McqMate
Chapters
1. |
The value of money in Fisher’s equation is determined by |
A. | Demand for money |
B. | Supply of money |
C. | Demand and supply of money |
D. | None of the above |
Answer» C. Demand and supply of money |
2. |
According to the Quantity Theory of Money, the value of money depends upon |
A. | Quantity theory of money in circulation |
B. | Purchasing power of money |
C. | Demand for money |
D. | Price level |
Answer» A. Quantity theory of money in circulation |
3. |
According to Cambridge equation, the value of money depends upon |
A. | Demand for money |
B. | Supply of money |
C. | Demand for goods and services |
D. | All of the above |
Answer» A. Demand for money |
4. |
The degree of relationship between the demand for and the supply of money in Fisher’s equation will be |
A. | 𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠 > 𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑 |
B. | 𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠 = 𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑 |
C. | 𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠 < 𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑 |
D. | None of the above |
Answer» B. 𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠 = 𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑 |
5. |
Which is not the function of money |
A. | Make demand and supply equal |
B. | Store of value |
C. | Medium of exchange |
D. | Measure of value |
Answer» A. Make demand and supply equal |
6. |
High-powered money is also known as |
A. | Base money |
B. | Reserve money |
C. | Narrow money |
D. | All of the above |
Answer» D. All of the above |
7. |
Who stated, “Bad money drives good money out of circulation, when both of them are full legal tender”? |
A. | Irving Fisher |
B. | Milton Friedman |
C. | J.M. Keynes |
D. | Thomas Gresham |
Answer» D. Thomas Gresham |
8. |
Value of money is |
A. | Directly related to the price level |
B. | Inversely related to the price level |
C. | Proportionately related to the price level |
D. | All the above |
Answer» B. Inversely related to the price level |
9. |
Who stated, “Money is what money does”? |
A. | Milton Friedman |
B. | Walker |
C. | Irving Fisher |
D. | Thomas Gresham |
Answer» B. Walker |
10. |
Barter system means |
A. | Purchase of commodity with money |
B. | Sale of commodity with money |
C. | Purchase and sale of commodity with commodity |
D. | None of the above |
Answer» C. Purchase and sale of commodity with commodity |
11. |
Which among the following is considered to be the most liquid asset? |
A. | Gold |
B. | Money |
C. | Land |
D. | Treasury bonds |
Answer» B. Money |
12. |
Currency notes and coins are called as: |
A. | flat money |
B. | legal tenders |
C. | Fiat money |
D. | Both (b) and (c |
Answer» D. Both (b) and (c |
13. |
Convertible money means |
A. | It can buy goods |
B. | Government can give gold against it |
C. | Illegal money |
D. | Low value of money |
Answer» B. Government can give gold against it |
14. |
Barter system has the defect of |
A. | Goods exchanged are of inferior quality |
B. | Goods cannot be exchanged for services |
C. | Lack of common measure of value |
D. | None of the above |
Answer» C. Lack of common measure of value |
15. |
Legal money is called so because |
A. | The buyer must pay in that money |
B. | Can be converted into gold |
C. | Sellers do not accept any other money |
D. | It is official medium of exchange |
Answer» D. It is official medium of exchange |
16. |
The most important feature of money is |
A. | General acceptability |
B. | Convertibility into gold |
C. | Store of value |
D. | Medium of exchange |
Answer» A. General acceptability |
17. |
Which property the paper money does not possess: |
A. | acceptability |
B. | Divisibility |
C. | Durability |
D. | Portability |
Answer» C. Durability |
18. |
In the equation 𝑀𝑀𝑀𝑀 = 𝑃𝑃𝑃𝑃, 𝑉𝑉 𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑡𝑡𝑡𝑡 |
A. | Value of money |
B. | Velocity of circulation of money |
C. | Variation of national income |
D. | All of the above |
Answer» B. Velocity of circulation of money |
19. |
In the equation 𝑀𝑀𝑀𝑀 = 𝑃𝑃𝑃𝑃, 𝑀𝑀 𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟 |
A. | Money supply |
B. | Money demand |
C. | Maximum output |
D. | Minimum output |
