MONEY And BANKINGMULTIPLE CHOICE QUESTIONS (MCQ,s)
1. Which of the subsequent is typical character of the barter system?
a. a standard medium of exchange
b. Double coincidence of requirements
c. a standard unit of account
d. a typical for deferred payments
Answer: b
2. Money which is accepted as a medium of exchange due to the trust between the payer and therefore the payee is called:
a. Full bodied money
b. Credit money
c. paper money
d. Fiduciary money
Answer: d
3. Money that's issued by the authority of the govt is called:
a. Full bodied money
b. Credit money
c. paper money
d. Fiduciary money
Answer: c
4. Supply of cash is a:
a. Flow variable
b. Stock variable
c. Real flow
d. None of those
Answer: b
5. Which of the subsequent systems is followed by Federal Reserve Bank of India for issuing currency?
a. Proportionate system
b. Simple deposit system
c. Minimum reserve system
d. Fixed fiduciary issue system
Answer: c
6. deposit include
a. Saving account deposits and glued deposits
b. Saving account deposits and accounting deposits
c. accounting deposits and glued deposits
d. all kinds of deposits
Answer: b
7. Money is defined as:
a. Commonly accepted measure useful
b. A store useful
c. a typical of deferred payments
d. All of those
Answer: d
8. Component of cash supply
a. Coins
b. paper money
c. Demand deposits
d. All of those
Answer: d
9. the utmost limit to simply accept payments in coins
a. ₹ 500
b. ₹ 1000
c. ₹ 250
d. None of those
Answer: d
10. High powered money includes:
a. Currency and demand deposits
b. Demand deposits and saving deposits
c. Currency held by public and cash reserves with banks
d. None of those
Answer: d
Assertion (A) and Reason (R) type questions:
11. Read the subsequent statements – Assertion (A) and Reason (R). (Choose one among the right alternatives given below) Assertion(A) There are two components of cash supply, currency held by the general public and net demand deposits held by the commercial banks. Reason(R) funds may be a stock variable and refers to the stock of cash held by public in spendable form i.e., funds refers to the stock of cash in circulation in an economy.
a. Both (A) and (R) are true and (R) is that the correct explanation of (A)
b. Both (A) and (R) are true and (R) are true and (R) isn't the right explanation of (A)
c. (A) is true but (R) is fake
d. (A) is fake but (R) is true
Answer: a
12. Read the subsequent statements – Assertion (A) and Reason (R). (Choose one among the right alternatives given below) Assertion(A): Anything are going to be called money, if the law of country proclaims it to be money. it'll be commonly accepted measure useful because it are going to be endowed with tender power (limited and unlimited). Thus “money is what the law says it is”. Reason(R): limited delivery money are often accepted up to a particular maximum limit. for instance , in India, coins up to rs1000 only (as per coinage bill, august 2011) are often accepted legally in payment. All currency notes have unlimited tender .
