Page 1 - Homeassignment

Assessment

1.What is central bank?
2. Which bank operates in public interest without any profit motive -.
a) RBI
b) SBI
c) HDFC
d) All of the above
3. Which of these is not a function of central bank :
a) Advancing loan
b) Bankers bank
c) Currency authority
d) lender of last resort.
4.Central bank involved in advancing loan to general public.State true or false.
5. What will be the effect of increase in the repo rate on the money suppy?
6.What role is played by commercial bank?
a) Advancing of loans
b) Money creation
c) Accepting deposits
d) All of these

Home Assignment
(1 mark)
1: State the effect of a rise in the bank rate on money supply.
2: Define open market operation.
3: State difference between bank rate and repo rate.

(3/4 marks)
1 Why is RBI known as ‘lender of last resort’?
2. Explain the function of banker’s bank to the govt.
3. Discuss the ‘bankers to the govt. ‘function of Central bank
4: Explain the open market operation method of credit control used by Central bank.
(6 Marks)

1. Explain the process of money creation by the commercial bank with the help of
an example.

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