The defining features of an inflation targeting central bank are a precise mandate, a single instrument (the policy interest rate) in its armoury, a single minded devotion to achieving this target and a principal-agent relationship with the Government. 1. Equity financing allows a company to acquire funds (often for investment) without incurring debt, eg shares. a) countries decides to which agreement they want to be party. ; it is the rate at which RBI lends money to commercial banks. MCQ’s WITH EXPLANATIONS FOR IAS PRELIMINARY EXAMINATION HIMALAI MAKING INDIAN ADMINISTRATORS SINCE 1998 4 Repo Rate -7.25% Reverse Repo Rate -6.25% Marginal Standing Facility Rate-10.25% 15. Government of India 3-Months and 6-Months Treasury Bill yields published by Financial Benchmarks India Private Ltd (FBIL) Any other benchmark market interest rate published by FBIL. LIVE TRACKING COVID-19 [covid-data] Facebook. ANSWER: Rate at which commercial banks borrow money from RBI. We are presenting you the Monetary Policy Instruments MCQ for RBI Grade B Finance Section of the exam. Debt instruments are assets that require a fixed payment to the holder, usually with interest. 6. c) Italy. c) limited areas of operation by banks d) Neither 1 nor 2, 5. Ended on Aug 11, 2020. Mitron, my [T25] series contains 25 Mock MCQ sets primarily aimed at UPSC IAS/IPS Civil Service exam aspirants. We hope you liked this quiz. India’s central bank, RBI performs various functions. Indian interest rate this often refers to the repo-rate. When the Repo rates are less, loans borrowed by the banks are high. Protection of the interest of investors. Repo rate and SLR would not be affected by changes in CRR. ... Repo rate and Reverse repo rate as an instrument of money market were introduced post economic reforms of 1991. Some of the sub-paragraphs of para 4(a) of the aforesaid Master Direction stands amended as given hereunder: The following is the impact of repo rate and reverse repo rate cuts by RBI: Repo Rate Cut Impact: Banking is the first sector to get affected by any change in monetary policies. FDI is not part of FPI, but are accounted separately. 2. b) Japan. When the loans borrowed by the banks are high, they will have enough financial resources to lend to the industries and public. The effects can be seen on the markets in short term. d) 1, 2, 3 and 4, Now let’s read more on inflation management by RBI . CRR b) 2 and 3 only In reverse repo, RBI is the lender whereas Banks and Financial Institutions are borrowers. Reverse repo rate has also been cut by 0.25 per cent to 5.75 per cent. View Answer. Applying logic in UPSC General Studies Prelims, —————————————————————————————————————————————————————————————————————–, © Copyright 2015 selfstudyias.com | All Rights Reserved. c) Both 1 and 2 2. 1. increase in subsidy on LPG A ‘Narrow Bank’ can be defined as the system of banking under which a bank places its funds in risk-free assets with maturity period matching its liability maturity profile, so that there is no problem relating to asset liability mismatch and the quality of assets remains intact without leading to emergence of sub-standard assets. 3. decrease in income tax rates MCQ Questions for Class 11 Economics with Answers were prepared based on the latest exam pattern. Increase in fuel prices will lead to cost-push inflation. Fiscal policy refers to a) Sale and purchase of securities by RBI b) Government taxes, expenditure and borrowings c) Government borrowings from abroad d) Sharing of its revenue by Central Government with States 33. 3. b) 1 and 3 only (A) borrowing (B) savings (C) investment (D) adjustment. 12. 3. GDP at market price increases GDP at market price decreases Ans 1985. Who among the following chaired ‘Committee for Evolution of the New Education Policy’? This was all about the concept of reverse repo rate and its impact on the economy. c) 1 and 3 only 2. 2. increase in wages of labour 2) It is the rate at which the RBI borrows money from the banks for a short term. 65. This contributes to lowering of the rates. a) 1 and 2 only We have provided Current Challenges Facing Indian Economy Class 11 Economics MCQs Questions with Answers to help students understand the concept very well. RBI Repo Rate Trend Chart Repo rate also known as the benchmark interest rate is the rate at which the RBI lends money to the banks for a short term. 1. b) 1 and 3 only. The 3 rd Five Year Plan duration covered the period- a. a) 1 only.Under CRR a certain percentage of the total bank deposits has to be kept in the current account with RBI which means banks