This reduces the cash reserves of the commercial banks. TOS4. These methods have caused a further decline in the importance of bank rate policy. By changing the bank rate, the central bank affects the cost of credit; by raising the bank rate, it raises the cost of credit and by lowering the bank rate, it lowers the cost of credit. A fall in the cash reserves of the commercial banks reduces their ability to create credit and results in multiple contractions in the total volume of credit due to the operation of credit multiplier. (ii) The central banks in the underdeveloped countries may not possess adequate stock of securities. The Cash Reserve Ratio is an effective instrument of credit control. The credit … Answer: (A) 2- The State shall endeavour to secure for the citizens a Uniform Civil Code throughout the territory of India… 2. Dynamic Tutorials and Services is a Leading Coaching Centre of Tinsukia … 1- Clause (4) of Article 15 has been added to the Constitution by (A) The Constitution First Amendment Act. Which of the following are qualitative control methods a) Margins b) Maximum limit of credit for specific purpose . (v) The commercial banks, motivated by higher profits, may manipulate their accounts and advance loans for prohibited uses. In this course, Nikita Khetan will cover the topic of Indirect tax. Seattle cop is caught up in a corrupt police force that he is trying to make right. What do the banks do with the deposits which they accept from the public. 100 and they will now decrease their lending to get the additional 2% cash. (iii) It is suitable when only marginal changes are desired in the cash reserves of the commercial banks. (ii) The modern banking sector in the underdeveloped countries lack coordination among its constituent units so that the bank rate policy does not become fully effective. IBPS Banking Awareness Amp GA High Priority Topics Studyplan. S Bharadwaj Reddy November 3, 2017 December 12, 2019. a) True b) False View Answer / Hide Answer. (i) Crowther (ii) Robertson. The bank rate policy is indiscriminatory in nature. Money and Credit Answers for Multiple Choice Questions, 1. higher profits. The ultimate purpose of corporate finance is to maximize the value Value Added Value Added is the extra value created over and above the original value of something. a decrease in bad debt losses. True or false. The credit multiplier will then rise from 10 to 12.5 (i.e., 1/8% =12.5). The open market operations policy is superior to the policy of bank rate in two way: (i) Open market operations policy is a direct way of controlling credit, whereas the bank rate policy is an indirect way; in the case of the former, the initiative lies in the hands of the monetary authority, while in case of the latter, the initiative lies with the commercial banks. These methods regulate the lending ability of the financial sector of the whole economy and do not discriminate among the various sectors of the economy. (c) It is difficult for the commercial banks to control the ultimate use of credit by the borrowers. Open market operations refer to the deliberate and direct buying and selling of securities in the money market by the central bank. 8. This may be done by encouraging productive investments and restricting unproductive investments. Control Systems Multiple Choice Questions With Answers Bing. Similarly, a fall in the bank rate makes the credit cheaper, increases the volume of credit, encourages the businessmen to borrow and invest, and increases the levels of economic activity and the price level. PreserveArticles.com is a free service that lets you to preserve your original articles for eternity. (vi) To supplement the bank rate policy and thus to increase its efficiency. BE CSE Semester 5 MA8551 Algebra and Number Theory MCQ EC8691 Microprocessors and Microcontrollers MCQ CS8592 Object Oriented Analysis and Design MCQ CS8591 Computer Networks MCQ CS8501 Theory Of Computation MCQ (ELECTIVE I) OMD551 Basic OF Biomedical Instruments MCQ (ELECTIVE I) OCE551 Air Pollution and Control Engineering MCQ In this sense, bank rate is the effective rate for lending or borrowing which prevails in the market. Through publicity, the central bank seeks- (a) to influence the credit policies of the commercial banks; (b) to educate people regarding the economic and monetary condition of the country; and (c) to influence the public opinion in favour of its monetary policy. (d) Controller of credit and money supply: it is an important function of a central bank to control credit and money supply through its monetary policy. (c) 13. When the central bank purchases securities, the reserves of the banks increase exactly by the same amount of the purchase. If you don't see any interesting for you, use our search form on bottom ↓ . (i) It is a more direct method because it controls the volume of credit by influencing the cash reserves of the commercial banks. Your Answer increase Select The Blank Question Like all organism, the firm too is an organism according to the _____ Correct Answer life-cycle theory. The important qualitative or selective methods of credit control are; (a) marginal requirements, (b) regulation of consumer credit, (c) control through directives, (d) credit rationing, (e) moral suasion and publicity, and (f) direct action. (ii) It produces immediate effect on the cash reserves of the commercial banks. Cost Accounting Multiple Choice Questions and Answers PDF, a revision guide with solved quiz questions and answers PDF on topics: Accounting concepts, activity based costing and … No Simultaneous Determination of Interest Rates and Money Supply: The central bank, through its bank rate policy, is able to influence the interest rates and the money supply in the economy. Under the consumer credit system, a certain percentage of the price of the durable goods is paid by the consumer in cash. Important Basic Introduction to Accounting solved mcqs with answers and exaplanation for test preparation. Various effects of bank rate policy are discussed below: i. 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