For Financial inclusion, identify the meaning.
Correct answer: D
It includes appropriate savings, payments, credit and insurance access.
Economy
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Evaluate the two proposed answers. Which are supported? I. Time deposit — the meaning: Deposit placed for an agreed period. II. Demand deposit — the meaning: Ease of conversion into spendable funds with little loss.
Correct answer: A
I is correct: Time deposit → Deposit placed for an agreed period. It differs from a balance freely payable on demand. II is incorrect: Demand deposit → Bank deposit withdrawable on demand. Savings and current account balances are common examples.
For Cash reserve ratio, identify the meaning.
Correct answer: B
It is a reserve requirement rather than a lending rate.
Evaluate the two proposed answers. Which are supported? I. Repo transaction — the meaning: Sale of securities with an agreement to repurchase. II. Inflation targeting — the meaning: Money's role in transferring purchasing power over time.
Correct answer: C
I is correct: Repo transaction → Sale of securities with an agreement to repurchase. It provides collateralised short-term funding. II is incorrect: Inflation targeting → Monetary policy organised around a stated inflation objective. It provides a nominal anchor for policy and expectations.
For Store of value, identify the meaning.
Correct answer: D
Inflation can reduce that stored purchasing power.
Evaluate the two proposed answers. Which are supported? I. Financial inclusion — the meaning: Access to useful and affordable formal financial services. II. Statutory liquidity ratio — the meaning: Monetary policy organised around a stated inflation objective.
Correct answer: B
I is correct: Financial inclusion → Access to useful and affordable formal financial services. It includes appropriate savings, payments, credit and insurance access. II is incorrect: Statutory liquidity ratio → Specified share of relevant bank liabilities maintained in eligible liquid assets. It differs from cash reserves held with the RBI.
Evaluate the two proposed answers. Which are supported? I. Store of value — the meaning: Bank deposit withdrawable on demand. II. Demand deposit — the meaning: Ease of conversion into spendable funds with little loss.
Correct answer: C
I is incorrect: Store of value → Money's role in transferring purchasing power over time. Inflation can reduce that stored purchasing power. II is incorrect: Demand deposit → Bank deposit withdrawable on demand. Savings and current account balances are common examples.
For Legal tender, identify the meaning.
Correct answer: A
Its legal status is distinct from every privately accepted payment instrument.
Evaluate the two proposed answers. Which are supported? I. Time deposit — the meaning: Deposit placed for an agreed period. II. Credit risk — the meaning: Sale of securities with an agreement to repurchase.
Correct answer: B
I is correct: Time deposit → Deposit placed for an agreed period. It differs from a balance freely payable on demand. II is incorrect: Credit risk → Risk that a borrower does not meet obligations. Default can cause lender losses.
For Medium of exchange, identify the meaning.
Correct answer: D
It avoids the need for a double coincidence of wants.
Evaluate the two proposed answers. Which are supported? I. Cash reserve ratio — the meaning: Specified share of relevant bank liabilities kept with the RBI. II. Statutory liquidity ratio — the meaning: Monetary policy organised around a stated inflation objective.
Correct answer: D
I is correct: Cash reserve ratio → Specified share of relevant bank liabilities kept with the RBI. It is a reserve requirement rather than a lending rate. II is incorrect: Statutory liquidity ratio → Specified share of relevant bank liabilities maintained in eligible liquid assets. It differs from cash reserves held with the RBI.
For Unit of account, identify the meaning.
Correct answer: B
Prices and accounts use a shared monetary unit.
Evaluate the two proposed answers. Which are supported? I. Legal tender — the meaning: Ease of conversion into spendable funds with little loss. II. Inflation targeting — the meaning: Money's role in transferring purchasing power over time.
Correct answer: D
I is incorrect: Legal tender → Money recognised by law for discharging specified debts. Its legal status is distinct from every privately accepted payment instrument. II is incorrect: Inflation targeting → Monetary policy organised around a stated inflation objective. It provides a nominal anchor for policy and expectations.
For Demand deposit, identify the meaning.
Correct answer: B
Savings and current account balances are common examples.
Evaluate the two proposed answers. Which are supported? I. Open market purchase by a central bank — the meaning: Access to useful and affordable formal financial services. II. Cash reserve ratio — the meaning: Access to useful and affordable formal financial services.
Correct answer: D
I is incorrect: Open market purchase by a central bank → Can inject liquidity into the banking system. The central bank pays for securities it buys. II is incorrect: Cash reserve ratio → Specified share of relevant bank liabilities kept with the RBI. It is a reserve requirement rather than a lending rate.
For Statutory liquidity ratio, identify the meaning.
Correct answer: C
It differs from cash reserves held with the RBI.
Evaluate the two proposed answers. Which are supported? I. Unit of account — the meaning: Money's role as a common measure of value. II. Medium of exchange — the meaning: Money's role as a common measure of value.
Correct answer: D
I is correct: Unit of account → Money's role as a common measure of value. Prices and accounts use a shared monetary unit. II is incorrect: Medium of exchange → Money's role in making payments. It avoids the need for a double coincidence of wants.
For Collateral, identify the meaning.
Correct answer: B
The lender may have rights over it if contractual conditions are breached.
Evaluate the two proposed answers. Which are supported? I. Store of value — the meaning: Bank deposit withdrawable on demand. II. Repo transaction — the meaning: Specified share of relevant bank liabilities kept with the RBI.
Correct answer: D
I is incorrect: Store of value → Money's role in transferring purchasing power over time. Inflation can reduce that stored purchasing power. II is incorrect: Repo transaction → Sale of securities with an agreement to repurchase. It provides collateralised short-term funding.
For Inflation targeting, identify the meaning.
Correct answer: D
It provides a nominal anchor for policy and expectations.
Evaluate the two proposed answers. Which are supported? I. Statutory liquidity ratio — the meaning: Money's role in making payments. II. Time deposit — the meaning: Risk that a borrower does not meet obligations.
Correct answer: A
I is incorrect: Statutory liquidity ratio → Specified share of relevant bank liabilities maintained in eligible liquid assets. It differs from cash reserves held with the RBI. II is incorrect: Time deposit → Deposit placed for an agreed period. It differs from a balance freely payable on demand.
Evaluate the two proposed answers. Which are supported? I. Repo transaction — the meaning: Sale of securities with an agreement to repurchase. II. Statutory liquidity ratio — the meaning: Monetary policy organised around a stated inflation objective.
Correct answer: D
I is correct: Repo transaction → Sale of securities with an agreement to repurchase. It provides collateralised short-term funding. II is incorrect: Statutory liquidity ratio → Specified share of relevant bank liabilities maintained in eligible liquid assets. It differs from cash reserves held with the RBI.
For Credit risk, identify the meaning.
Correct answer: D
Default can cause lender losses.
Evaluate the two proposed answers. Which are supported? I. Time deposit — the meaning: Deposit placed for an agreed period. II. Liquidity — the meaning: Asset pledged to secure a loan.
Correct answer: B
I is correct: Time deposit → Deposit placed for an agreed period. It differs from a balance freely payable on demand. II is incorrect: Liquidity → Ease of conversion into spendable funds with little loss. Cash is highly liquid.
For Time deposit, identify the meaning.
Correct answer: D
It differs from a balance freely payable on demand.