Class 12 Finance MCQ Chapter 3 Credit Control Techniques of the RBI Solutions in English Medium to each chapter is provided in the list so that you can easily browse through different chapters Class 12 Finance MCQ Chapter 3 Credit Control Techniques of the RBI Question Answer and select need one. Class 12 Finance MCQ Chapter 3 Credit Control Techniques of the RBI Solutions Download PDF. AHSEC Class 12 Banking Multiple Choice Solutions.
Class 12 Finance MCQ Chapter 3 Credit Control Techniques of the RBI
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Credit Control Techniques of the RBI
Chapter: 3
| MCQ |
1. What is the primary objective of credit control by the RBI?
(i) To regulate interest rates.
(ii) To stabilize price levels.
(iii) To control the exchange rate.
(iv) To promote international trade.
Ans: (ii) To stabilize price levels.
2. Which of the following is a quantitative credit control technique used by the RBI?
(i) Issue of Directives.
(ii) Bank Rate.
(iii) Credit Rationing.
(iv) Moral Suasion.
Ans: (ii) Bank Rate.
3. The Cash Reserve Ratio (CRR) is a percentage of which of the following?
(i) Net demand and time liabilities (NDTL).
(ii) Total deposits of the bank.
(iii) Bank’s capital.
(iv) Total assets of the bank.
Ans: (i) Net demand and time liabilities (NDTL).
4. Which of the following methods is used by the RBI to influence the total volume of credit in the economy?
(i) Credit Rationing.
(ii) Bank Rate.
(iii) Issue of Directives.
(iv) Moral Suasion.
Ans: (ii) Bank Rate.
5. What is the objective of the RBI’s open market operations?
(i) To buy or sell government securities.
(ii) To regulate inflation.
(iii) To maintain the country’s foreign exchange reserves.
(iv) To control industrial growth.
Ans: (i) To buy or sell government securities.
6. What happens when the RBI increases the Bank Rate?
(i) The cost of borrowing decreases.
(ii) The demand for loans increases.
(iii) The cost of borrowing increases.
(iv) The money supply increases.
Ans: (iii) The cost of borrowing increases.
7. Which of the following is an example of qualitative credit control?
(i) Bank Rate.
(ii) Open Market Operations.
(iii) Issue of Directives.
(iv) Cash Reserve Ratio.
Ans: (iii) Issue of Directives.
8. What is the effect of decreasing the Cash Reserve Ratio (CRR)?
(i) It reduces the credit creation power of banks.
(ii) It increases the credit creation power of banks.
(iii) It decreases the money supply in the economy.
(iv) It has no effect on banks’ operations.
Ans: (ii) It increases the credit creation power of banks.
9. Which of the following is true about the Statutory Liquidity Ratio (SLR)?
(i) It is a percentage of total loans granted by the banks.
(ii) It is the minimum reserve of cash that banks must hold.
(iii) It is a requirement for the RBI to hold gold reserves.
(iv) It regulates the rate of interest charged by banks.
Ans: (ii) It is the minimum reserve of cash that banks must hold.
10. Which of the following methods is used by the RBI to control cyclical fluctuations in business activities?
(i) Bank Rate.
(ii) Open Market Operations.
(iii) Credit Rationing.
(iv) Moral Suasion.
Ans: (ii) Open Market Operations.
11. What is the role of ‘Moral Suasion’ in RBI’s credit control methods?
(i) It involves coercive action against non-compliant banks.
(ii) It encourages banks to comply with RBI’s directives voluntarily.
(iii) It directly influences the interest rates in the economy.
(iv) It involves adjusting the CRR to control credit supply.
Ans: (ii) It encourages banks to comply with RBI’s directives voluntarily.
12. What happens when the RBI sells government securities in the open market?
(i) It increases liquidity in the economy.
(ii) It decreases the cash reserves of the banks.
(iii) It encourages commercial banks to lend more.
(iv) It increases the money supply in the economy.
Ans: (ii) It decreases the cash reserves of the banks.
13. Which of the following is true about Credit Rationing?
(i) It limits the supply of credit to priority sectors.
(ii) It involves increasing the cash reserve ratio of banks.
(iii) It is used to increase liquidity in the banking system.
(iv) It is a method used only during deflationary periods.
Ans: (i) It limits the supply of credit to priority sectors.
14. What does the RBI primarily use the Bank Rate for?
(i) To control the liquidity of foreign exchange.
(ii) To manage the country’s fiscal policies.
(iii) To influence the cost of credit in the economy.
(iv) To directly regulate government spending.
Ans: (iii) To influence the cost of credit in the economy.
15. Which of the following is not a method of credit control used by the RBI?
(i) Bank Rate.
(ii) Cash Reserve Ratio (CRR).
(iii) Direct Taxes.
(iv) Open Market Operations.
Ans: (iii) Direct Taxes.
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