Chapter MCQ Test 2 — Money and Banking

With a legal reserve ratio of 25% and an initial deposit of ₹4,000, the maximum total deposits the banking system can create is:

To fight a recession (slowdown), the RBI should:

Open market operations control the money supply when the RBI:

Raising the CRR reduces credit because it forces banks to:

Banks can create credit only because, in normal times, depositors:

When the RBI raises the repo rate, commercial banks typically respond by:

The RBI acting as 'lender of last resort' means it:

Margin requirements and moral suasion are examples of ____ measures of monetary policy.

Money supply excludes cash held by the government and banks because money supply measures money held by the:

Both monetary policy (RBI) and fiscal policy (government budget) are used to manage the economy. Monetary policy works mainly by changing the: