12th Class Economics Money And Banking Question Bank

done Assertion - Reason - Banking Total Questions - 12

• question_answer1)

  Directions : Read the following statements:

  Assertion (A) and Reason (R). Choose one of the correct alternative.

  Assertion (A):RBI is the lender of the last resort.

  Reason (R):Because when commercial banks fail to get money from anywhere they approach the Central bank and Central Bank gives financial help to them.

  A)
  Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). done clear
  B)
  Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A). done clear
  C)
  Assertion (A) is true but Reason (R) is false. done clear
  D)
  Assertion (A) is false but Reason (R) is true. done clear
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• question_answer2)

  Directions : Read the following statements:

  Assertion (A) and Reason (R). Choose one of the correct alternative.

  Assertion (A):RBI decreases the cash reserve ratio to increase the flow of credit in the economy.

  Reason (R):Because it decreases the credit giving capacity of commercial banks.

  A)
  Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). done clear
  B)
  Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A). done clear
  C)
  Assertion (A) is true but Reason (R) is false. done clear
  D)
  Assertion (A) is false but Reason (R) is true. done clear
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• question_answer3)

  Directions : Read the following statements:

  Assertion (A) and Reason (R). Choose one of the correct alternative.

  Assertion (A):NABARD is the apex bank.

  Reason (R):RBI does not deal directly with the public.

  A)
  Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). done clear
  B)
  Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A). done clear
  C)
  Assertion (A) is true but Reason (R) is false. done clear
  D)
  Assertion (A) is false but Reason (R) is true. done clear
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• question_answer4)

  Directions : Read the following statements:

  Assertion (A) and Reason (R). Choose one of the correct alternative.

  Assertion (A):RBI is the banker of all commercial bank of the country.

  Reason (R):Holds a part of cash reserves of banks.

  A)
  Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). done clear
  B)
  Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A). done clear
  C)
  Assertion (A) is true but Reason (R) is false. done clear
  D)
  Assertion (A) is false but Reason (R) is true. done clear
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• question_answer5)

  Directions : Read the following statements:

  Assertion (A) and Reason (R). Choose one of the correct alternative.

  Assertion (A):Credit multiplier is inversely related to legal reserve ratio.

  Reason (R):Greater the LRR, lower the credit multiplier.

  A)
  Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). done clear
  B)
  Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A). done clear
  C)
  Assertion (A) is true but Reason (R) is false. done clear
  D)
  Assertion (A) is false but Reason (R) is true. done clear
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• question_answer6)

  Directions : Read the following statements:

  Assertion (A) and Reason (R). Choose one of the correct alternative.

  Assertion (A):Commercial banks create credit in the economy.

  Reason (R):Commercial banks create credit on the basis of demand deposits.

  A)
  Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). done clear
  B)
  Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A). done clear
  C)
  Assertion (A) is true but Reason (R) is false. done clear
  D)
  Assertion (A) is false but Reason (R) is true. done clear
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• question_answer7)

  Directions : Read the following statements:

  Assertion (A) and Reason (R). Choose one of the correct alternative.

  Assertion (A):Qualitative measures regulate the direction of credit.

  Reason (R):It includes moral suasion, rationing of credit, margin requirement, etc.

  A)
  Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). done clear
  B)
  Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A). done clear
  C)
  Assertion (A) is true but Reason (R) is false. done clear
  D)
  Assertion (A) is false but Reason (R) is true. done clear
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• question_answer8)

  Directions : Read the following statements:

  Assertion (A) and Reason (R). Choose one of the correct alternative.

  Assertion (A):Quantitative measures regulates the volume of credit.

  Reason (R):It includes bank rate, open market operation, CRR, SLR, etc.

  A)
  Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). done clear
  B)
  Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A). done clear
  C)
  Assertion (A) is true but Reason (R) is false. done clear
  D)
  Assertion (A) is false but Reason (R) is true. done clear
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• question_answer9)

  Directions : Read the following statements:

  Assertion (A) and Reason (R). Choose one of the correct alternative.

  Assertion (A):CRR and SLR are one and the same thing.

  Reason (R):In CRR, banks keep reserve with RBI whereas in SLR banks keep reserve with themselves in the form of liquid assets like gold.

  A)
  Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). done clear
  B)
  Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A). done clear
  C)
  Assertion (A) is true but Reason (R) is false. done clear
  D)
  Assertion (A) is false but Reason (R) is true. done clear
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• question_answer10)

  Directions : Read the following statements:

  Assertion (A) and Reason (R). Choose one of the correct alternative.

  Assertion (A):Increase in margin requirement decreases the flow of credit in the economy.

  Reason (R):Increase in margin requirements increases the credit giving capacity of commercial banks.

  A)
  Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). done clear
  B)
  Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A). done clear
  C)
  Assertion (A) is true but Reason (R) is false. done clear
  D)
  Assertion (A) is false but Reason (R) is true. done clear
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• question_answer11)

  Directions : Read the following statements:

  Assertion (A) and Reason (R). Choose one of the correct alternative.

  Assertion (A):Higher the legal reserve ratio, lower will be the credit creation and lower the legal reserve ratio, higher will be the credit creation.

  Reason (R):Money/deposit multiplier is a multiple by which total deposits increase due to primary deposits. If refers to the amount by which the initial deposits multiply into a large amount of final deposits.

  Money Multiplier \[=\frac{1}{LRR/RDR}\](LRR = legal Reserve Ratio, RDR = Reserve Deposit Ratio)

   
  A)
  Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). done clear
  B)
  Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A). done clear
  C)
  Assertion (A) is true but Reason (R) is false. done clear
  D)
  Assertion (A) is false but Reason (R) is true. done clear
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• question_answer12)

  Directions : Read the following statements:

  Assertion (A) and Reason (R). Choose one of the correct alternative.

  Assertion (A):To boost the failing demand in the economy, Reserve Bank of India recently reduced Repo Rate and Bank Rate.

  Reason (R):Decrease in Repo Rate and Bank Rate causes decrease in the rate of interest which leads to rise in demand of credit because of which more money flows into the system, purchasing power of people increases. Thus, aggregate demand rises and deficient demand is corrected.

  A)
  Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). done clear
  B)
  Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A). done clear
  C)
  Assertion (A) is true but Reason (R) is false. done clear
  D)
  Assertion (A) is false but Reason (R) is true. done clear
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