Answer» A. Money supply |
20. |
According to Keynes, motives for holding money are |
A. | Two |
B. | Three |
C. | Four |
D. | Five |
Answer» B. Three |
21. |
Under normal circumstances, the velocity of circulation of money in a country is |
A. | 100 % |
B. | Negative |
C. | Less than 10 |
D. | Zero |
Answer» C. Less than 10 |
22. |
Paper money is called fiat money because |
A. | It is issued with authority of government |
B. | It is convertible into gold |
C. | It can be easily printed |
D. | It is light weight |
Answer» A. It is issued with authority of government |
23. |
Value of money means |
A. | Gold purchased by money |
B. | General Purchasing power of money |
C. | Importance of money |
D. | Demand for money |
Answer» B. General Purchasing power of money |
24. |
If the quantity of money increases 100%, other things remaining constant, value of money changes by |
A. | Increases by 100 % |
B. | Decreases by 100 % |
C. | Decreases by 200% |
D. | Does not change |
Answer» B. Decreases by 100 % |
25. |
Value of money and supply of money are related |
A. | Inversely |
B. | Directly |
C. | Are not related |
D. | None of the above |
Answer» A. Inversely |
26. |
The quantity demanded of money rises |
A. | As the interest rises |
B. | As the interest falls |
C. | As the supply of money falls |
D. | As the numberof banks rises |
Answer» B. As the interest falls |
27. |
Equation of exchange is associated with |
A. | Pigou |
B. | J.B.Say |
C. | Marshall |
D. | Irving Fisher |
Answer» D. Irving Fisher |
28. |
Equation of exchange is converted into the quantity theory of money by assuming the following variables as constants |
A. | V and T |
B. | M and V |
C. | M and P |
D. | V and P |
Answer» A. V and T |
29. |
Fisher equation of exchange states that |
A. | P varies directly with income |
B. | P varies directly with M |
C. | P and M are constants |
D. | None of the above |
Answer» B. P varies directly with M |
30. |
In the Fisher’s extended equation of exchange MI VI represents |
A. | Credit money |
B. | Primary money |
C. | Both primary and credit money |
D. | General Price level |
Answer» A. Credit money |
31. |
In Fisher’s transaction velocity model, which one of the following is not an assumption |
A. | Velocity of circulation of money is constant |
B. | The volume of transaction is constant |
C. | Full employment |
D. | P is considered as an active factor |
Answer» D. P is considered as an active factor |
32. |
The cash balance equation 𝑀𝑀 = 𝐾𝐾𝐾𝐾𝐾𝐾 was given by |
A. | Keynes |
B. | Pigou |
C. | Robertson |
D. | Marshall |
Answer» D. Marshall |
33. |
The quantity theory of money was restated by |
A. | Alfred Marshall |
B. | Milton Friedman |
C. | Irving Fisher |
D. | JM. Keynes |
Answer» B. Milton Friedman |
34. |
Fisher’s equation of exchange considers money as |
A. | A medium of exchange |
B. | A store of value |
C. | Measures of value |
D. | All of the above |
Answer» A. A medium of exchange |
35. |
Robertson’s equation of exchange considers money as |
A. | A medium of exchange |
B. | A store of value |
C. | Measures of value |
D. | All of the above |
Answer» B. A store of value |
36. |
The number of times a unit of money exchanges hands during a unit period of time is known as |
A. | Velocity of the circulation of money |
B. | Speed of circulation of money |
C. | Momentum of circulation of money |
D. | Count of circulation of money |
Answer» A. Velocity of the circulation of money |
37. |
In India, coins are minted at four places, which among the following is one of them |
A. | New Delhi |
B. | Chennai |
C. | Hyderabad |
D. | All of them |
Answer» C. Hyderabad |
38. |
Which of the following is a qualitative or selective method of credit control by the central bank? |
A. | Bank rate or Discount Rate Policy |
B. | Open market operations |
C. | Cash Reserve Ratio |
D. | None of the above |
Answer» D. None of the above |
39. |
In what way the Central Bank serves as a Banker’s Bank? |
A. | By maintaining gold reserve |
B. | By controlling currency |
C. | By acting as a lender of the last resort |
D. | By reducing the interest rates |
Answer» C. By acting as a lender of the last resort |
40. |
Which of the following is not a function of commercial bank? |
A. | Accepting deposits |
B. | Creating credits |
C. | Printing bank notes |
D. | None of the above |
