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Question 1 of 10
1. Question
2 points
Consider the following statements:
(i) Currencies and coins are fiat money
(ii) Currencies do not have intrinsic value but coins have
(iii) Currencies and coins are legal tenders
(iv) Cheques are legal tenders
Correct
Answer:
(b)
Currencies and coins are fiat money because they derive their value from government “fiat”/ order. If the coin is melted then it will not fetch the same value in the market and the paper of which the currency note is made of does not have any value in the market. Hence, Currency notes and coins are called fiat money and they do not have intrinsic value.
Incorrect
Answer:
(b)
Currencies and coins are fiat money because they derive their value from government “fiat”/ order. If the coin is melted then it will not fetch the same value in the market and the paper of which the currency note is made of does not have any value in the market. Hence, Currency notes and coins are called fiat money and they do not have intrinsic value.
Question 2 of 10
2. Question
2 points
Consider the following statements:
(i) Currency notes are legal tenders
(ii) Currency notes are unlimited legal tenders
(iii) Currency notes are guaranteed by the Central Government
(iv) Currency notes are guaranteed by the RBI
Select the correct answer using the code given below:
Correct
Answer:
(C)
A country or its citizens may use many modes of exchange in their daily lives. History tells us that ancient humans used salt and spices as currency. But ‘Legal tender’ is the money that is recognized by the law of the land, as valid for payment of debt. It must be accepted for discharge of debt. RBI Act 1934, Section 26 states that “Every central bank note shall be legal tender at any place in India in payment or on account for the amount expressed therein”.
Incorrect
Answer:
(C)
A country or its citizens may use many modes of exchange in their daily lives. History tells us that ancient humans used salt and spices as currency. But ‘Legal tender’ is the money that is recognized by the law of the land, as valid for payment of debt. It must be accepted for discharge of debt. RBI Act 1934, Section 26 states that “Every central bank note shall be legal tender at any place in India in payment or on account for the amount expressed therein”.
Question 3 of 10
3. Question
2 points
Who has the authority to issue currency notes in India?
Correct
Answer:
(C)
The RBI Act of 1934, Section 22 gives the central bank the sole right to issue currency notes.
Incorrect
Answer:
(C)
The RBI Act of 1934, Section 22 gives the central bank the sole right to issue currency notes.
Question 4 of 10
4. Question
2 points
Consider the following statements regarding currency circulation in India:
(i) Govt. of India has the sole right to mint coins
(ii) The coins are issued for circulation only through RBI in terms of the RBI Act 1934
(iii) Coins can be issued up to the denomination of Rs. 1000 as per the Coinage Act 1906
Select the correct answer using the code given below:
Correct
Answer:
(d)
[The Government of India has the sole right to mint coins. The responsibility for coinage vests with the Government of India in terms of the Coinage Act, 1906. The designing and minting of coins in various denominations is also the responsibility of the Government of India. Coins are minted at the India Government Mints at Mumbai, Alipore (Kolkata)
Incorrect
Answer:
(d)
[The Government of India has the sole right to mint coins. The responsibility for coinage vests with the Government of India in terms of the Coinage Act, 1906. The designing and minting of coins in various denominations is also the responsibility of the Government of India. Coins are minted at the India Government Mints at Mumbai, Alipore (Kolkata)
Question 5 of 10
5. Question
2 points
If new currency is being issued, then who has the authority to decide its “Denomination”:
Correct
Answer:
(C)
As per section 24 of RBI Act 1934, “Central Government, on the recommendation of Central Board of Directors of RBI, has the authority to specify the denomination of the new currency note to be issued in the country.”
Incorrect
Answer:
(C)
As per section 24 of RBI Act 1934, “Central Government, on the recommendation of Central Board of Directors of RBI, has the authority to specify the denomination of the new currency note to be issued in the country.”
Question 6 of 10
6. Question
2 points
Prime Minister, on 8th of Nov 2016, declared that the existing Rs. 500 and Rs. 1000 notes will not be legal tender. This was done under which of the following Act.
Correct
Answer:
(a)
As per the RBI Act 1934, Section 26, “on recommendation of the Central Board, the Central Government may, by notification in the Gazette of India, declare that, with effect from such date, any series of bank notes of any denomination shall cease to be legal tender”.
Incorrect
Answer:
(a)
As per the RBI Act 1934, Section 26, “on recommendation of the Central Board, the Central Government may, by notification in the Gazette of India, declare that, with effect from such date, any series of bank notes of any denomination shall cease to be legal tender”.
Question 7 of 10
7. Question
2 points
Which agency has the authority to declare that certain bank notes cease to be legal tender:
Correct
Answer:
(d)
As per section 26 of the RBI Act 1934, on recommendation of the Central Board the Central Government may, by notification in the Gazette of India, declare that, with effect from such date as may be specified in the notification, any series of bank notes of any denomination shall cease to be legal tender.
Incorrect
Answer:
(d)
As per section 26 of the RBI Act 1934, on recommendation of the Central Board the Central Government may, by notification in the Gazette of India, declare that, with effect from such date as may be specified in the notification, any series of bank notes of any denomination shall cease to be legal tender.
Question 8 of 10
8. Question
2 points
Which of the following statements are true regarding RBI?
Correct
Answer:
(C)
In terms of Section 20 of the RBI Act 1934, RBI has the obligation to undertake the receipts and payments of the Central Government and to carry out the exchange, remittance and other banking operations, including the management of the public debt of the Central Govt. Further, as per Section 21 of the said Act, RBI has the right to transact Government business of the Union in India.
State Government transactions are carried out by RBI in terms of the agreement entered into with the State Governments in terms of section 21 A of the RBI Act. As of now, such agreements exist between RBI and all the State Governments except Government of Sikkim.
Thus, the legal provisions vest Reserve Bank of India with both the right and obligation to function as banker to the government.
Incorrect
Answer:
(C)
In terms of Section 20 of the RBI Act 1934, RBI has the obligation to undertake the receipts and payments of the Central Government and to carry out the exchange, remittance and other banking operations, including the management of the public debt of the Central Govt. Further, as per Section 21 of the said Act, RBI has the right to transact Government business of the Union in India.
State Government transactions are carried out by RBI in terms of the agreement entered into with the State Governments in terms of section 21 A of the RBI Act. As of now, such agreements exist between RBI and all the State Governments except Government of Sikkim.
Thus, the legal provisions vest Reserve Bank of India with both the right and obligation to function as banker to the government.
Question 9 of 10
9. Question
2 points
Consider the following statements regarding ‘Agency Banks’ of RBI:
(i) RBI Act 1934 allows it to appoint agency banks
(ii) Public sector and private sector banks both can act as agency banks
Select the correct answer using the code given below:
Correct
Answer:
(C)
RBI carries out the general banking business of the governments through its own offices and commercial banks, both public and private, appointed as its agents (called Agency
Banks). Section 45 of the Reserve Bank of India Act, 1934, provides for appointment of scheduled commercial banks as agents at all places or at any place in India.
Incorrect
Answer:
(C)
RBI carries out the general banking business of the governments through its own offices and commercial banks, both public and private, appointed as its agents (called Agency
Banks). Section 45 of the Reserve Bank of India Act, 1934, provides for appointment of scheduled commercial banks as agents at all places or at any place in India.
Question 10 of 10
10. Question
2 points
Who has the authority to issue currency notes in India?
Correct
Answer:
(C)
The RBI Act of 1934, Section 22 gives the central bank the sole right to issue currency notes
Incorrect
Answer:
(C)
The RBI Act of 1934, Section 22 gives the central bank the sole right to issue currency notes
