2160 8 [This question paper contains 8 printed pages.

(b) What are intermediate targets? Critically examine Your Roll No...,...........
the rate of interest and money aggregates as G
Sr. No. of Question Paper: 2160
intermediate targets.
Unique Paper Code 227 4002005
(c) Derive and explain the following: Deposit multiplier,
currency multiplier and complete money multiplier. Name of the Paper Money and Banking
(9'9)
Name of the Course Generic Elective -
ffiF+a++acrn*sttffftq' Economics
Coii U.,
(or) rturm qR+ffir si t&c + q{srttl lrerrfi qRo-s+ Sem ester III
qiT iq+Ir 6.+ rrFq fr qs qt 6r Xit-flT +t Duration : 3 Hours {pximum Marks : 90
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' Instructions for Candidates
(q) qta-+ff as wr i? ftT{S deq + Gc i erq qt P
t];r {gqc qr 3{rfrq<rff6- Eiq-<r dftq t
Write your Roll No. on the top immediately on receipt
of this question paper.
(t) ffiR+< fr qrcqr dfrs qcr {-ur+., T{r g"16 gfu
qf trr yror 2 This paper has 8 questions, out of which 5 have to
be done by the student.

3. Each question is of 18 marks.

4. Please attempt all parts of a question in one place.

5 Answers may be written either in English or Hindi;

but the same medium should be used throughout the
paper.

(1500) P.T.O.
2160 )
2160 7
Afts fffrr (e) List three monetary tools that RBI
can use to
achieve its monetary targets.
F{I }rr;r-q? * A-o+ a sct frq qg ffufu rc{rr q{ irqn (6,6,6)
sr5mqro.frtev r
ftqRrfrF + i ft-d *a d srt fffrv:
2. T( tw+ e cr<*, ffit s ar* d ro q..r**i r
(ir) RBr + qR nh ffi +'r4 T{r fr tu}C * vs *
3. 9$5 ysq re sisi 6.r * r
+q ird{ e€ dfrsl
a. pv+rrr*{rt qFt a1 v+,ffrqmqqEaq+ ,
(e) it-*t 6tRrir- + sR + qra-srt afra q.lqr ensrq
s. yr;r-rg ?firrt< er}fr qr Eff ffi \16 tnqr+ A&q, Afu-{
E{T
* ffi a
vrt ql fteq
vrar *, rim*r q..c * qr& tr cfurR qrqR
rnft q-6. * rt{ ilBq qFolfir + serf + E{ 6!rc
r

fr qrql 66q,

(a) Derive and explain the concepts

(r) ffim-o qfi Rr *? s+RlM d qrcqr dftc frr<+
of deposit
multiplier and currency multiplier.
T6 fr+ qft *r go'rrwr *r

(b) Explain some

(e) u-<rw qRo-s+ *
ertsr yftq-o qm scr d *r, ++
of the factors that could lead to
financial crisis. Explain the role of asymmetric
d sh Cq, uo-<r * sfu C6.*rfr tcr rfr d co-ar
information in detail in this
*, e1s1 q16q,
context. (6,12)
(t) €-+riF*-sv-otot d qS -{r( fud-ol sc+rr Bnftrr{
(sr) vqr gr+, *t T{r d srq?rnurrcil + sR t- q{i
1u1+-
irc+ dF6 rq] d crq qt+ + frs tn-r Es-f,r *l
d&qr

Attempt and TWO questions of the following

F) Ts t+ sr.s] d qrqr dfrq + fttftq w+.e qr
8
:

tnRul tr{ v+'t *r fs Fdrl + i[sqn-d qnsrt

+ (a) Briefly explain the expectation hypothesis.
How
could future interest rates be forecast using the
Ttr6r*ftRR+ffirrr+l
expectation hypothesis?

