MONEY AND BANKING IN INDIA UPSC PRELIMS MCQS
Q1. Which of the following are included in the definition of Narrow Money?
- Currency with the public
- Demand deposits
- ‘Other’ deposits with Reserve Bank of India
- Banker’s deposits with Reserve Bank of India
Options:
A. 1, 2 and 4
B. 1 and 2 only
C. 1, 2 and 3
D. 3 and 4 only
Answer: (c) 1, 2 and 3
Q2. With reference to the Indian economy, Collateral Borrowing and Lending Obligations are the instruments of:
Options:
A. Bond market
B. Forex market
C. Money market
D. Stock market
Answer: (c) Money market
Q3. What would be the impact on the economy if people start holding more currency in hand and less in deposits? (CDS-II/2023)
Options:
A. Money demand will increase
B. Money multiplier will decrease
C. Money multiplier will increase
D. Money demand will decrease
Answer: (b) Money multiplier will decrease
Q4. An increase in money supply in the economy will lead to (SCRA/2010)
Options:
A. Increase in inflow of FDI
B.Appreciation of domestic currency
C.Increase in prices in the economy
D. None of the above
Answer: (c) Increase in prices in the economy
Q5. The Reserve Bank of India defines narrow money as (CAPF/2018)
Options:
A. CU [currency notes + coins] + DD [net demand deposits held by commercial banks]
B. CU + DD + saving deposits with post office savings banks
C. CU + DD + net time deposits of commercial banks
D. CU + DD + net time deposits of commercial banks + total deposits of post offices
Answer: (b) CU + DD + saving deposits with post office savings banks
Q6. Consider the following:
- Currency with the public
- Demand deposits with banks
- Time deposits with banks
Which of these are included in Broad Money (M3) in India?
A. 1 and 2
B. 1 and 3
C. 2 and 3
D. 1, 2 and 3
Answer: (d) 1, 2 and 3
Q7. The Cash Reserve Ratio refers to (CDS-I/2020)
Options:
A. The share of Net Demand and Time Liabilities that banks have to hold as liquid assets
B. The share of Net Demand and Time Liabilities that banks have to hold as balances with the RBI
C. The share of Net Demand and Time Liabilities that banks have to hold as part of their cash reserves
D. The ratio of cash holding to reserves of banks
Answer: (b) The share of Net Demand and Time Liabilities that banks have to hold as balances with the RBI
Q8. If the Cash Reserve Ratio is lowered by the RBI, supply of money in the economy will: (CAPF/2023)
Options:
A. Remain unchanged
B. Decrease
C. Increase
D. Have ambiguous impact
Answer: (c) Increase
Q9. Which one of the following forms of money supply is considered as the most widely used in the Indian monetary system? (CDS-II/2022)
Options:
A. M1
B. M2
C. M3
D. M4
Answer: (c) M3
Q10. The Reserve Bank of India regulates the commercial banks in matters of (IAS/2013)
- Liquidity of assets
- Branch expansion
- Merger of banks
- Winding-up of banks
Options:
A. 1 and 4 only
B. 2, 3 and 4 only
C. 1, 2 and 3 only
D. 1, 2, 3 and 4
Answer: (d) 1, 2, 3 and 4
