Chapter: Money and Commercial Banking
1.

Which of the following is a commercial bank?

A. State Bank of India
B. Unit Trust of India (UTI
C. IDBI
D. NABARD
Answer» A. State Bank of India
2.

Which one of the following is near money?

A. Treasury Bills
B. Bills of Exchange
C. Bonds and Debentures
D. All of the above
Answer» D. All of the above
3.

In July 1969, 14 major Indian scheduled banks were nationalised and 6 more banks were nationalised in

A. April 1980
B. May 1980
C. April 1981
D. May 1981
Answer» A. April 1980
4.

The liabilities of a bank are

A. Advance and loans
B. Time deposits and shares
C. Cash with reserve ratio
D. Bonds and debentures of share holders
Answer» B. Time deposits and shares
5.

The recent conversion of Financial Institutions into Commercial Banks or Non-Banking Finance Companies (NBFCs) under the regulatory aspect of RBI was suggested by

A. Narasimham Committee
B. Ministry of Company Affairs
C. Ministry of Finance
D. None of the above
Answer» A. Narasimham Committee
6.

Which property the paper money does not possess

A. Acceptability
B. Divisibility
C. Duality
D. Portability
Answer» C. Duality
7.

Rupee is a coin

A. Full Value
B. Token money
C. Credit money
D. Convertible
Answer» B. Token money
8.

Which one of the following is not included in the function of money

A. Make demand and supply
B. Store of value
C. Medium of exchange
D. Measure of value
Answer» A. Make demand and supply
9.

Convertible money means

A. It can buy means
B. Government can give gold against it
C. Illegal money
D. Low value of money
Answer» B. Government can give gold against it
10.

Commercial banks create

A. Credit money
B. Token money
C. Legal money
D. Do not create money
Answer» A. Credit money
11.

The most important features of money is

A. General acceptability
B. Convertibility into gold
C. Store of value
D. Medium of exchange
Answer» A. General acceptability
12.

Which movement encourage the formation of commercial banks

A. Swadeshi movement
B. Quit India movement
C. Non-cooperation movement
D. Civil disobedience movement
Answer» A. Swadeshi movement
13.

In which year was the Banking Regulation Act passed?

A. 1949
B. 1955
C. 1959
D. 1969
Answer» A. 1949
14.

What is the most widely used tool of monetary policy?

A. Issuing of notes
B. Open market operation
C. Discount rate
D. None of the above
Answer» C. Discount rate
15.

Banking sector comes under which of the following sectors?

A. Manufacturing sectors
B. Industrial sectors
C. Service sectors
D. None of the above
Answer» C. Service sectors
16.

Who is responsible for the supply of coins in India?

A. Reserve bank of India
B. Ministry of finance
C. Ministry of commerce and industry
D. Bankers association of India
Answer» B. Ministry of finance
17.

Difference between total receipt and total expenditure is

A. Capital deficit
B. budget deficit
C. fiscal deficit
D. Revenue deficit
Answer» B. budget deficit
18.

The commercial banks in India are governed by

A. Reserve bank of India Act 1934
B. Indian Companies Act 1956
C. Indian Banking Regulation Act 1949
D. Securities and Exchange Board of Indian Act 1993
Answer» C. Indian Banking Regulation Act 1949
19.

Which of the following limits the power of credit creation by commercial bank

A. Fiscal policy
B. Banking loan
C. Business possession
D. None of the above
Answer» D. None of the above
20.

Deposits which arise from granting of loans are called

A. primary deposits
B. derivative deposits
C. fixed deposits
D. All the above
Answer» B. derivative deposits
21.

Which among the following is considered to be the most liquid asset?

A. Gold
B. Money
C. Land
D. Treasury bonds
Answer» B. Money
22.

The first financial institution set up in India

A. IDBI
B. ICICI
C. IRBI
D. IFCI
Answer» D. IFCI
23.

In order to control credit and investment , the central bank of a country should

A. Sell securities in the open market and hike the cash reserve ratio
B. Buy securities in the open market
C. Buy securities from the open market and hike the cash reserve ratio
D. Sell securities in the open market
Answer» A. Sell securities in the open market and hike the cash reserve ratio
24.

Which one of the following is not an instrument of credit control in the banking system?

A. Open market operation
B. Cash Reserve ratio
C. Tax rate
D. Bonds and debentures
Answer» C. Tax rate
25.

The commercial bank do not perform one function out of the following

A. Mobilization of saving
B. Giving loans and advances
C. Issues currency notes
D. Financing priority sectors
Answer» C. Issues currency notes
26.

Credit creation power of the commercial banks gets limited by which of the following?

A. Banking habits of the people
B. Cash reserve ratio
C. Credit policy of the Central bank
D. All the above
Answer» D. All the above
27.

Number of times a unit of money change hands in the course of a year is called

A. Supply of money
B. Purchasing power of money
C. Velocity of money
D. value of money
Answer» C. Velocity of money
28.

Assets – liability =

A. Profit
B. Working capital
C. Capital
D. Long term liability
Answer» C. Capital
29.

The assets can be convert into cash within a short period like one year or less are known as

A. Current asset
B. Fixed asset
C. Tangible asset
D. Investment
Answer» A. Current asset
30.

Debentures is also name as

A. share
B. Bond
C. Equity
D. Reserve
Answer» B. Bond
31.

A bills of exchange when drawn requires

A. Nothing
B. Discounting
C. Acceptance
D. Investment
Answer» C. Acceptance
32.

The following is not a type of liability

A. Short term
B. Current
C. Fixed
D. Contingent
Answer» A. Short term
33.

Whichof the following is most liquid measure of money supply in India

A. M1
B. M2
C. M3
D. M4
Answer» A. M1
34.

Which of the following money supply is used by RBI?

A. Currency notes
B. Coins
C. Both A &B
D. None of the above
Answer» A. Currency notes
35.

The term ‘bank liquidity’ means

A. Its capacity to create credit
B. Its capacity to provide a high rate of interest
C. Its capacity to convert its assets into cash
D. None of the above
Answer» C. Its capacity to convert its assets into cash
36.

Accounting equation is base of

A. Single entry system
B. Dual concept
C. Double entry system
D. Costing measurement system
Answer» C. Double entry system
37.

Anything used as money must be

A. Fixed in value
B. Fixed in supply
C. Legal tender
D. Readily acceptable
Answer» D. Readily acceptable
38.

Which of the following can change money supply

A. National Assembly
B. Supreme Court
C. Government
D. State Bank
Answer» D. State Bank
39.

Which of the following increase money supply in the country?

A. Purchase of bonds by State Bank
B. Sale of bonds by State Bank
C. Increase in discount rate
D. Decrease in taxes
Answer» A. Purchase of bonds by State Bank
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