a. Both (A) and (R) are true and (R) is that the correct explanation of (A)
b. Both (A) and (R) are true and (R) are true and (R) isn't the right explanation of (A)
c. (A) is true but (R) is fake
d. (A) is fake but (R) is true
Answer: a
13. Read the subsequent statements – Assertion (A) and Reason (R). (Choose one among the right alternatives given below) Assertion(A) Money is an asset and may be stored in future money helps people to transfer their purchasing power from present use to future use. Reason (R) Money may be a thanks to store wealth because it's commonly accepted measure useful and straightforward to store money
a. Both (A) and (R) are true and (R) is that the correct explanation of (A)
b. Both (A) and (R) are true and (R) are true and (R) isn't the right explanation of (A)
c. (A) is true but (R) is fake
d. (A) is fake but (R) is true
Answer: a
14. Read the subsequent statements – Assertion (A) and Reason (R). (Choose one among the right alternatives given below) Assertion (A)Money is additionally called bearer of options Reason(R) Money commonly accepted measure useful money helps in buying selling of products and services
a. Both (A) and (R) are true and (R) is that the correct explanation of (A)
b. Both (A) and (R) are true and (R) are true and (R) isn't the right explanation of (A)
c. (A) is true but (R) is fake
d. (A) is fake but (R) is true
Answer: a
15. Read the subsequent statements – Assertion (A) and Reason (R). (Choose one among the right alternatives given below) Assertion(A) higher the legal reserve ratio, lower are going to be the credit creation and lower the legal reserve ratio, higher are going to be the credit creation. Reason(R) money/ deposit multiplier during a multiple by which total deposits increase thanks to primary deposit. It refers to the quantity by which the initial deposits multiply into a bigger amount of ultimate deposits. Money multiplier= 1/(LRR/RDR) (LRR=legal reserve ratio RDR=reserve deposits ratio)
a. Both (A) and (R) are true and (R) is that the correct explanation of (A)
b. Both (A) and (R) are true and (R) are true and (R) isn't the right explanation of (A)
c. (A) is true but (R) is fake
d. (A) is fake but (R) is true
Answer: a
16. Read the subsequent statements – Assertion (A) and Reason (R). (Choose one among the right alternatives given below) Assertion(A) to spice up the falling demand within the economy, Federal Reserve Bank of India recently reduced repo rate and discount rate . Reason(R) decrease in repo rate and discount rate causes decrease in rate of interest which results in rise in demand of credit because within the rate of interest which results in rise in demand of credit due to which extra money flows into the system, purchasing power of individuals increases. Thus aggregate demand rises and deficient demand is corrected.
a. Both (A) and (R) are true and (R) is that the correct explanation of (A)
b. Both (A) and (R) are true and (R) are true and (R) isn't the right explanation of (A)
c. (A) is true but (R) is fake
d. (A) is fake but (R) is true
Answer: a
17. Read the subsequent statements – Assertion (A) and Reason (R). (Choose one among the right alternatives given below) Assertion(A) A margin is that the difference between market price of the safety offered by the borrower against the loan and therefore the amount of loan granted Reason(R) The discount fixed by RBI on the assets mortgaged as security to the full service bank example: margin requirement is 20% the bank is allowed to offer loan up to 80%
a. Both (A) and (R) are true and (R) is that the correct explanation of (A)
b. Both (A) and (R) are true and (R) are true and (R) isn't the right explanation of (A)
c. (A) is true but (R) is fake
d. (A) is fake but (R) is true
Answer: a
18. Read the subsequent statements – Assertion (A) and Reason (R). (Choose one among the right alternatives given below) Assertion(A) legal reserve ratio determines the limit to make credit by the commercial banks Reason(R) the credit created by commercial banks are called derivative deposits a bank cannot lead quite primary deposits
a. Both (A) and (R) are true and (R) is that the correct explanation of (A)
b. Both (A) and (R) are true and (R) are true and (R) isn't the right explanation of (A)
c. (A) is true but (R) is fake
d. (A) is fake but (R) is true
Answer: a
19. funds within the economy has increased over 5 months since June due to:
a. Public holding cash for transaction and precautionary
b. Inflow of exchange
c. Uncertainty caused by corona virus pandemic
d. All of those
Answer: d
20. Sum of currency with public, demand deposits and time deposits with banks is a reasonably measure of cash supply.
a. M1
b. M2
c. M3
d. None of the above
Answer: c
21. ____ and military are the components of cash supply.
a. Currency held with public, fixed deposits
b. Currency held with public, demand deposits
c. Coins, paper money
d. Goods, services
Answer: b
22. funds refers to the entire assistance from money in circulation within the economy which
can be directly used for transactions.
