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प्रश्न
Give any two reasons as to why a country needs a central bank.
Mention two reasons for setting up the central bank (or the Reserve Bank of India).
With reference to the central bank of a country.
State two reasons for the need of a Central Bank in a country.
उत्तर
Two reasons for setting up the Central Bank are:
- The Central Bank is set up to control the supply of money and credit in the country.
- Every central bank is set up to control the entire banking system of a country.
APPEARS IN
संबंधित प्रश्न
Define bank rate.
Explain how credit rationing helps to control credit in an economy.
In order to encourage investment in the economy, the central bank may ______.
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 |
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.
Define the following term:
Open Market Operations.
Define the term Statutory Liquidity Ratio.
State the impact of an increase in Cash Reserve Ratio on loanable funds.
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
The Central Bank is the apex monetary institution of the country. Explain its role of a custodian of foreign exchange reserves.
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.
Who controls the credit supply in an economy?
What is this policy called that controls the credit supply in an economy?
Which are qualitative methods of credit control?
Give an example of margin requirements.
Describe two quantitative credit control measures of the Central Bank.