Answer» C. Printing bank notes |
41. |
Reserve Bank of India(RBI) was established on |
A. | 1st April,1925 |
B. | 1st April 1935 |
C. | 1st April 1945 |
D. | 1st April 1955 |
Answer» B. 1st April 1935 |
42. |
Primary deposit in a commercial bank is called |
A. | Active deposit |
B. | Passive deposit |
C. | Derivative deposit |
D. | All of the above |
Answer» B. Passive deposit |
43. |
Derivative deposit in a commercial bank is also called |
A. | Active deposit |
B. | Passive deposit |
C. | Primary deposit |
D. | None of the above |
Answer» A. Active deposit |
44. |
Bank rate is |
A. | The rate of interest charged by banks on their loans |
B. | The rate of interest paid by banks on deposits |
C. | Official discount rate at which the Central Bank rediscount approved bills of the commercial banks |
D. | The interest paid by commercial banks to their beneficiaries |
Answer» C. Official discount rate at which the Central Bank rediscount approved bills of the commercial banks |
45. |
Which of the following is not a function of Central Bank? |
A. | Enjoys monopoly of note issue |
B. | Acts as the banker’s bank |
C. | Creation of credit |
D. | Lender of the last resort |
Answer» A. Enjoys monopoly of note issue |
46. |
Which of the following is a qualitative method of credit control of a central bank? |
A. | Bank rate |
B. | Open market operation |
C. | Rationing of Credit |
D. | All of the above |
Answer» C. Rationing of Credit |
47. |
If the central bank wants to control credit, it should |
A. | Lower the rediscount rate |
B. | Raise the bank rate |
C. | Buy securities in the open market |
D. | Raise cash reserve ratio |
Answer» B. Raise the bank rate |
48. |
Which of the following is a selective credit instrument? |
A. | variable reserve ratio |
B. | credit rationing |
C. | Bank rate |
D. | All of the above |
Answer» B. credit rationing |
49. |
When the Central Bank intends to expand the credit, it should |
A. | Raise the margin requirements |
B. | Raise the variable reserve ratio |
C. | Lower the bank rate |
D. | Purchase government securities in the open market |
Answer» D. Purchase government securities in the open market |
50. |
Open Market Operation is |
A. | Buying and selling of government securities |
B. | Sale of government securities |
C. | Buying and selling of government cheques |
D. | All of the above |
Answer» A. Buying and selling of government securities |
51. |
Open market operation will become successful if there is a |
A. | free-market economy |
B. | developing economy |
C. | well-developed bill and security market |
D. | All of the above |
Answer» C. well-developed bill and security market |
52. |
Which of the following is not an instrument of selective credit control? |
A. | Margin requirements |
B. | Open market operation |
C. | Credit rationing |
D. | None of the above |
Answer» B. Open market operation |
53. |
Bank rate policy is not very effective because- |
A. | It requires a well-developed money market |
B. | It cannot operate effectively |
C. | All banks are not under the control of central bank |
D. | All the above |
Answer» A. It requires a well-developed money market |
54. |
Which of the following is not a quantitative method of credit control |
A. | Bank arte |
B. | Open market operation |
C. | Variable reserve ratio |
D. | Regulation of consumer credit |
Answer» D. Regulation of consumer credit |
55. |
To what extent the central bank is the lender of the last resort? |
A. | As it lends to the government |
B. | As it provides finance to agriculture |
C. | As it is the ultimate source of credit in times of crisis |
D. | As it controls the money supply in the economy |
Answer» C. As it is the ultimate source of credit in times of crisis |
56. |
Variable reserve ratio refers to- |
A. | The ratio which the commercial banks are required to maintain with the central bank |
B. | The ratio at which the central bank rediscounts first class bills |
C. | The purchase and sale by the central bank to government securities in the money market |
D. | All of the above |
Answer» A. The ratio which the commercial banks are required to maintain with the central bank |
57. |
The term bank liquidity implies |
A. | Management of cash |
B. | Creation of credit |
C. | The capacity of the bank to give cash on demand in exchange |
