UPSC Economics- Money Supply and Indian Financial System Set 1

increase in government expenditure ✘ increase in unemployment due to contraction of the economy ✘ expansion of credit ✘ creation of excess liquidity ✔

Supervising the working of the Stock Exchanges ✘ Underwriting new capital issues ✘ Regulating merchant banks and mutual funds ✘ promoting the development of a healthy capital market ✔

ensuring that black money is accounted. ✘ compliance with import-export regulations ✘ ensuring that counterfeit currency does not enter circulation ✘ withdrawing equivalent local currency to maintain a desirable rate of exchange ✔

Punjab National Bank ✘ Oriental Bank of Commerce ✘ Corporation Bank ✘ State Bank of India ✔

Mutual Funds ✘ Commodity Futures Market ✘ Stock Market ✘ Foreign Exchange Markets ✔

when the price of essential commodities outstrips income ✘ when money supply grows at a higher rate than GDP in real terms ✘ when the exchange rate of a currency falls ✘ when fiscal deficit exceeds balance of payment Deficit ✔

postponing public expenditure ✘ mopping up excess liquidity through taxation ✘ credit control measures of RBI ✘ maintaining price levels through an effective PDS ✔

They provide direct loans to small and marginal farmers; ✘ They are co-sponsored by Reserve Bank of India; ✘ They also perform other banking operations; ✘ State Governments are share-holders in RRBs. ✔

the rate at which banks lend to its prime borrowers ✘ the maximum rate that banks can pay for deposit ✘ the rate at which banks rediscount bills with RBI ✘ the rate of interest charged on inter-bank transactions ✔

buying and selling of shares ✘ auctioning of foreign exchange ✘ trading in securities ✘ transaction in gold ✔