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Total Questions : 550 | Page 55 of 55 pages
Question 541. Which of the following measures would result in an increase in the money supply in the economy?
  1. Purchase of government securities from the public by the Central Banks.
  2. Deposit of currency in commercial banks by the public.
  3. Borrowing by the government from the Central Bank.
  4. Sale of government Securities to the public by the Central Bank.
Select the correct answer using the codes given below.
  1.    2 and 4
  2.    1, 2 and 3
  3.    1 and 3
  4.    1, 2, 3 and 4
 Discuss Question
Answer: Option C. -> 1 and 3
Answer: (c)
Question 542. Consider the following statements regarding "Real Estate Investment Trusts (REITs):

  1. They are regulated by respective Real Estate Regulatory Authorities (RERA) of every State

  2. It will make the real estate sector accessible to small investors


Select the correct answer using the code given below
  1.    (ii) only
  2.    Both (i) & (ii)
  3.    (i) only
  4.    Neither (i) nor (ii)
 Discuss Question
Answer: Option A. -> (ii) only
Answer: (a)
A “Real estate investment trust" is a trust registered under the Indian Trusts Act, 1882 which manages a fund/ corpus where the funds are invested in real estate property.
REITS are mutual fund like institutions that enable investment into the real estate sector by pooling small sums of money from a multitude of individual investors. REITS are regulated by the Securities and Exchange Board of India (SEBI).
Most middle-class investors presently do not invest in commercial real estate because of the big size of the investment. This entry barrier will be removed through REITs as it will make the expensive real estate sector accessible to the middle-class investor (min. investment limit is Rs. 2 lac).
REITS will also help the real estate industry which is currently plagued with problems such as weak demand, cash constraints, stuck projects etc. Now, the developers will be able to sell their property to REITs and move on to the execution of new projects.
SEBI has also approved Infrastructure Investment Trusts (InvITs) along with REITs which are very similar to REITs but are for the infrastructure sector.
Question 543. The price of government securities is influenced by which of the following?

  1. Interest rate in the economy

  2. Liquidity in the market

  3. Developments in forex, money and capital markets


Select the correct answer using the code given below:
  1.    (ii) only
  2.    (i) & (ii) only
  3.    (i) only
  4.    All of the above
 Discuss Question
Answer: Option D. -> All of the above
Answer: (d)
When the interest rate moves up in the economy, government securities (bonds) prices go down. If the liquidity in the economy is surplus, the interest rate comes down in the economy resulting in higher bond prices.
Developments in money, capital and forex markets also impact the interest rates and liquidity in the domestic economy resulting in changes in government securities prices.
Question 544. Which of the following may have an inflationary impact on the economy?

  1. Forex swap

  2. Increase in the inflow of foreign capital

  3. General elections


Select the correct answer using the code given below:
  1.    (ii) only
  2.    (ii) & (iii) only
  3.    (i) only
  4.    All of the above
 Discuss Question
Answer: Option D. -> All of the above
Answer: (d)
In the case of a forex swap, RBI may give rupees to banks and can take dollars, which leads to an increase in rupee liquidity in the economy, resulting in inflation. Of course, forex swaps can also be used to take out the excess liquidity in the economy (RBI giving dollars to banks and taking rupees).
An increase in foreign capital inflow leads to an increase in money supply leading to inflation. General elections lead to higher spending levels by the government increasing inflation.
Question 545. Consider the following statements regarding the transactions happening at the international level for trade and financial flows.

  1. There is an international authority with the power to force the use of a particular currency

  2. There is a basket of currencies which can only be used to settle international transactions

  3. Currencies which maintain a stable purchasing power are generally accepted

  4. Freely convertible currencies are generally accepted


Select the correct answer using the code given below:
  1.    (ii) & (iv) only
  2.    (iii) & (iv) only
  3.    (i) only
  4.    (ii), (iii) & (iv) only
 Discuss Question
Answer: Option B. -> (iii) & (iv) only
Answer: (b)
There is no international authority that directs that trade between two countries should happen only with some specific currencies. Any two countries are free to transact with any currency if they are willing.
Generally, any country will accept that currency for its trade (exports), if that currency is not losing value (less inflation) and it is stable and it is freely convertible in other currencies.
Question 546. The term "Nostro Account" was recently in the news is related to:

  1. It is an account that one bank holds in another bank

  2. It is used to facilitate international transactions


Select the correct answer using the code given below:
  1.    (ii) only
  2.    Both (i) & (ii)
  3.    (i) only
  4.    Neither (i) nor (ii)
 Discuss Question
Answer: Option B. -> Both (i) & (ii)
Answer: (b)
A Nostro account refers to an account that a bank holds in a foreign currency in another bank. Nostro account and Vostro account refer to the same thing from a different perspective.
For example, Bank X has an account with Bank Y in Bank Y's home currency.
To Bank X, that is a Nostro account, meaning "our account on your books," while to Bank Y, it is a Vostro, meaning "your account on our books."
These accounts are used to facilitate foreign exchange and international trade transactions.
Question 547. Which one of the following links all the ATMs in India?
  1.    National Securities Depository Limited
  2.    Reserve Bank of India
  3.    National Payments Corporation of India
  4.    Indian Bank’s Association
 Discuss Question
Answer: Option C. -> National Payments Corporation of India
Answer: (c)
Question 548. Bring out the only incorrect statement:
  1.    Reverse Repo operation by RBI aims at injecting/ increasing liquidity
  2.    Rupee appreciation results in decrease in imports
  3.    SDR refers to special drawing rights
  4.    Increase in inflation rate leads to decline in real interest rate
 Discuss Question
Answer: Option B. -> Rupee appreciation results in decrease in imports
Answer: (b)
Question 549. Name of four institutions that are regulated by the RBI as all-India FIs:
  1. Export Import Bank of India (EXIM Bank)
  2. National Bank for Agriculture and Rural Development (NABARD)
  3. National Housing Bank (NHB)
  4. Small Industries Development Bank of India (SIDBI)
Choose the correct answer.
  1.    3 and 4
  2.    1 and 2
  3.    1, 3, 4
  4.    1, 2, 3, 4
 Discuss Question
Answer: Option D. -> 1, 2, 3, 4
Answer: (d)According to the Economic Survey, there are four Institutions, namely the Export Import Bank of India (EXIM Bank), National Bank for Agriculture and Rural Development (NABARD), the National Housing Bank (NHB) and Small Industries Development Bank of India (SIDBI).
Question 550. _______ deals with long-term finance (more than 365 days) funds. It includes all facilities and institutional arrangements available for borrowing and lending of term funds (including medium-term).

  1. Capital market

  2. Stock market

  3. Debit

  4. Credit


Choose the correct answer.
  1.    2 only
  2.    1 only
  3.    3 only
  4.    4 only
 Discuss Question
Answer: Option B. -> 1 only
Answer: (b)
Capital market deals with long-term finance (more than 365 days) funds.
It includes all facilities and institutional arrangements available for borrowing and lending of term funds (including medium-term).

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