Money and Banking Overview

False (B)

Anything which is generally acceptable as a medium of exchange.

<p>money supply</p> Signup and view all the answers

<p>M1 = CC + DD + OD + other deposits with RBI of foreign institutions M2 = M1 + saving deposit with post office M3 = M2 + Net Time Deposit with commercial bank M4 = M3 + saving deposit with post office (excluding NSC and National Saving Cert)</p> Signup and view all the answers

<p>Holds accounts for each commercial bank to settle transactions (A)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>Lending rates increase.</p> Signup and view all the answers

<p>repo</p> Signup and view all the answers

<p>Bank Rate = Loans for long-term borrowings Repo Rate = Loans for short-term borrowings Reverse Repo Rate = Depositing excess funds with central bank Open Market Operation = Buying and selling of government securities by central bank</p> Signup and view all the answers

<p>Sell government securities (C)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>It discourages them from taking loans.</p> Signup and view all the answers

<p>Cash Reserve Ratio (A)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>To determine the difference between the value of securities offered and the amount loan granted.</p> Signup and view all the answers

<p>goods</p> Signup and view all the answers

<p>Inflation of currency (C)</p> Signup and view all the answers

<p>CRR = Percentage of deposits maintained with the central bank SLR = Percentage of deposits banks maintain with themselves Moral suasion = An appeal to banks to comply with policies Selective credit control = Regulating loans granted for various reasons</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>Increasing the credit availability or relaxing the lending criteria.</p> Signup and view all the answers

<p>Accepting deposits and granting loans (B)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>Liquidity Reserve Ratio</p> Signup and view all the answers

<p>currency</p> Signup and view all the answers

<p>20000 (C)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>1/LRR</p> Signup and view all the answers

<p>Bank of Note Issue = Controls money supply and maintains currency value Banker to the Government = Receives and pays government money Custodian of Foreign Exchange Reserve = Holds foreign reserves in the country Lender of Last Resort = Provides financial assistance to failing banks</p> Signup and view all the answers

A service where transactions between banks are settled by the central bank through a single entry.

The central bank holds a percentage of commercial banks' net deposits as reserves.

The interest rate at which the central bank lends to commercial banks for long-term borrowings.

The rate at which the central bank lends to commercial banks for short-term borrowings.

The rate at which commercial banks park their excess funds with the central bank.

The buying and selling of government securities by the central bank in the open market.

Policy tool focusing on controlling the amount of money in circulation.

Policy tool aimed at controlling the types of credit available.

A financial requirement for banks to hold a percentage of deposits with the central bank and themselves.

Cash Reserve Ratio is the percentage of net deposits that banks must maintain with the central bank.

Statutory Liquidity Ratio is the percentage of net deposits that banks must keep in liquid assets.

The difference between the value of securities and the amount loaned by banks.

Persuasion by the central bank to influence banks' behavior according to policy.

Central bank measures to manage which loans banks grant to control money supply.

An economy where goods are directly exchanged for other goods without money.

A situation in barter where both parties want what the other has.

An asset that maintains its value over time, allowing it to be saved and retrieved later.

An agreement to pay for goods or services at a later date.

Currency that a government has declared to be legal tender but has no intrinsic value.

The total amount of money available in an economy at a specific time.

Financial institutions that accept deposits and grant loans to earn profits.

The process by which banks generate more credit than their initial deposits.

The percentage of deposits that banks must hold as reserves.

The factor indicating how much credit can be created from deposits, calculated as 1/LRR.

The apex institution that regulates and directs the entire banking system of a country.

The central bank has the sole authority to issue currency in the country.

The central bank manages and holds the country's foreign exchange reserves.

The role of the central bank to provide funds to troubled banks during financial hardships.