Question : Which among the following statements is incorrect?
Option 1: An increase in the bank rate will decrease the money supply.
Option 2: The lower the Cash Reserve Ratio (CRR), the lower will be the liquidity in the system.
Option 3: The higher the Cash Reserve Ratio (CRR), the lower the liquidity in the system.
Option 4: The lower the Statutory Liquidity Ratio (SLR), the higher the liquidity in the system.
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Correct Answer: The lower the Cash Reserve Ratio (CRR), the lower will be the liquidity in the system.
Solution : The correct option is The lower the Cash Reserve Ratio (CRR), the lower will be the liquidity in the system.
The Reserve Bank of India (RBI) has mandated that all commercial banks adhere to the specific Cash Reserve Ratio (CRR) guidelines that are sent to each bank. There would be little liquidity in the economy when the CRR rate for the amount held with the RBI is high. The relationship between the CRR and the RBI is as follows: the smaller the CRR that is held with the RBI, the greater the total liquidity of the economy.
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Question : Which of the following statements is incorrect?
Option 1: Fiat money is issued without any backing of an equivalent amount of gold or silver
Option 2: The money Multiplier is the ratio of the money supply to the reserve money
Option 3: In Time Deposits, money can be withdrawn only after maturity or with a penalty before maturity
Option 4: Vault cash is also a part of the money supply
Question : The cash reserve ratio(CRR) is a tool to control the money supply through which measure I. Qualitative II. Quantitative
Option 1: Only II
Option 2: Only I
Option 3: Neither I nor II
Option 4: Both I and II
Question : _____________is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks of the country.
Option 1: Reserve Repo Rate
Option 2: Base Rate
Option 3: Marginal Rate
Option 4: Repo Rate
Question : The minimum rate below which banks are not allowed to lead money except in cases specified by the Reserve Bank of India is called ______.
Option 1: repo rate
Option 2: reverse repo rate
Option 3: cash rate
Option 4: base rate
Question : If the birth rate of a country is more than the death rate then the population will ___________.
Option 1: decrease by 50%
Option 2: decrease gradually
Option 3: increase
Option 4: remain constant
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