22 - Monetary Policy of Reserve Bank of India

Banking Awareness Multiple Choice Questions (MCQs) and Answers with explanation on Monetary Policy of Reserve Bank of India for IBPS Bank PO, IBPS Bank Clerical, RRB PO and Clerical, SBI PO and SBI Clerical, IBPS Recruitments, RBI Grade B and RBI Bank

1. What happens when CRR is increased?

[A] It decreases money supply
[B] It increases demand for money
[C] It decreases inflation
[D] All of the above

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2. Which of the following counts under SLR?

[A] Cash in Hand
[B] Gold owned by the bank
[C] Balance with RBI
[D] All of the above

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3. What do we call the rate at which the Reserve Bank of India lends money to commercial banks?

[A] Repo rate
[B] Reverse repo rate
[C] CRR
[D] SLR

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4. Who is the chairperson of the Monetary Policy committee of India?

[A] Finance Minister
[B] Prime Minister
[C] RBI Governor
[D] Chief Economic Advisor

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5. What do we call the instruments of monetary policy which directly affect the quantity of money supply?

[A] Quantitative instruments
[B] Qualitative instruments
[C] Money instruments
[D] None of the above

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6. Which of these is a quantitative instrument of Monetary Policy?

[A] Repo rate
[B] CRR
[C] SLR
[D] All of the above

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7. What do we call the funds that the banks keep with RBI as a portion of their Net Demand and Time Liabilities?

[A] Statutory Liquidity Ratio
[B] Cash Reserve Ratio
[C] Bank Rate
[D] Reverse Repo Rate

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8. What is meant by Open Market Operations?

[A] Purchase and sale of the Government Securities by RBI
[B] Rationing of the credit allocated by commercial banks by RBI
[C] Request by the RBI to the commercial banks to take certain measures
[D] None of the above

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9. What do we call the official interest rate at which RBI provides loans to the banking system?

[A] Reverse repo rate
[B] Bank rate
[C] SLR
[D] CRR

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10. What was the first Narsimham Committee’s recommendation regarding the SLR?

[A] to bring it down from 38.5% to 25%
[B] to bring it up from 38.5% to 45%
[C] to bring it down from 38.5% to 25%
[D] None of the above

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