D. | All of the above |
Answer» C. The capacity of the bank to give cash on demand in exchange |
58. |
What is known as the most profitable asset of a commercial bank? |
A. | Investment at call and short-notice |
B. | Loans and advances to its customers |
C. | Accepting deposits |
D. | None of the above |
Answer» B. Loans and advances to its customers |
59. |
The fundamental function of a commercial bank is |
A. | Acceptance of deposits |
B. | Advancing loans |
C. | Issuing bank draft |
D. | Creating credit |
Answer» B. Advancing loans |
60. |
Which of the following is not a function of commercial bank? |
A. | Accepting deposits |
B. | Advancing loans |
C. | Creating credit |
D. | Printing bank notes |
Answer» D. Printing bank notes |
61. |
Loans and investment of a commercial bank constitute its |
A. | Derivative deposits |
B. | Primary deposits |
C. | Secondary deposits |
D. | All of the above |
Answer» A. Derivative deposits |
62. |
Bank’s liquidity means |
A. | Its capacity to create credit |
B. | Its capacity to provide a high rate of interest |
C. | Its capacity to supply finance |
D. | Its capacity to convert its assets into cash |
Answer» D. Its capacity to convert its assets into cash |
63. |
A bank’s capacity to create credit is limited by the |
A. | Size of cash |
B. | Size of its area |
C. | Size of the central bank |
D. | All of the above |
Answer» A. Size of cash |
64. |
A bank can increase the supply of money by |
A. | printing notes |
B. | Creating credit |
C. | Issuing cheques |
D. | None of the above |
Answer» B. Creating credit |
65. |
Which of the following public sector banks has the highest number of branches in India? |
A. | State Bank of India |
B. | Allahabad Bank |
C. | Bank of India |
D. | Punjab National Bank |
Answer» A. State Bank of India |
66. |
Derivative deposits are created during the time of – |
A. | Accepting demand deposits |
B. | Accepting drafts |
C. | Making loans to the customers |
D. | All of the above |
Answer» C. Making loans to the customers |
67. |
The securities and bonds which a commercial banks holds is also known as |
A. | Cash reserve ratio |
B. | Derivative deposits of the banks |
C. | Secondary deposits of the bank |
D. | All of the above |
Answer» C. Secondary deposits of the bank |
68. |
Which is known as the most profitable asset of the bank? |
A. | loans and advance to its customers |
B. | the investment in government securities |
C. | life insurance policies of the staff |
D. | None of the above |
Answer» A. loans and advance to its customers |
69. |
The derivative deposit created by a bank results in- |
A. | a decrease in the total stock of money |
B. | an increase in the total stock of money |
C. | an increase in government securities |
D. | none of the above |
Answer» B. an increase in the total stock of money |
70. |
What is Currency Deposit Ratio (CDR)? |
A. | Ratio of money held by the public in currency to that of money held in bank deposits |
B. | Ratio of money held by the public in bank deposits to that of money held by public in currency |
C. | Ratio of money held in demand drafts to that of money held in treasury bonds |
D. | None of the above |
Answer» A. Ratio of money held by the public in currency to that of money held in bank deposits |
71. |
What is the Reserve Deposit Ratio ? |
A. | The proportion of money RBI lends to commercial banks |
B. | The proportion of total deposits commercial banks keep as reserves |
C. | The total proportion of money that commercial banks lend to the customers |
D. | None of the above |
Answer» B. The proportion of total deposits commercial banks keep as reserves |
72. |
Which among the following is called the rate of interest charged by RBI for lending money to various commercial banks by rediscounting of the bills in India? |
A. | Bank rate |
B. | Discount window |
C. | Monetary Policy |
D. | Overnight rate |
Answer» A. Bank rate |
73. |
What method is used by the Bank to read code on cheque? |
A. | MICR |
B. | OCR |
C. | OMR |
D. | None of the above |
Answer» A. MICR |
74. |
Which is the largest private sector bank in India? |
A. | ICICI |
B. | Axis Bank |
C. | HDFC |
D. | ICICI |
Answer» C. HDFC |
75. |
Who was the first Indian to become Governor of Reserve Bank of India(RBI)? |
A. | Liaquant Ali Khan |
B. | T.T. Krishnamachari |
