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Read the passage given below and answer the questions that follow.
| A change in the rupee-dollar exchange rate represents a change in the external value of the rupee. The value of the rupee, in terms of the dollar, has been falling continuously over a period of time. Since the rupee-dollar exchange rate is determined by the demand for and supply of dollars, it is possible that the value of the rupee will slide further if appropriate measures are not taken. The Reserve Bank of India, in charge of both the internal and external value of the rupee, has repeatedly emphasised maintaining stability in the foreign exchange market. |
- What kind of exchange rate system is being referred to in the passage?
- The value of the rupee, in terms of the dollar, has been falling continuously over a period of time.” Give the economic term for this phenomenon.
- How would this phenomenon affect balance of payments?
- Explain the role of the Reserve Bank of India as custodian of foreign exchange.
- Suggest any two measures to correct adverse balance payments.
Concept: Meaning of Money
Distinguish between:
Cash Reserve Ratio and Statutory Liquidity Ratio
Concept: Central Bank Function - Banker's Bank
Answer the following question.
Explain discounting bills of exchange as one of the functions of the banks.
Concept: Function of Commercial Banks
Answer the following question.
Discuss two qualitative methods of credit control.
Concept: Central Bank Function - Controller of Credit
Differentiate between Cash Credit and Outright Loans.
Concept: Central Bank Function - Controller of Credit
What is meant by the following function of the Central bank:
Clearing house
Concept: Function of Central Bank - Bank of Issue
What is meant by the following function of the Central bank:
Lender of the last resort
Concept: Function of Central Bank - Bank of Issue
Read the given extract carefully and answer the following questions.
| Mr. X wanted to buy an expensive motorcycle for his son but he did not have sufficient money to buy it. He approached a public sector commercial bank for the loan. The bank asked Mr. X to deposit 20% cash of the loan amount and rest 80% of the loan amount was given by the bank. |
- Briefly explain a Commercial Bank.
- What is the regulation of consumer credit in selective credit control?
- Name the bank which controls all the commercial banks and financial institutions in the country.
Concept: Money Creation Or Credit Creation by the Commercial Banking System
Explain Open Market Operations as a measure to control inflation.
Concept: Open Market Operations
Read the passage given below and answer the questions that follow.
|
The Monetary Policy Committee (MPC) increased the repo rate, at which the RBI lends short-term funds to commercial banks, from 6.25 percent to 6.50 percent. This increase in the repo rate is based on the increase in the key rate by 250 bps. The Committee also decided to continue the withdrawal of money supply in the economy. |
- Which function of the central bank is hinted at in the passage given above? (1)
- In which situation does central bank adopt the measure given in the above passage? (1)
- Explain any two monetary measures that can be used to accomplish a similar objective, other than the one given in the above passage. (4)
- Differentiate between Reserve Bank of India and Commercial banks by giving any two points. (2)
Concept: Function of Commercial Banks
Answer the following question.
Differentiate between revaluation of currency and appreciation of the currency.
Concept: Concepts of Appreciation
Answer the following question.
Discuss the various components of the current account of the balance of payment.
Concept: Concept of Balance of Payments Account
Briefly explain two reasons for the adverse Balance of Payments in any economy.
Concept: Concept of Balance of Payments Account
How is the rate of exchange determined in a flexible exchange rate system?
Concept: Concept of Foreign Exchange Rate
Why is the demand curve for foreign exchange negatively sloped?
Concept: Concept of Foreign Exchange Rate
Mention any one difference between Balance of Trade and Balance of Payment.
Concept: Concept of Balance of Payments Account
Categorise the following item into Current Account or Capital Account of Balance of Payment of India.
Acquisition of land in India by an American firm
Concept: Concept of Balance of Payments Account
Categorise the following item into Current Account or Capital Account of Balance of Payment of India.
Use of transport by Indian tourists in Dubai
Concept: Concept of Balance of Payments Account
Categorise the following item into Current Account or Capital Account of Balance of Payment of India.
Dividend paid to foreigners on their investment in shares in India.
Concept: Concept of Balance of Payments Account
Categorise the following item into Current Account or Capital Account of Balance of Payment of India.
Loan taken by India from International Monetary Fund (IMF) to cover its BOP deficit
Concept: Concept of Balance of Payments Account