a. Stock
b. Flow
c. Depreciation
d. Value
Answer: a
23. Demonetization announced for the aim of
a. To tackle the matter of corruption
b. To tackle the matter of Black money
c. To tackle the matter of terrorism
d. All of the above
Answer: d
24. Which currency notes are demonetized
a. Rs 500
b. Rs 1000
c. both (a) and (b)
d. none of the above
Answer: c
25. positive impacts of demonetization
a. sizable amount of individuals was brought within the tax ambit
b. savings are channelized into the formal economic system
c. Both(a) and (b)
d. None of the above
Answer: c
26. Criticism on demonetization
a. Long queues outside banks and ATM centers
b. Shortage of the currency in circulation
c. Both (a) and (b)
d. None of the above
Answer: c
27. The Federal Reserve Bank of India lowered reverse repo rate to discourage banks from parking idle funds hopefully .
a. RBI
b. Commercial banks
c. Cooperative banks
d. NABARD
Answer: a
28. RBI’s measure of reduction in reverse repo rate is completed to enable commercial banks ___.
a. To use the excess funds for investment
b. To grant loans for productive purposes
c. To widen economic and financial landscape
d. All of those
Answer: d
29. Reverse repo rate is abundantly to correct excess demand.
a. Decreased
b. increased
c. Constant
d. Flexible
Answer: b
30. When reverse repo rate is reduced, it _____
a. Discourage the commercial banks to park their surplus funds with RBI
b. Encourage the commercial banks to park their surplus funds with RBI
c. Both (a) and (b)
d. Neither (a) or (b)
Answer: a
31. Commercial banks create money by way of:
(a) Fixed deposits (b) Demand deposits
(c) Treasury bills
(d) Bill of exchange
Answer: b
32. Which of the following us not concerned with banking organization?
(a) Bank rate
(b) Fiscal deficit
(c) Credit creation
(d) Cash reserve ratio
Answer: b
33. Central Bank is an open bank of the country that:
(a)Controls the entire banking system of the country
(b)Issues currency
(c)Acts as a banker to the government
(d)All of these
Answer: d
34. CRR in India is fixed by:
(a) The commercial banks
(b) the government
(c) the RBI
(d) the RBI and commercial banks
Answer: c
35. Reserve repo rate:
(a)Generates interest income
(b) is increased to control inflation
(c) is not a policy rate
(d) Both (a) and (b)
Answer: d
36. In India, the central bank is____________
(a)Federal Reserve System
(b) Federal System
(c) Reserve Bank of India
(d) Both (b) and
Answer: c
37. Open market operations as an instrument of credit control are performed by:
(a)The central bank of the country
(b)The commercial bank of the country
(c) Both (a) and (b)
(d) None of these
Answer: a
38. As an advisor to the government central bank frames policies to regulate the:
(a) Money market
(b) Capital Market
(c) Financial and Capital market
(d) none of these
Answer: a
39. Formula to calculate money multiplier_________
(a) 1/CRR
(b) 1/SLR
(c) 1/CRR*1/SLR
d) 1/SLR*time deposits
Answer: d
40. Credit cards issued by the banks are___________ [1]
(a) Encourage consumer spending
(b) Increase aggregate demand the economy
(c) Increase in aggregate supply
(d) both (a) and (b)
Answer: d
41. Read the following statements Assertion (A) and Reason (R). Choose the correct alternatives
given below.
Assertion (A): Higher the legal reserve ratio lowers the credit creation and lower the reserve
ratio higher will be the credit creation.
Reason (R): Money/Deposit multiplier is a multiple by which total deposits increases due to
primary deposits. It refers to the amount by which the initial deposits multiply into a large
amount of the deposits.