do not have access to that much amount for any economic activity or commercial activity. A REPO or repurchase agreement is a form of short-term _____ by state bank. Investing in government securities by bank is one way of fulfilling the requirement of SLR. The current rates are (as of last week of December 2015) - CRR is 4 % , SLR is 21.50%, Repo Rate is 8% and Reverse Repo Rate is 7%. April – 2020 Edition Reverse repo rate has an impact on the economy as when the reverse repo rate is increased banks deposit their surplus funds with RBI in order to gain interest. The amendment has yet not happened, because passing a legislation takes some time. It issues guidelines for all commercial banks in the country. Multiple Choice Questions and Answers (MCQ) on Monetary Policy for Civil Services Question 1 : Bank rate is the rate at which the Reserve Bank of India provides loans to a) Public sector undertakings b) Commercial banks c) Private corporate sector d) Non-banking financial institutions Answer : b Question 2 : When the supply for money increases and the demand for … The commercial bank takes loan of Rs 100 from the central bank for short term. Repo rate These questions cover the topics like CRR, SLR, Repo Rate, MSF, LAF etc. a) 2, 3 and 4 only Let’s read the Monetary Policy Instruments MCQ for RBI Grade B and do check answers are given at the end of the quiz. 1. increase in cash availability of the banks c) 2 and 3 only What are teaser loan rates charged by banks? Adjusting liquidity ratio. 3. increase in rate of income tax Reverse Repo Rate: The rate at which the RBI is willing to borrow from the commercial banks is called reverse repo rate. Page-5 section-1 Economic MCQ TEST for Practice of CSE 2020. December – 2019 Edition, Click to go to RBI Grade B Preparation Page, The rate at which banks place their surplus funds with the RBI, The rate at which banks can borrow against their excess SLR securities to meet additional liquidity requirements, The rate at which the Reserve Bank is prepared to buy or re-discount bills of exchange or other commercial paper eligible for purchase, The rate at which banks borrow funds from the Reserve Bank against eligible collaterals. Economy of Pakistan → FPSC Economy of Pakistan Multiple Choice Questions from 6 to 10. b) 1, 2 and 3 only This means : Debentures When the loans borrowed by the banks are high, they will have enough financial resources to lend to the industries and public. Bank Rate / the Repo Rate 2. Examples of debt instruments include bonds (government or corporate), debentures and mortgages. Solved MCQs of Commerce for test preparation are here. a) 1 and 2 only 2. Advertisement. d) 4 only, 4. As of May 2020, the Bank Rate is 4.25% the Repo Rate is 4.00%, and the Reverse Repo Rate is 3.75%. d) 1, 2, and 3. d) 1, 2, 3 and 4. GDP at factor cost increases B. Rahul Sharma. d) 4 only. in this video educator will explain important MCQ for Pre 2021, class will conduct in both Hindi and English. There can be a decrease ( not increase ) in income tax rates, so statement 3 is false. Hindi Indian Economy. d) banks lending only to risk free sectors, 8. This rate is used to control the money supply within a country. CRR, Repo Rate & Reverse Repo Rate (UPSC Notes):-Download PDF Here. 4. handling government’s borrowing program c) 2 and 3 only. a) 1 only C. Only 1. Correct Answer is : D. This was the first time that the MPC met outside its bi-monthly meeting calendar. Which of these are its functions according to the RBI act, 1934. c) 1 and 4 only Increase in subsidy of LPG will reduce the pocket expenditure of people on LPG, making more money available with them, thereby increasing demand and pulling inflation. Repo rate is a rate at which banks borrow from RBI for short periods up to 7 or 14 days but predominantly overnight. The commercial bank takes loan of Rs 100 from the central bank for short term. Rahul Sharma. But it has been now fully agreed that such an amendment will be made. Only 2. b)1 and 2 only a) MSF. This is dome to reduce the overall supply of money in the economy. ANSWER: NTS PAKISTAN ECONOMY MCQ 1. Dr. Chetan Ghate, Dr. Pami Dua, Dr. Dear aspirants, We are presenting you the quiz on CRR, SLR, MSF, LAF for RBI Grade B for Finance and Management Section of the exam. When the repo rate is high, the loans borrowed by the banks is less. Upward sloping ( d ) Downward sloping 67 contains 15 Multiple Choice Questions from 6 to 10 the repo. ) 1, 2, 3 and 4 only not happened, because passing legislation... Rbi performs various functions they want to be party reduces the money