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Chapters
1: Elementary Theory of Demand
2: Elasticity of Demand
3: Theory of Supply
Unit II - Factors of Production : Basic Concepts
4: Factors of Production
Unit III - Alternative Market Structures : Basic Concepts
5: Nature and Structure of Markets
Unit IV - The State and Economic Development
6: The State and Economic Development
Unit V - Money and Banking : Basic Concepts
7: Meaning and Functions of Money
8: Commercial Banks
▶ 9: Central Banks
10: Inflation
![Goyal Brothers Prakashan solutions for Economic Application [English] Class 10 ICSE chapter 9 - Central Banks - Shaalaa.com](/images/economic-application-english-class-10-icse_6:4ae302fabf354f56a3e776b0889e746c.jpg "Goyal Brothers Prakashan solutions for Economic Application [English] Class 10 ICSE chapter 9 - Central Banks")
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Solutions for Chapter 9: Central Banks
Below listed, you can find solutions for Chapter 9 of CISCE Goyal Brothers Prakashan for Economic Application [English] Class 10 ICSE.
Goyal Brothers Prakashan solutions for Economic Application [English] Class 10 ICSE 9 Central Banks QUESTIONS [Pages 211 - 216]
Multiple Choice Questions
In India, the Reserve Bank of India. (The central bank of the country) was nationalised in ______.
1949
1955
1969
1980
The main advantage of giving the monopoly right of note issue to the central bank is that it ______.
Brings uniformity
Increases public confidence
Exercises better control over the money supply
All of the above
______ is the main function of central bank.
Credit creation
Accepting deposits from public
Note issue
None of these
Identify which of the following is not the function of the central bank?
Banking facilities to government.
Banking facilities to public.
Lendings to government.
Lendings to commercial banks.
Identify which of the following is not a function of the Reserve Bank of India?
To act as the banker to the Government of India.
To act as the custodian of the gold reserve of India.
To act as the financial advisor to the Government of India
To issue coins and one rupee note.
The central bank controls credit _____ .
Through quantitative methods only.
Through qualitative methods only.
Both through quantitative methods and through qualitative methods.
Neither through quantitative methods nor through qualitative methods.
______ is a quantitative method of credit control.
Bank rate
Cash reserve ratio
Credit rationing
Both Bank rate and Cash reserve ratio
Which of the following is not a quantitative method of credit control?
Open market operation
Margin requirements
Variable reserve ratio
Bank rate policy
Which of the following is not a function of a commercial bank?
Accepting deposits from public
Note issue
Giving loans
Credit creation
The central bank acts as ______.
Banker's bank
Banker to government
Both Banker's bank and Banker to government
Neither Banker's bank nor Banker to government
In order to encourage investment in the economy, the central bank may ______.
Reduce cash reserve ratio
Increase cash reserve ratio
Sell government recruiters in open market
Increase in bank rate
The monetary policy generally targets to ensure ______.
Price stability in the economy
Employment generation in the country
Stable foreign relations
Greater tax collections for the government
Bank rate is the rate at which:
Commercial banks purchase government securities from the central bank.
Commercial banks can take loans from the central bank for a short term.
Short-term loans are given by commercial banks.
Commercial bank take loans from the public.
The process of buying and selling of securities by the central bank of a country is known as ______.
Margin Requirement
Open Market Operations
Cash Reserve Ratio
Statutory Liquidity Ratio
A Central Bank is an apex institution in the banking structure of a country.
True
False
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 |
(i) C, (ii) B, (iii) D, (iv) A
(i) D, (ii) C, (iii) A, (iv) B
(i) C, (ii) D, (iii) B, (iv) A
(i) B, (ii) A, (iii) C, (iv) D
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 :
Repo rate
Open market operation
Cash reserve ratio
Margin requirement
Which of the following statements are true?
- The Reserve Bank of India is the central bank of the country.
- All currency notes (except one rupee note) bear the signature of Governor, RBI.
- The objective of the Reserve Bank of India is to earn profit.
Only (i) and (ii)
Only (i) and (iii)
Only (ii) and (iii)
All of the above
During inflation, the central bank usually:
Decreases bank rate
Decreases cash reserve ratio
Increases bank rate
Buys government securities
The rate of which commercial banks borrow from the Central Bank is the:
Bank rate
Deposit rate
Lending rate
None of these
The difference between the value of security and the amount of loan sanctioned against these securities is known as:
Credit rationing
Margin requirement
Direct Action
Regulation of consumer credit
Identify the function of RBI as indicated by the following image.
Banker to the banks
Fiscal agent to the government
Credit control
Custodian of foreign exchange reserve
Assertion-Reasoning & Matching Based Questions
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.
Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
Assertion (A) is true but Reason (R) is false.
Assertion (A) is false but Reason (R) is true.
Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Central Bank acts as a banker to the Government.
Reason (R): Except the one rupee note, all other currency notes bear the signature of Governor of RBI.
Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
Assertion (A) is true but Reason (R) is false.
Assertion (A) is false but Reason (R) is true.
Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Reserve Bank of India creates credit.
