The existence of a parallel economy or black money makes the monetary policies less effective. Parallel economy, based on the blank money or unaccounted money, causes high circulation of money in the market and thus causes inflation etc.

Correct Option: B

The existence of a parallel economy or black money makes the monetary policies less effective. Parallel economy, based on the blank money or unaccounted money, causes high circulation of money in the market and thus causes inflation etc.

In the parlance of economy, Gild-edged market is called market of safe securities. "Gild-edged" denotes high-grade securities, consequently carrying low yields.

Correct Option: C

In the parlance of economy, Gild-edged market is called market of safe securities. "Gild-edged" denotes high-grade securities, consequently carrying low yields.

At present Indian Rupee is fully convertible on current account. Current account convertibility means that any company that wants to conduct business with outside companies (like TCS, Infy etc.) can convert the dollar payment into Rupee payment or pay in terms of dollar itself. This is fully allowed in India provided that initial permission is taken from RBI.

Correct Option: B

At present Indian Rupee is fully convertible on current account. Current account convertibility means that any company that wants to conduct business with outside companies (like TCS, Infy etc.) can convert the dollar payment into Rupee payment or pay in terms of dollar itself. This is fully allowed in India provided that initial permission is taken from RBI.

Money laundering occurs in three steps: the first step involves introducing cash into the financial system by some means called as placement; the second involves carrying out complex financial transactions to camouflage the illegal source called layering; and the final step entails acquiring wealth generated from the transactions of the illicit funds called as integration.

Correct Option: D

Money laundering occurs in three steps: the first step involves introducing cash into the financial system by some means called as placement; the second involves carrying out complex financial transactions to camouflage the illegal source called layering; and the final step entails acquiring wealth generated from the transactions of the illicit funds called as integration.

Inflation reflects a situation where the demand for goods and services exceeds their supply in the economy. Higher interest rates in low inflation means higher real returns not just on money, but on all other assets too. These higher real returns increases the allocation of investment.

Correct Option: A

Inflation reflects a situation where the demand for goods and services exceeds their supply in the economy. Higher interest rates in low inflation means higher real returns not just on money, but on all other assets too. These higher real returns increases the allocation of investment.