MCQs
Total Questions : 550
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Answer: Option B. -> High quality liquid assets to net cash outflow amount over a 30 days period
Answer: (b)
The LCR is calculated by dividing an institution (Banks/NBFCs) high-quality liquid assets (for example cash, govt. securities, securities issued or guaranteed by foreign governments etc.) by its total net cash flows, over a 30-day period.
In the background of the IL&FS and HDFL crisis, RBI on 24th May 2019 proposed introducing LCR for large NBFCs to help tackle liquidity issues in the sector.
NBFCs will have to maintain minimum high-quality liquid assets of 50% of total net cash outflows over the following 30 calendar days starting from Dec 1, 2020, and from Dec 1, 2024, 100%.
Suppose a bank's expected cash outflow/spending for the next 30 days is Rs. 150 and cash inflow is expected to be Rs. 50, which means net cash outflow for the next 30-day period is Rs. 100.
In such a case if the bank is holding cash and govt. securities (which are called High-Quality Liquid Assets) of Rs. 60,
then LCR = (High Quality Liquid Asset)/ (Banks Net cash outflow for 30-day period) = Rs. 60/ Rs. 100 = 60%.
Answer: (b)
The LCR is calculated by dividing an institution (Banks/NBFCs) high-quality liquid assets (for example cash, govt. securities, securities issued or guaranteed by foreign governments etc.) by its total net cash flows, over a 30-day period.
In the background of the IL&FS and HDFL crisis, RBI on 24th May 2019 proposed introducing LCR for large NBFCs to help tackle liquidity issues in the sector.
NBFCs will have to maintain minimum high-quality liquid assets of 50% of total net cash outflows over the following 30 calendar days starting from Dec 1, 2020, and from Dec 1, 2024, 100%.
Suppose a bank's expected cash outflow/spending for the next 30 days is Rs. 150 and cash inflow is expected to be Rs. 50, which means net cash outflow for the next 30-day period is Rs. 100.
In such a case if the bank is holding cash and govt. securities (which are called High-Quality Liquid Assets) of Rs. 60,
then LCR = (High Quality Liquid Asset)/ (Banks Net cash outflow for 30-day period) = Rs. 60/ Rs. 100 = 60%.
Answer: Option A. -> Money supply will increase
Answer: (a)
Answer: (a)
Answer: Option A. -> Regulation of foreign trade
Answer: (a)
Answer: (a)
Answer: Option A. -> stagnation and inflation
Answer: (a)
Stagflation is a situation of stagnation in which the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high.
Stagflation occurs when the economy isn't growing but prices are, which is not a good situation for a country to be in
Answer: (a)
Stagflation is a situation of stagnation in which the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high.
Stagflation occurs when the economy isn't growing but prices are, which is not a good situation for a country to be in
Answer: Option B. -> Letter of Credit
Answer: (b)
Answer: (b)
Answer: Option B. -> individual banks should adopt particular districts for intensive development
Answer: (b)The basic aim of Lead Bank scheme is that the bank should adopt particular districts for intensive development by offering loans and banking services.
Answer: (b)The basic aim of Lead Bank scheme is that the bank should adopt particular districts for intensive development by offering loans and banking services.
Answer: Option C. -> Velocity of money
Answer: (c)
Answer: (c)
Answer: Option C. -> A currency drain is an increase in currency held outside the banks.
Answer: (c)
Answer: (c)
Answer: Option A. -> Export competitiveness will reduce
Answer: (a)
Suppose Nominal Exchange Rate is $1 = Rs.60
Burger Price - India : Rs. 30, US : $1 Whether India will export burgers to US or not depends on three parameters/prices
Price of Burger in US (directly proportional, i.e. if it increases, exports to US will increase)
Price of Burger in India (indirectly proportional, i.e. if it increases exports to the US $ will decrease)
Nominal Exchange Rate (directly proportional, i.e. if it increases exports to US $ will increase)
And all the three parameters are captured in Real Exchange Rate
Real Exchange Rate = $\text"Price in US X Nominal Exchange Rate"/\text"Price in India"$
= ${1 X 60}/30$ = 2
Till Real Exchange Rate > 1, India will continue to export its burgers to the US. If Real Exchange Rate becomes equal to 1, then export & import will stop. If Real Exchange Rate is < 1, then the US will start exporting its burgers to India. So Real Exchange Rate determines export competitiveness between two countries.
But if India wants to measure its export competitiveness with all its trading partners then it calculates the Real Effective Exchange Rate which is a weighted average (weights being the shares in foreign trade with respective countries) of the Real Exchange Rates of its different trading partners.
If the real effective exchange rate appreciates that means it moves from 2 to 1 (in the example above) which means the export competitiveness of Indian products will start reducing.
Answer: (a)
Suppose Nominal Exchange Rate is $1 = Rs.60
Burger Price - India : Rs. 30, US : $1 Whether India will export burgers to US or not depends on three parameters/prices
Price of Burger in US (directly proportional, i.e. if it increases, exports to US will increase)
Price of Burger in India (indirectly proportional, i.e. if it increases exports to the US $ will decrease)
Nominal Exchange Rate (directly proportional, i.e. if it increases exports to US $ will increase)
And all the three parameters are captured in Real Exchange Rate
Real Exchange Rate = $\text"Price in US X Nominal Exchange Rate"/\text"Price in India"$
= ${1 X 60}/30$ = 2
Till Real Exchange Rate > 1, India will continue to export its burgers to the US. If Real Exchange Rate becomes equal to 1, then export & import will stop. If Real Exchange Rate is < 1, then the US will start exporting its burgers to India. So Real Exchange Rate determines export competitiveness between two countries.
But if India wants to measure its export competitiveness with all its trading partners then it calculates the Real Effective Exchange Rate which is a weighted average (weights being the shares in foreign trade with respective countries) of the Real Exchange Rates of its different trading partners.
If the real effective exchange rate appreciates that means it moves from 2 to 1 (in the example above) which means the export competitiveness of Indian products will start reducing.
Answer: Option B. -> Ways and means advances given by RBI are nowhere related to State’s revenue
Answer: (b)
Answer: (b)