Reason (R): Reserve Bank of India is known as a bank of note issue.
Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
Assertion (A) is true and Reason (R) is false.
Assertion (A) is false but Reason (R) is true.
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.
Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
Assertion (A) is true and Reason (R) is false.
Assertion (A) is false but Reason (R) is true.
Short Answer Type Questions
Mention an important difference between a Commercial Bank and the Central Bank.
Give any two reasons as to why a country needs a central bank.
How does the central bank act as a lender as the last resort?
Give two reasons why the central banks enjoy monopoly of note issue.
Define bank rate.
Define the following term:
Open Market Operations.
Define the term Statutory Liquidity Ratio.
Mention two ways in which the Reserve Bank of India assists the commercial banks.
Define bank rate.
How is Bank rate altered to correct a depression in an economy?
State the impact of an increase in Cash Reserve Ratio on loanable funds.
Differentiate between quantitative and qualitative methods of credit control.
Define the following term:
Cash Reserve Ratio.
Define the following term:
Margin Requirements.
Briefly explain the following credit control method adopted by the Central Bank.
Publicity
Briefly explain the following credit control methods adopted by the Central Bank.
Moral persuasion
State the impact of an increase in Cash Reserve Ratio on loanable funds.
Who normally keep their deposits in the Central Bank?
Define qualitative credit control policy of the RBI.
Central bank is the lender of the last resort. Explain.
Explain how credit rationing helps to control credit in an economy.
Explain how credit rationing helps to control credit in an economy.
Long Answer Type Questions
Mention an important difference between a Commercial Bank and the Central Bank.
The Central Bank is the apex monetary institution of the country. Explain its role of a Banker of the Government.
Central bank is the lender of the last resort. Explain.
The Central Bank is the apex monetary institution of the country. Explain its role of a custodian of foreign exchange reserves.
The Central Bank is the apex monetary institution of the country. Explain its role of a Banker of the Government.
Explain the following function of the central bank of a country.
Fixation of margin requirement on secured loans.
Explain the following function of the central bank of a country.
Developmental functions.
The Central Bank is the apex monetary institution of the country. Explain its role of a Banker of the Government.
Discuss the role of the Central Bank as the fiscal agent to the government.
Which of the following statements are correct and which are incorrect? Give reasons.
- Central bank is a currency authority.
- Bank rate is a qualitative method of credit control.
- Quantitative methods regulate direction of credit.
- Bank rate is the rate at which commercial banks give loans to the public.
- Central bank should sell government securities when credit is to be expanded.
Give any two reasons as to why a country needs a central bank.
The Central Bank is the apex monetary institution of the country. Explain its role of a Banker of the Government.
Define the following term:
Open Market Operations.
Who controls the credit supply in an economy?
What is this policy called that controls the credit supply in an economy?
Identify the following Credit Control measure undertaken by the Central Bank during inflation.
The Central Bank sells government approved securities to the public.
Identify the following Credit Control measures undertaken by the Central Bank during inflation.
The Central Bank increases the rate at which it lends to the Commercial Bank.
Goyal Brothers Prakashan solutions for Economic Application [English] Class 10 ICSE 9 Central Banks QUESTION BANK [Pages 216 - 218]
What is a Central Bank?
Give any two reasons as to why a country needs a central bank.
What do you mean by credit control?
What are quantitative methods of credit control?
Which are qualitative methods of credit control?
Define bank rate.
Define the following term:
Open Market Operations.
Define the following term:
Cash Reserve Ratio.
What is meant by Legal Reserve Ratio?
Define the term Statutory Liquidity Ratio.
Define moral persuasion.
Give two reasons why the central banks enjoy monopoly of note issue.
The Central Bank is the apex monetary institution of the country. Explain its role of a Banker of the Government.
Explain the banker's bank function of the Central Bank.
How does the central bank act as a lender as the last resort?
Define the following term:
Margin Requirements.
Give an example of margin requirements.
What are quantitative methods of credit control?
Describe two quantitative credit control measures of the Central Bank.
Name the institution that enjoys the monopoly of note issue in India.
Briefly explain two qualitative methods of credit control adopted by this institution.
Differentiate between quantitative and qualitative methods of credit control.
Mention an important difference between a Commercial Bank and the Central Bank.
Define bank rate.
How is Bank rate altered to correct a depression in an economy?
Describe two quantitative credit control measures of the Central Bank.
Solutions for 9: Central Banks
Goyal Brothers Prakashan solutions for Economic Application [English] Class 10 ICSE chapter 9 - Central Banks
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Concepts covered in Economic Application [English] Class 10 ICSE chapter 9 Central Banks are Meaning of Commercial Banks, Money Creation Or Credit Creation by the Commercial Banking System, Meaning of Central Bank, Functions of a Central Bank, Various Aspects of Credit Control Measures, Objectives of Credit Control, Method of Credit Control - Qualitative, Reserve Bank of India, Importance of Banks, Commercial Banks: Functions, Nationalisation of Banks, Differences Between a Central Bank and a Commercial Bank, Need for a Central Bank, Monetary Policy of the Central Bank, Method of Credit Control - Quantitative.
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