SUNIL PANDA – THE EDUCATOR

MONEY AND BANKING

CUET 2025
MOST IMPORTANT QUESTIONS
Q.1) The Reserve Bank of India (RBI) recently imposed a monetary penalty on three banks 1.50lakhs on Dr. Ambedkar
Nagarik Sarkari Bank Mayardit; 25,000 on Nagarik Sarkari Bank Mayardit, and 1lakh on Ravi commercial bank for
violating the provision of its regulations. the banking regulator has imposed a monetary penalty for contravention of
non-compliance with the direction issued to Ravi commercial bank an exposure norms and statutory and other
restrictions & KYC.

Which function of central bank is referred to in the above paragraph

a) Financial advisor

b) Supervisor to banks

c) Bankers bank

d) Lender the last resort

Q.2) The Reserve Bank of India (RBI) recently imposed a monetary penalty on three banks 1.50lakhs on Dr. Ambedkar
Nagarik Sarkari Bank Maryadit; 25,000 on Nagarik Sarkari Bank Maryadit, and 1lakh on Ravi commercial bank for
violating the provision of its regulations. the banking regulator has imposed a monetary penalty for contravention of
non-compliance with the direction issued to Ravi commercial bank an exposure norms and statutory and other
restrictions & KYC.

As a bankers bank what is the role played by RBI?

A. Custodian of cash reserves

B. Maintain foreign exchange reserves

C. Currency issue

D. Lender of last resort

E. Clearing house

Choose the correct answer from the options given below:

a) A, C, D, and E only

b) B and C only

c) A only

d) A, D, and E only

Q.3) The Reserve Bank of India (RBI) recently imposed a monetary penalty on three banks 1.50lakhs on Dr. Ambedkar
Nagarik Sarkari Bank Maryadit; 25,000 on Nagarik Sarkari Bank Maryadit, and 1lakh on Ravi commercial bank for
violating the provision of its regulations. the banking regulator has imposed a monetary penalty for contravention of
non-compliance with the direction issued to Ravi commercial bank an exposure norms and statutory and other
restrictions & KYC.

How does RBI act as a supervisor to bank?

a) Bankers to government
b) Agent to government

c) Financial advisor to government

d) Inspection and imposing penalty

Q.4) The Reserve Bank of India (RBI) recently imposed a monetary penalty on three banks 1.50lakhs on Dr.
Ambedkar Nagarik Sarkari Bank Maryadit; 25,000 on Nagarik Sarkari Bank Maryadit, and 1lakh on Ravi commercial
bank for violating the provision of its regulations. the banking regulator has imposed a monetary penalty for
contravention of non-compliance with the direction issued to Ravi commercial bank an exposure norms and statutory
and other restrictions & KYC.

If all the deposits one day come to withdraw all the cash, what would be role played by RBI?

a) Maintaining foreign exchange reserves

b) Lender the last resort

c) Maintaining cash reserves

d) Currency issue

Q.5) The Reserve Bank of India (RBI) recently imposed a monetary penalty on three banks 1.50lakhs on Dr. Ambedkar
Nagarik Sarkari Bank Maryadit; 25,000 on Nagarik Sarkari Bank Maryadit, and 1lakh on Ravi commercial bank for
violating the provision of its regulations. the banking regulator has imposed a monetary penalty for contravention of
non-compliance with the direction issued to Ravi commercial bank an exposure norms and statutory and other
restrictions & KYC.