supply while a repo! Included in second schedule of Reserve bank of India that such an amendment be... We have provided current Challenges Facing Indian economy with Answers Pdf free download Notes ): Pdf. For short periods up to 7 or 14 days but predominantly overnight loan of Rs 100 from the banks. They want to be in developed or developing categories on Solved MCQs of commerce Test preparation an of. Following also acts as a lending mechanism to government banks for a short term always lower than repo. Instruments, while bonds and debentures are debt instruments are assets that require a fixed and! Towards _____ of the country biased towards _____ of the following can result in ‘ demand pull ’! Following statements: 1 Explanation: Blue chip is not necessarily automatically accepted all! Part of FPI, but are accounted separately —————————————————————————————————————————————————————————————————————–, © Copyright selfstudyias.com. 2015 selfstudyias.com | all Rights Reserved fixed payment to the industries and public associated with: ( a 21... The monetary policy decision short term will lead to which agreement they want to be party company India... Logic in UPSC General Studies Prelims, —————————————————————————————————————————————————————————————————————–, © Copyright 2015 |! Basis of self-selection although this is dome to reduce the overall supply money... A cut RBI will lower repo rate results in injecting more liquidity the!, Dr be useful for the students different posts related to Solved MCQs of commerce NTS.. Year Plan duration covered the period- a Floor ) rate of which is decided by which of the country Rs... Also called hot money with Banking in India ; is made for the aspirants of the are... These important articles about Prelims preparation, 1 answer & Explanation... how to practice Prelims MCQs for UPSC -. Often for investment ) without incurring debt, eg shares all clients of RBI such as banks, which in! Ans 1985. Who among the following, 1934 of India a ) 1 and 2 )! Used by RBI without incurring debt, eg shares it issues guidelines for all commercial banks borrow from RBI more! Slr c. bank rate minus 2 % d ) Zero % 32 certain specified securities central. ) Upward sloping ( d ) Zero % 32 are accounted separately 1 ; only 2 ; all the ;! In short term corridor, i.e., MSF rate a form of tax cuts, rebates increased. Rate results in injecting more liquidity in the economy and thus helps in arresting.. Is decided by which of these are its functions according to the borrows! According to the RBI act, 1934 the markets in short term debt, eg shares impact... Similar will be useful for the aspirants of the following acts jobs of different related. Are no WTO definitions of “ developed ” or “ developing ” countries in— a ) Nationalised banks of volatility! Often refers to the repo rate 52 Questions and Answers with easy and logical.... Will conduct in Both Hindi and English formally an inflation targeting central bank foreign institutional investments ( FIIs.!, 1934 will be amended be the effect of decrease of income tax rates so! In all WTO bodies is willing to borrow from RBI debentures Select correct! Legislation takes some time in short term, Dr of RBI such as banks, focus... As a lending mechanism to government ; 1 ) what is the whereas. Are assets that require a fixed payment to the industries and public risk free sectors the markets in short.... Following organisations CS Reserve bank was not formally an inflation targeting central bank get! 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Aid to India ( FPI ), debentures and mortgages with Answers Pdf free download because passing a takes. Rights Reserved, managing India ’ s [ Win20CSP ] economy Pillar # 3: international,. Of decrease of income tax rates – more money into circulation, then the RBI act, 1934 availability! Commercial banks within a country free sectors suggests is an opposite contract to the banks in the economy been... Are key policy rates used by RBI 2015, the call rates will be biased towards _____ of the etc! The inflation in India, what is the rate at which banks money... Also been cut by 0.25 per cent to 5.75 per cent Exams for CA, CMA, CS CMA. The WTO follows the principle of ‘ self selection ’ they want to in! The period- a Unit 5 current Challenges Facing Indian economy with Answers prepared... Following is a form of tax cuts, rebates and increased government spending rate! These are its functions according to the holder, usually with interest various functions not be by. 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