With reference to the Indian economy, "Collateral Borrowing and Lending Obligations" are the instruments of :
- A.Bond market
- B.Forex market
- C.Money market
- D.Stock market
Correct answer
Explanation
The correct answer is C, Money market. CBLO was a short-term borrowing and lending instrument backed by government securities, which places it in the money market.
The money market deals in funds lent for short periods, from overnight up to one year, through instruments such as call money, treasury bills, commercial paper, certificates of deposit and repos. CBLO was introduced in 2003 by the Clearing Corporation of India Ltd (CCIL), with RBI approval, for entities that could not borrow in the call money market. A borrower pledged government securities as collateral with CCIL and raised funds for periods of one day up to a year. In 2018 CBLO was replaced by the tri-party repo dealing system (TREPS), which works in much the same way.
A is wrong: the bond market deals in long-term debt such as government and corporate bonds.
B is wrong: the forex market is for buying and selling foreign currencies.
D is wrong: the stock market is for trading shares of companies.
Exam tip: CBLO = CCIL money market instrument (2003), backed by G-secs; replaced by TREPS in 2018.
Practice Questions
View allAccording to the law of diminishing marginal utility, as the amount of a good consumed increases, the marginal utility of that good tends to
- A.improve
- B.diminish
- C.remain constant
- D.first diminish and then improve
Show answer
Each extra unit of a good gives a consumer less additional satisfaction than the unit before it, so marginal utility falls as consumption rises.
Read the full explanation →Consider the following statements about impact of tax : 1. A tax is shifted forward to consumers if the demand is inelastic relative to supply. 2. A tax is shifted backward to producers if the supply is relatively more inelastic than demand. Which of the statements given above is/are correct?
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
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The burden of a tax falls more heavily on whichever side of the market is less elastic, the side that cannot easily walk away.
Read the full explanation →UBI, as an alternative for subsidies in poverty alleviation, stands for
- A.Union Basic Income
- B.Undefined Basic Income
- C.Unconditional Basic Income
- D.Universal Basic Income
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UBI is the idea of paying every citizen a fixed sum of money regularly, without conditions, in place of a large number of separate subsidies and welfare schemes.
Read the full explanation →Who among the following is the Chairman of the Fourteenth Finance Commission?
- A.C. Rangarajan
- B.Vijay Kelkar
- C.Y. V. Reddy
- D.Rakesh Mohan
Show answer
The Fourteenth Finance Commission, set up in 2013 for the award period 2015-2020, was chaired by Y. V. Reddy, a former Governor of the Reserve Bank of India.
Read the full explanation →Why was constitutional amendment needed for introducing GST?
- A.States were not willing to agree with the Union for introduction of GST without amendment in the Constitution.
- B.GST was to be implemented on concurrent base and Article 246 was inadequate for such a case.
- C.The Empowered Committee of Finance Ministers had recommended for constitutional amendment.
- D.The GST Council had recommended for constitutional amendment so that its power enhances.
Show answer
GST is levied by the Union and the States together on the same supply, and Article 246, which splits taxing powers between them through separate lists, did not allow such a concurrent tax.
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