Monetary Policy and Central Banking

Economics ⇒ Government and the Economy

Monetary Policy and Central Banking starts at 11 and continues till grade 12. QuestionsToday has an evolving set of questions to continuously challenge students so that their knowledge grows in Monetary Policy and Central Banking. How you perform is determined by your score and the time you take. When you play a quiz, your answers are evaluated in concept instead of actual words and definitions used.

See sample questions for grade 12

Define Statutory Liquidity Ratio (SLR).

Describe the process of credit creation by commercial banks with the help of an example.

Describe the process of Open Market Operations and its effect on the money supply.

Describe the role of the Monetary Policy Committee (MPC) in India.

Explain how an increase in SLR affects the lending capacity of commercial banks.

Explain the concept of 'lender of last resort' in the context of central banking.

Explain the difference between expansionary and contractionary monetary policy.

Explain the difference between quantitative and qualitative instruments of monetary policy.

If the RBI increases the Cash Reserve Ratio (CRR), what will be the likely impact on the money supply in the economy? (1) Increase (2) Decrease (3) No Change (4) Cannot be determined

If the RBI wants to control inflation, which of the following actions is it most likely to take? (1) Decrease repo rate (2) Increase CRR (3) Buy government securities (4) Decrease SLR

If the RBI wants to encourage investment and economic growth, which of the following actions is it likely to take? (1) Increase repo rate (2) Increase CRR (3) Decrease repo rate (4) Increase SLR

Open Market Operations refer to: (1) Buying and selling of government securities by RBI (2) Opening new bank branches (3) Issuing new currency notes (4) Regulating foreign exchange rates

Fill in the blank: The ________ Committee is responsible for setting the policy interest rate in India.

Fill in the blank: The ________ policy is used by the central bank to control the supply of money and credit in the economy.

Fill in the blank: The ________ rate is the rate at which the central bank borrows money from commercial banks.

Monetary policy mainly deals with the regulation of ________ supply in the economy.

True or False: An increase in the repo rate by RBI makes borrowing cheaper for commercial banks.

True or False: Open Market Operations can be used to both increase and decrease the money supply in the economy.

True or False: The main aim of expansionary monetary policy is to reduce inflation.

True or False: The RBI can use both direct and indirect instruments to implement monetary policy.