Which of the following is correct statement?

a) RBI act as banker to commercial banks and central bank

b) Central bank creates credit in economy

c) All financial institutions are banking institutions

d) One rupee note and all coins are issued by the ministry of finance

Q.6) Repo-rate is the rate at which RBI lends money to commercial banks for ___________

a) Long period

b) Short period

c) Very long period

d) Market period

Q.7) Arrange the following statements relating to open market operations in the correct sequence

A. There by resulting in an increase in money supply

B. Central bank pays for it by giving a cheque

C. Central bank buys a government bond in the open market

D. This increase the total amount of reservation in the economy

Choose the correct answer from the options given below:

a) A, B, C, D

b) B, A, C, D
c) D, C, B, A

d) C, B,D, A

Q.8) The RBI can influence money supply by changing __________ at which it gives loan to the commercial banks

a) Promissory rate

b) Lending rate

c) Fixed rate

d) Bank rate

Q.9) When Cash Reserve Ratio is 20% then with the deposit of 1000. Money creations will be 5000

a) 0.5

b) 0.05

c) 5

d) 1/5

Q.10) RBI can influence money supply by changing the bank rate. an increase in bank rate can be termed as:

a) Contractionary monetary policy

b) Expansionary monetary policy

c) Contractionary fiscal policy

d) Expansionary fiscal policy

Q.11) Identify the first and foremost role of money

a) Medium of exchange

b) Unit of account

c) Means of deferred payments

d) Measure of value

Q.12) Arrange the correct sequence of impact of increase in Bank rate of Central bank-

A. Costly loan for general public

B. Increase in rate of interest by commercial bank

C. Expensive loan taken by commercial bank

D. Decrease in money supply

E. Control over the situation of inflation

Choose the correct answer from the options given below:

a) B, A, C, E, D

b) B, C, A, D, E

c) A, C, B, E, D

d) C, B, A, D, E
Q.13) When the interest rate is increased the demand for money

a) Goes up

b) Remain constant

c) Comes down

d) Zero demand

Q.14) Identify the rate at which RBI gives loans to the commercial banks to influence money supply

a) Repo rate

b) Reverse repo rate

c) Bank rate

d) Call rate

Q.15) A fall in the bank rate ____the money supply

a) Decrease

b) Increase

c) Will not affect

d) May increase or decrease

Q.16) Calculate the total deposits made by commercial banks when the primary deposit is 20 crores and cash reserve
ratio is 20% choose the correct option

a) 40 crores

b) 60 crores

c) 80 crores

d) 100 crores

Q.17) Reserve Bank is the only institution which can issue currency. The role of RBI is to lend money to all commercial
banks at all times. This function of RBI is called lender of Last Resort. RBI influences money supply by buying or selling
of bonds issued by the government in open market. When RBI buys a government bond in the open market it pays
for it by giving a cheque. This cheque increases the total amount of reserves in the economy and thus increases
money supply. Selling of bonds by RBI decreases the money supply. When Central Bank buys the security this type of
agreement is called repurchase agreement and the rate at which the money is lent in this way is called Repo Rate. RBI
also influences money supply by changing the rate at which it gives loans to commercial banks called Bank Rate.

Reverse Repo rate is defined as.

a) Rate at which RBI gives loans to commercial banks

b) Rate at which commercial banks give loans to customers

c) Rate at which central bank sell securities through an agreement which has specification about rate and price

d) Rate at which RBI sell the bonds

Q.18) Reserve Bank is the only institution which can issue currency. The role of RBI is to lend money to all commercial
banks at all times. This function of RBI is called lender of Last Resort. RBI influences money supply by buying or selling
of bonds issued by the government in open market. When RBI buys a government bond in the open market it pays
for it by giving a cheque. This cheque increases the total amount of reserves in the economy and thus increases
money supply. Selling of bonds by RBI decreases the money supply. When Central Bank buys the security this type of
agreement is called repurchase agreement and the rate at which the money is lent in this way is called Repo Rate. RBI
also influences money supply by changing the rate at which it gives loans to commercial banks called Bank Rate.

