MCQs
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?
- Purchase of government securities from the public by the Central Banks.
- Deposit of currency in commercial banks by the public.
- Borrowing by the government from the Central Bank.
- Sale of government Securities to the public by the Central Bank.
Answer: Option C. -> 1 and 3
Answer: (c)
Answer: (c)
Question 542. Consider the following statements regarding "Real Estate Investment Trusts (REITs):
Select the correct answer using the code given below
- They are regulated by respective Real Estate Regulatory Authorities (RERA) of every State
- It will make the real estate sector accessible to small investors
Select the correct answer using the code given below
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.
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.
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.
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.
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.
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.
Select the correct answer using the code given below:
- There is an international authority with the power to force the use of a particular currency
- There is a basket of currencies which can only be used to settle international transactions
- Currencies which maintain a stable purchasing power are generally accepted
- Freely convertible currencies are generally accepted
Select the correct answer using the code given below:
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.
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.
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.
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.
Answer: Option C. -> National Payments Corporation of India
Answer: (c)
Answer: (c)
Answer: Option B. -> Rupee appreciation results in decrease in imports
Answer: (b)
Answer: (b)
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).
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).
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).
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).