Money multiplier = 1/LRR/RDR
(LRR= Legal reserve ratio, Reserve Deposit ratio)
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is the not correct explanation of
Assertion (A)
(c) Assertion (A) is true but Reason (R) is false
(d) Assertion (A) is false but Reason (R) is true
Answer: a
42. Peruse the accompanying assertions Assertion (A) and Reason (R). Pick the right other options given underneath. Statement (A): To support the falling interest in the economy. Save bank of India as of late decreased repo rate and bank rate. Reason (R): Decrease in repo rate and bank rate causes diminishes in the pace of revenue which prompts rise interest of credit in view of which more cash streams into the economy, Purchasing force of individuals increments. Along these lines total interest rises and lacking interest is adjusted. Options: (a) Both Assertion (A) and Reason (R) are valid and Reason (R) is the right clarification of Affirmation (A). (b) Both Assertion (A) and Reason (R) are valid and Reason (R) is the not right clarification of Statement (A) (c) Assertion (A) is valid yet Reason (R) is bogus (d) Assertion (A) is bogus yet Reason (R) is valid Reply: a 43. Peruse the accompanying assertions Assertion (A) and Reason (R). Pick the right other options given underneath. Declaration (A): There are two parts of cash supply money held by people in general and the request stores held by the business banks. Reason (R): Money supply is a stock variable and alludes to the load of cash held by the general population in spendable structures i.e cash supply alludes to the load of cash available for use in an economy. Choices: (a) Both Assertion (A) and Reason (R) are valid and Reason (R) is the right clarification of Statement (A). (b) Both Assertion (A) and Reason (R) are valid and Reason (R) is the not right clarification of Affirmation (A) (c) Assertion (A) is valid however Reason (R) is bogus (d) Assertion (A) is bogus yet Reason (R) is valid Ans. a
44. Peruse the accompanying assertions Assertion (A) and Reason (R). Pick the right other options given underneath. Declaration (A): Anything will be called cash if the law of nation broadcasts it to be cash. It will be normally acknowledged proportion of significant worth as it will be invested with legitimate delicate force (Restricted and unlimited).Thus "cash is the thing that the law says it is" Reason (R): Limited lawful delicate cash can be acknowledged up to a specific cutoff. For instance in India, coins up to Rs1000 just (according to money charge, August 2011) can be acknowledged legitimately in installment. All money notes have limitless legitimate delicate. Choices: (a) Both Assertion (A) and Reason (R) are valid and Reason (R) is the right clarification of Attestation (A). (b) Both Assertion (A) and Reason (R) are valid and Reason (R) is the not right clarification of Attestation (A) (c) Assertion (A) is valid however Reason (R) is bogus (d) Assertion (A) is bogus however Reason (R) is valid Ans: a
45. Peruse the accompanying assertions Assertion (A) and Reason (R). Pick the right other options given underneath.
Declaration (A): Central bank of a nation has the selective right (restraining infrastructure right) of giving
cash notes (with the exception of one rupee note/coin) and national bank has the total capacity to the
cash supply and credit in the country.
Reason (R): Central bank can utilize just quantitative technique to control credit.
Options:
(a) Both Assertion (A) and Reason (R) are valid and Reason (R) is the right clarification of
Statement (A).
(b) Both Assertion (A) and Reason (R) are valid and Reason (R) is the not right clarification of
Statement (A)
(c) Assertion (A) is valid yet Reason (R) is bogus
(d) Assertion (A) is bogus yet Reason (R) is valid
Ans: b
46. Peruse the accompanying assertions Assertion (A) and Reason (R). Pick the right other options
given beneath.
Affirmation (A): Money supply is a stream idea.
Reason (R): Money Supply consistently estimated at a specific place of time
Options:
(a) Both Assertion (A) and Reason (R) are valid and Reason (R) is the right clarification of
Declaration (A).
(b) Both Assertion (A) and Reason (R) are valid and Reason (R) is the not right clarification of
Affirmation (A)
(c) Assertion (A) is valid however Reason (R) is bogus
(d) Assertion (A) is bogus yet Reason (R) is valid
Ans: C
47. Peruse the accompanying assertions Assertion (A) and Reason (R). Pick the right other options
given beneath.
given beneath.