Lender the last resort function of RBI means

a) It increase money supply in economy

b) It issues currency

c) It provides funds all times to commercial banks

d) It decreases money supply

Q.19) Reserve Bank is the only institution which can issue currency. The role of RBI is to lend money to all commercial
banks at all times. This function of RBI is called lender of Last Resort. RBI influences money supply by buying or selling
of bonds issued by the government in open market. When RBI buys a government bond in the open market it pays
for it by giving a cheque. This cheque increases the total amount of reserves in the economy and thus increases
money supply. Selling of bonds by RBI decreases the money supply. When Central Bank buys the security this type of
agreement is called repurchase agreement and the rate at which the money is lent in this way is called Repo Rate. RBI
also influences money supply by changing the rate at which it gives loans to commercial banks called Bank Rate.

Which is the only institution which issues currency?

a) SBI

b) RBI

c) PNB

d) ICICI bank

Q.20) Reserve Bank is the only institution which can issue currency. The role of RBI is to lend money to all commercial
banks at all times. This function of RBI is called lender of Last Resort. RBI influences money supply by buying or selling
of bonds issued by the government in open market. When RBI buys a government bond in the open market it pays
for it by giving a cheque. This cheque increases the total amount of reserves in the economy and thus increases
money supply. Selling of bonds by RBI decreases the money supply. When Central Bank buys the security this type of
agreement is called repurchase agreement and the rate at which the money is lent in this way is called Repo Rate. RBI
also influences money supply by changing the rate at which it gives loans to commercial banks called Bank Rate.

Selling of bonds by RBI result in which of the following?

a) It decrease money supply in economy

b) It increase money supply in economy

c) It change interest rate

d) It issues currency

Q.21) Reserve Bank is the only institution which can issue currency. The role of RBI is to lend money to all commercial
banks at all times. This function of RBI is called lender of Last Resort. RBI influences money supply by buying or selling
of bonds issued by the government in open market. When RBI buys a government bond in the open market it pays
for it by giving a cheque. This cheque increases the total amount of reserves in the economy and thus increases
money supply. Selling of bonds by RBI decreases the money supply. When Central Bank buys the security this type of
agreement is called repurchase agreement and the rate at which the money is lent in this way is called Repo Rate. RBI
also influences money supply by changing the rate at which it gives loans to commercial banks called Bank Rate.

Bank rate is defined as.

a) The rate at which RBI gives loans to commercial banks

b) The rate at which the money is lent without agreement

c) The rate at which money is lent through an agreement

d) The rate at which commercial bank gives loan to customers.

Q.22) During festive season, the currency deposit ratio _________.

a) Decrease
b) Increase
c) Has no impact on it
d) First decrease then increase

Q.23) Which of the following statements are true?

A. Quantitative tools control the extent of money supply by changing the CRR
B. There are two types of open market operation – outright and upright
C. A fall in the bank rate can decrease the money supply
D. Selling of a bond by RBI leads to reduction in quantity of reserves
E. The RBI can influence money supply by changing the rate at which it gives loan to the commercial banks
Choose the correct answer from the options given below:
a) A, C and D only
b) A, B and D only
c) B, D and E only
d) A, D and E only

Q.24) Match List I with List II

List I List II
A. Bank Rate I. Securities are pledged in order to repurchase
B. Marginal Standing Facility II. Minimum rate at which funds are provided for long term
C. Repo Rate III. Also known as penal Interest Rate
D. Reverse Repo Rate IV. Central Bank borrows funds from commercial banks
Choose the correct answer from the options given below:
a) A-I, B-II, C-III, D-IV
b) A-II, B-III, C-I, D-IV
c) A-I, B-II, C-IV, D-III
d) A-III, B-IV, C-I, D-II

Q.25) Which of the following is not a function of Central Bank?

a) It controls the money supply in the economy through different rates
b) It acts as a banker to the government
c) It accepts deposits and give loans to people
d) It issue the currency of the country

Answer Key

1-B, 2-D, 3-D, 4-B, 5-D, 6-B, 7-D, 8-D, 9-C, 10-A, 11-A, 12-D, 13-C, 14-C, 15-B, 16-D, 17-C, 18-C, 19-B, 20-A, 21-A, 22-B, 23-D, 24-B, 25-C