P. T. O.
2160 6 2r60 ffi 3

(b) Explain how the Expectation Market Hypothesis 2 (a) Given required reserve ratio is l0ol0, desired excess
and Segmented-Market Hypothesis are different reserve ratio is 5% and desired currency to deposit
versions of the Preferred- Habitat Hypothesis. ratio is 25oh, how does an open market purchase
Discuss with examPle. (6,12) of Rs. 500,000 change deposits, currency holdings
and money stock. How does your answer change
(sr) efu d{ qrs Ermlt { +.r< + qqqqr $ ilsunut if the required reserve ratio rises to 20%?
{lrilr{gl
(b) Differentiate between the base rate and Marginal
Cost of Funds based lending rate MCLR. How
(e) aa a-<rc fr ftq q-6ri viqrFre qrqn qt+-srr *( are these rates useful in monetary transmission?
r#e -<rsn qft+q+ c{+dr-qdsr€ qR*-€ir + frfu{ (6,12)
tqtur *r serE{ur qR-d *sl Sfrqr
(er) a-a ?et gv fr en-<r:ro qrro to% *, siB-fr
unfuc
orRR-ff 3{rtfsd Bf,tcrd s% + d{ srB-d 5{r *r vcl
7 Attempt any THREE of the following :

ffdqriT 25% i, 6 1ge qrqR * €t-{

soo,ooo rqa
(a) Explain the diflerence between M., of second and
vcr, gar AFer( *r rfr dr d *t cco-fr tr qR
third working group report of RBI.
3XFI{{r6', 3rRfu( ifiitlliT 20% 6 trd qlg
(b) As information about firms become easier to vfrr *t €a VrgtII?
acquire, the role of banks reduces. Explain this
statement in the context of a security market (e ) < ifu frciil fffu Errrd i{Enfu 3qR rt (MCLR)
arun
hypothesis. + +q ilid{ d&qr iF6 vqrur + t d fr-q r6R
(c) What is the yield curve? Explain the conditions in 3c+ff +?
which it can it downward sloping.

(d) According to the expectation hypothesis the yield 3 (a) Explain the legal framework that allows the
curve can slope upward, downward, and be a Reserve Bank of India to function as a central
straight line. Explain. bank.

P.T.O.
 2160 4 2160 5
(b) Money supply in India can be affectod
by changes
in monetary base and/or money multiplier. Explain.
(i) +n **
(6,t2\ (ii) +{-+6ffisffi
(er) w mq+ zrt* qrcqr znftq * lnttc M +sr 5 (a) Differentiate between the prime lending
d +frc *o * w + orf u.l+ fr ertqA +<r e, rate
system and benchmark prime lending rate
systems.
(s) .rR-d
3- ar$ *Fo. olrtm *rrer r+ guro i
+ (b) It is not merely the number of instruments
that is
cRs-+{ + yr{rEa A €sff *r qrqr dfut important but the number of instruments
exerting
independent effects on the target variables.,
4 (a) What is reserve money? List the Explain this statement in the context of monetary
sources of
changes in reserve money. policy instruments and targets. (6,12)

(b) Explain the impact of financial sector reforms (sr) vrrr Aftr tc ft€c aii.+qqrd crs{
siace ffir te Re{
l99l for the following sub sectors:
d ftq sror d&qr
(i) Insurance sector
(q) '+s-d sq-*,,tfr + n-rqr ff T& i + cE-d$ * sfu
(ii) Non-bank financial companies (6,12) q{ q{ va-a qrnq Eld+ sre 3q-sifr
FrFr d sTqr s
cE€T,t *r'*tr6 +fr sq-fioi" at E$d + t-e$ t
(er) emFo a;r Hr *? s{Rf*d rr+ + cffi{ + qt+- * {a qial{ fr qrer dfrqr
(S q-{Sr

(<) tutRfuo ov *+- qr reel n Gmq ** Sqrt * eqn

6 (a) Explain the problem of lemons in stock and
bond
fr qrcer dfrq: markets

P.T.O