Attestation (A): Central bank goes about as a financier to the public authority as an overseer of money saves. Reason (R): The national bank goes about as a clearing house for move and settlement of shared cases of business banks. Options: (a) Both Assertion (A) and Reason (R) are valid and Reason (R) is the right clarification of Attestation (A). (b) Both Assertion (A) and Reason (R) are valid and Reason (R) is the not right clarification of Attestation (A) (c) Assertion (A) is valid however Reason (R) is bogus (d) Assertion (A) is bogus however Reason (R) is valid Ans: b 48. Peruse the accompanying assertions Assertion (A) and Reason (R). Pick the right other options given underneath. Declaration (A): The hold bank of India had in March 2020 offered a three months ban on advances empowering borrowers to concede reimbursement on EMI and different credits. Reason (R): The advance ban was pointed toward giving borrowers help pointed the monetary effect of the Coronavirus pandemic. Options: (a) Both Assertion (A) and Reason (R) are valid and Reason (R) is the right clarification of Affirmation (A). (b) Both Assertion (A) and Reason (R) are valid and Reason (R) is the not right clarification of Affirmation (A) (c) Assertion (A) is valid however Reason (R) is bogus (d) Assertion (A) is bogus however Reason (R) is valid Ans: a 49. Peruse the accompanying assertions Assertion (A) and Reason (R). Pick the right other options given underneath. Statement (A): Central Bank is the Lender of the final Resort. Reason (R): It is prepared to loan to banks, when bank confronted extreme emergencies. In the event that Central bank declines, there is no alternative for the banks except for to closure. Choices: (a) Both Assertion (A) and Reason (R) are valid and Reason (R) is the right clarification of Declaration (A). (b) Both Assertion (A) and Reason (R) are valid and Reason (R) is the not right clarification of Attestation (A) (c) Assertion (A) is valid however Reason (R) is bogus (d) Assertion (A) is bogus however Reason (R) is valid Ans: b
50. Peruse the accompanying assertions Assertion (A) and Reason (R). Pick the right other options given beneath. Attestation (A): Currency held by open is a financial obligation of national bank Reason (R): Central bank controls credit, while business banks make credit with cash held by open. Options: (a) Both Assertion (A) and Reason (R) are valid and Reason (R) is the right clarification of Attestation (A). (b) Both Assertion (A) and Reason (R) are valid and Reason (R) is the not right clarification of Attestation (A) (c) Assertion (A) is valid however Reason (R) is bogus (d) Assertion (A) is bogus yet Reason (R) is valid Ans: d
51. The Reserve Bank of India brought invert repo rate down to deter banks from stopping inactive assets with ________ (RBI/Commercial Banks) Ans: RBI (Reserve Bank of India)
52. RBI's proportion of decrease backward repo rate is done to empower business banks _________ (a) To utilize the excess assets for venture (b) To give advances for useful purposes (c) To broaden monetary and monetary land space (d) none of these Ans: (d) none of these
53. Switch repo rate is _______(increased/diminished) to address overabundance interest Ans.: expanded
54. At the point when switch repo rate is decreased, it__________ (a) Discourages the business banks to stop their excess assets with RBI (b) Encourages the business banks to stop their excess assets with RBI (c) Both (a) and (b) (d) Neither (a) nor (b) Ans: (a) debilitate the business banks to stop their excess assets with RBI
55. Cash supply in the economy has expanded more than 5 months since June due to:
(a) Public holding cash for exchange and prudent thought process.
(b) Inflow of unfamiliar trade.
(c) Uncertainty brought about by Covid pandemic
(d) none of these
Ans: (d) none of these
56. Amount of money with public, request stores and time stores with the bank is _________ (M2/M3) Measure of cash supply. Ans: M3
57._______ and ________ are the parts of cash supply. ANS: Currency held by open, net interest stores held by the business banks
58. Cash supply alludes to the absolute _______(stock/stream) of cash available for use in the economy which can be straightforwardly utilized for exchanges.
Ans: Stock
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