ele ted      s   23.13
          3. Bond holders’ income increases with           3. Seignorage is a double-edged technique
              increased inflation in case of an                to increase governments’ income.
              inflation-indexed bond.
                                                          Select the correct statements using the code
          4. Cost of governments’ market                  below.
              borrowings increases in deflationary
                                                          (a) 1 and 2
              situation.
                                                          (b) 2 and 3
         Which of the above statements are correct?
                                                          (c) 1 and 3
         (a) 1, 2 and 3
                                                          (d) 1, 2 and 3
         (b) 2, 3 and 4
                                                      14. Consider the following statements related
         (c) 1, 2 and 4
                                                          to the functions of RBI.
         (d) 1, 2, 3 and 4
                                                           1. The final decision regarding Credit
     12. Consider the following statements regarding           and Monetary Policy is taken by the
         the operations of the various money market            Union Ministry of Finance.
         components in India:                              2. Open Market Operations by the RBI
          1. Commercial Paper route of borrowing               comes under its autonomous powers.
              working capital is profitable once           3. Ultimate power of issuing fresh
              inflation has peaked.                            currency notes in India remains with
          2. Cost of operation for the banks in the            the RBI.
              Call Money Market falls in the wake of       4. RBI has been given full autonomy in
              rising inflation.                                the area of regulating the All India
          3. Earnings from Money Market Mutual                 Financial Institutions.
              Funds.
                                                          Which of the above statements are
          4. Interest payments liabilities of the GoI     incorrect?
              on account of the Cash Management           (a) 1, 2 and 3
              Bill increases in case of decreased         (b) 2, 3 and 4
              inflation.
                                                          (c) 1, 3 and 4
         Select the correct statements using the code     (d) 1, 2, 3 and 4
         below.
                                                      15. Consider the following statements about
         (a) 1, 2 and 3                                   ‘market maker’.
         (b) 2, 3 and 4                                    1. Market maker is a kind of broker in
         (c) 1, 2 and 4                                        India’s security market who quotes
         (d) 1, 2, 3 and 4                                     two-way prices for the securities.
                                                           2. On the platform of the Over the
     13. Consider the following statements.
                                                               Counter Stock Exchange of India
          1. Governments cost of loan repayment                Ltd. (OTCEI) only market makers are
              is minimum once the inflation is                 allowed to trade.
              maximum.                                     3. The Discount and Finance House
          2. Tax collections of governments                    of India (DFHI) is the chief market
              increase with increased inflation.               maker in India’s Money Market.