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NABARD Grade A Monetary Policy — practice questions

Explore 71 free Monetary Policy questions in NABARD Grade A Banking Awareness. Open each question or exercise to read its content, reference answers and available explanation.

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Monetary Policy questions and exercises with answers

Showing questions 1–30 of 71.

The Monetary Policy Committee is constituted under which section?Read the answer and worked solution →What interest does RBI pay banks on their CRR balances?Read the answer and worked solution →Which rate forms the upper bound (ceiling) of the LAF corridor?Read the answer and worked solution →Which rate forms the lower bound (floor) of the LAF corridor?Read the answer and worked solution →Repo rate is the rate at which RBI:Read the answer and worked solution →Reverse repo rate is the rate at which RBI:Read the answer and worked solution →Quantitative tool or qualitative?Read the answer and worked solution →Match each policy tool to its jobRead the answer and worked solution →True or false: controlling money supplyRead the answer and worked solution →Fill in the two reserve ratiosRead the answer and worked solution →Which one is NOT what it claims?Read the answer and worked solution →A Government Security acknowledges the Government's:Read the answer and worked solution →Treasury bills are issued in how many tenors?Read the answer and worked solution →Which is a valid treasury bill tenor?Read the answer and worked solution →Treasury bills are best described as securities that are:Read the answer and worked solution →Cash Management Bills were introduced in the year:Read the answer and worked solution →Cash Management Bills are issued for maturities of less than:Read the answer and worked solution →Coupon on a dated G-Sec is paid on what basis?Read the answer and worked solution →The tenor of dated securities generally runs from five years to:Read the answer and worked solution →Loans raised from the market by State Governments are called:Read the answer and worked solution →Open market operations are conducted by the RBI to adjust:Read the answer and worked solution →When liquidity is in excess the RBI resorts to:Read the answer and worked solution →Premature redemption of its own securities by the Government is a:Read the answer and worked solution →The Liquidity Adjustment Facility operates on what basis?Read the answer and worked solution →Which entity is excluded from the Liquidity Adjustment Facility?Read the answer and worked solution →The Liquidity Adjustment Facility is operated by way of:Read the answer and worked solution →Which body acts as registry and central depository for G-Secs?Read the answer and worked solution →RBI regulated entities must hold G-Secs only in what form?Read the answer and worked solution →An investor who cannot open an SGL account may open a:Read the answer and worked solution →G-Secs are auctioned on which RBI platform?Read the answer and worked solution →

Worked practice questions

The Monetary Policy Committee is constituted under which section?

  1. Section 42 of RBI Act
  2. Section 24 of BR Act
  3. Section 45ZB of RBI Act
  4. Section 21 of BR Act
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Correct answer: C. Section 45ZB of RBI Act

1. The question asks: The Monetary Policy Committee is constituted under which section. 2. Correct answer: Section 45ZB of RBI Act. 3. The MPC is set up under Section 45ZB of the RBI Act. _Source: BOI Quick Revision — General Banking & Financial Awareness (2020), RBI Act §45ZB_

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What interest does RBI pay banks on their CRR balances?

  1. Repo rate
  2. Nil
  3. Reverse repo rate
  4. Bank rate
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Correct answer: B. Nil

1. The question asks: What interest does RBI pay banks on their CRR balances. 2. Correct answer: Nil. 3. No interest is paid on CRR balances kept with the RBI. _Source: BOI Quick Revision — General Banking & Financial Awareness (2020), Policy Rates_

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Which rate forms the upper bound (ceiling) of the LAF corridor?

  1. Reverse repo rate
  2. Bank rate
  3. MSF rate
  4. Base rate
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Correct answer: C. MSF rate

1. The question asks: Which rate forms the upper bound (ceiling) of the LAF corridor. 2. Correct answer: MSF rate. 3. The Marginal Standing Facility rate is the ceiling of the LAF corridor. _Source: BOI Quick Revision — General Banking & Financial Awareness (2020), LAF corridor_

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