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In order to encourage investment in the economy, the central bank may ______.
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Bank rate is the rate at which:
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The process of buying and selling of securities by the central bank of a country is known as ______.
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Match the following and select the correct option:
| Column A | Column B | ||
| (i) | A rate of interest at which the central bank (RBI) lends money to member commercial banks to meet they long term needs. | A. | Cash Reserve Ratio |
| (ii) | A rate of interest at which RBI lends money to commercial banks to meet their short term needs. | B. | Statutory liquidity ratio |
| (iii) | A minimum percentage of total deposits kept by banks with the Central Bank. | C. | Repo rate |
| (iv) | A minimum percentage of total deposits to be kept by banks inform of liquid assets with themselves. | D. | Bank rate |
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Observe the relationship of the first pair of words and complete the second pair.
Quantitative method of credit control by the central bank : Bank rate.
Quantitative method of credit control by the central bank :
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During inflation, the central bank usually:
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Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Increase in cash reserve ratio adversely affects the capacity of commercial banks to create credit.
Reason (R): An increase in cash reserve ratio reduces the excess reserves of commercial banks and hence limits their credit creating power.
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Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Bank rate is a quantitative instrument of monetary policy.
Reason (R): During inflation, RBI reduces the bank rate.
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Give any two reasons as to why a country needs a central bank.
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What is meant by open market operations?
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Define the term Statutory Liquidity Ratio.
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State the impact of an increase in Cash Reserve Ratio on loanable funds.
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Differentiate between quantitative and qualitative methods of credit control.
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Define the following term:
Cash Reserve Ratio.
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Define the following term:
Margin Requirements.
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Briefly explain the following credit control method adopted by the Central Bank.
Publicity
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Briefly explain the following credit control methods adopted by the Central Bank.
Moral persuasion
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Central bank is the lender of the last resort. Explain.
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The Central Bank is the apex monetary institution of the country. Explain its role of a custodian of foreign exchange reserves.
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Explain the following function of the central bank of a country.
Fixation of margin requirement on secured loans.
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