Indian Economy Mixed Quiz: Set 11

The Imperial Bank of India had itself been created in 1921 by merging the three presidency banks, the Bank of Bengal of 1806, the Bank of Bombay of 1840 and the Bank of Madras of 1843.

The Foreign Exchange Management Act was passed in 1999 and came into force on 1 June 2000, replacing the Foreign Exchange Regulation Act of 1973.

A margin requirement is the part of the value of a security that the borrower must fund from his own resources; by raising it for loans against a particular commodity the Bank can discourage credit flowing into speculation in that commodity without touching the total supply of credit.

Consumer theory studies how a household decides to spend its money among the goods and services available to it. The idea rests on three things: the wants of the consumer, the prices of goods, and the income in hand, which is the budget constraint.

Under the Minimum Reserve System, adopted in 1957 in place of the earlier proportional reserve system, the Reserve Bank has to hold assets worth at least two hundred crore rupees against the notes it issues, of which gold must account for one hundred and fifteen crore and the remaining eighty-five…

IBM and Coca-Cola wound up their Indian operations in 1977 rather than dilute their holdings to 40 per cent. The Foreign Exchange Regulation Act, passed in 1973, required foreign companies to cut their equity in Indian subsidiaries to that level and to obtain permission for most dealings in foreign exchange.

The one rupee note is not a Reserve Bank note at all: it is issued by the Government of India through the Ministry of Finance, is a legal tender note of the government and carries the signature of the Finance Secretary.

The Index of Industrial Production (IIP) covers only three sectors: mining, manufacturing and electricity.

The language panel on the reverse of an Indian banknote carries the value of the note in 15 languages. Hindi and English are not part of that panel: they appear on the front of the note, so the total number of languages printed on a note comes to 17.

The American economic historian Morris David Morris built the Physical Quality of Life Index in the 1970s for the Overseas Development Council, and set it out in his 1979 book on measuring the condition of the world’s poor.

Under the minimum reserve system adopted in 1957 the Bank keeps assets of at least two hundred crore rupees against the notes it issues, of which gold must be worth at least one hundred and fifteen crore rupees and the rest is held in foreign securities.

Elasticity measures how strongly the quantity demanded reacts to price, and zero means no reaction at all. Price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price.

When the rate of interest is already very low, people believe it can hardly fall further and must rise, so they hold cash instead of bonds.

Headline inflation is the change in the overall Consumer Price Index, which tracks the average price of a fixed basket of goods and services bought by a typical household, including food, fuel, clothing, housing and services.

A higher repo rate raises the cost at which banks borrow from the Reserve Bank, so they raise their own lending rates.

Kshitish Chandra Neogy chaired the First Finance Commission, set up by the President in November 1951, which gave its report in 1952 for the period 1952 to 1957.

A hawkish stand means the central bank is more worried about inflation than about slow growth, so it leans towards raising the policy rate and tightening money.

The government bond market and the stock market deal in long-term funds, so they are capital markets; call money and treasury bills belong to the money market.

The reverse repo rate is what the Reserve Bank pays banks when it takes their surplus cash for a short period.

The Reserve Bank Of India Act, as amended in 2016, states that the primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth.