Subject: RBIXLiquidity Management

What is/are the purpose/purposes of the ‘Marginal Cost of Funds based Lending Rate(MCLR)’ announced by RBI?
1. These guidelines help improve the transparency in the methodology followed by banks for
determining the interest rates on advances.
2. These guidelines help ensure availability of bank credit at interest rates which are fair to the borrowers as well as the banks.
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Which one of the following is not the most likely measure the Government/RBI takes to stop the slide of Indian rupee?

If you withdraw Rs. 1,00,000 in cash from your Demand Deposit Account at your bank, the immediate effect on aggregate money supply in the economy will be
(a) to reduce it by Rs. 1,00,000
(b) to increase it by Rs. 1,00,000
(c) to increase it by more than Rs. 1,00,000
(d) to leave it unchanged

If the RBI decides to adopt an expansionist monetary policy, which of the following would
it not do?
1. Cut and optimize the Statutory Liquidity Ratio
2. Increase the Marginal Standing Facility Rate
3. Cut the Bank Rate and Repo Rate
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The money multiplier in an economy increases with which one of the following?