Question : The Central Bank may reduce Cash Reserve Ratio
Option 1: To encourage investment in the economy
Option 2: To decrease the investment in economy
Option 3: To increase the exchange rate
Option 4: To decrease the exchange rate
Correct Answer: To encourage investment in the economy
Solution : To encourage investment in the economy, the Central Bank may Reduce Cash Reserve Ratio. Hence option A is correct
Question : To reduce credit availability in the economy, the Central bank may___
Option 1: Buy securities in the open market
Option 2: Sell securities in the open market
Option 3: Reduce reserve ratio
Option 4: Reduce the repo rate
Question : The central bank may________ to discourage credit in the economy.
Option 1: decrease CRR
Option 2: buy securities in an open market
Option 3: reduce SLR
Option 4: increase bank rate
Question : ___________ is the rate at which the central bank lends money to commercial banks.
Option 1: Repo rate
Option 2: Reverse repo rate
Option 3: Cash reserve ratio (CRR)
Option 4: Statutory liquidity ratio (SLR)
Question : It refers to a system in which foreign exchange rate is determined by market forces in central bank influence the exchange rate.
Option 1: Fixed exchange rate system
Option 2: Flexible exchange rate system
Option 3: Managed floating rate system
Option 4: None of the above.
Question : ___________ is the rate at which the central bank borrows money from commercial banks.
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