C. | John Mathai |
D. | C.D. Deshmukh |
Answer» D. C.D. Deshmukh |
76. |
In July 1969, 14 major Indian Scheduled Banks were nationalized and 6 more banks were nationalized in |
A. | April 1980 |
B. | May 1980 |
C. | April 1981 |
D. | May 1981 |
Answer» A. April 1980 |
77. |
Which is the largest private sector bank in India? |
A. | Axis Bank |
B. | ICICI Bank |
C. | HDFC Bank |
D. | South Indian Bank |
Answer» B. ICICI Bank |
78. |
The term business cycle refers to |
A. | Fluctuations in aggregate economic activity over time |
B. | Ups and down in the production of goods |
C. | Increasing unemployment |
D. | Declining savings |
Answer» A. Fluctuations in aggregate economic activity over time |
79. |
Which one of the following is not the characteristic of business cycle? |
A. | They are recurrent |
B. | They are not at regular intervals |
C. | They have uniform causes |
D. | All of the above |
Answer» C. They have uniform causes |
80. |
The turning points of the business cycle are |
A. | Expansion and peak |
B. | Peak and Contraction |
C. | Contraction and Trough |
D. | Peak and Trough |
Answer» D. Peak and Trough |
81. |
Which of the following is referred to the top or the highest point of business cycle |
A. | Expansion |
B. | Peak |
C. | Expansion and Peak |
D. | None of the above |
Answer» B. Peak |
82. |
Trade cycles are caused by |
A. | Fiscal factors |
B. | Monetary factors |
C. | Both monetary and non-monetary factors |
D. | None of the above |
Answer» C. Both monetary and non-monetary factors |
83. |
During the phase of recovery |
A. | Aggregate demand remains constant |
B. | Aggregate demand increases |
C. | Aggregate demand decreases |
D. | None of the above |
Answer» B. Aggregate demand increases |
84. |
Who stated that “Trade Cycle is purely a monetary phenomenon”. |
A. | Keynes |
B. | Hawtrey |
C. | Crowther |
D. | Hayek |
Answer» B. Hawtrey |
85. |
According to Hayek’s overinvestment theory of trade cycle, fluctuation of investment occurs when |
A. | Natural rate of interest is not equal to market rate of interest |
B. | Natural rate of interest is equal to market rate of interest |
C. | Natural rate of interest is equal to the rate of inflation |
D. | None of the above |
Answer» A. Natural rate of interest is not equal to market rate of interest |
86. |
According to Keynes, in order to fight depression, stabilization policy should include |
A. | High rate of taxation |
B. | High interest rate |
C. | Increased public expenditure |
D. | None of the above |
Answer» C. Increased public expenditure |
87. |
According to Keynes, fluctuations in the volumes of investment is due to |
A. | Fluctuations in the volume of savings |
B. | Fluctuations in the marginal efficiency of capital |
C. | Fluctuations in the marginal efficiency of labour |
D. | None of the above |
Answer» B. Fluctuations in the marginal efficiency of capital |
88. |
During the phases of recession of a trade cycle |
A. | Investment, income, employment and demand decline |
B. | Investment falls but income rises |
C. | Income, employment and investment rise |
D. | None of the above |
Answer» A. Investment, income, employment and demand decline |
89. |
During the downward phase of trade cycle, the central bank of the country should |
A. | Increase the cash reserve ratio |
B. | Lower-down the cash reserve ratio |
C. | Raise the bank rate |
D. | None of the above |
Answer» B. Lower-down the cash reserve ratio |
90. |
During depression, government expenditure on public works will function as |
A. | an anti-deflationary tonic |
B. | a pumb-priming |
C. | compensatory action |
D. | None of the above |
Answer» B. a pumb-priming |
91. |
To attain long-term economic stability, the government can introduce |
A. | Compensatory action |
B. | Monetary measures |
C. | Pumb-priming |
D. | an anti-deflationary tonic |
Answer» A. Compensatory action |
92. |
When the cause of business cycles is attributed to some factor outside the economic system, it is called |
A. | A periodical theory |
B. | An innovation theory |
C. | An exogenous theory |
D. | None of the above |
Answer» C. An exogenous theory |
93. |
During the upward swing of the trade cycle, the central bank of the country will |
A. | Raise the cash reserve ratio |
B. | Raise the bank rate |
C. | Lower down the cash reserve ratio |
D. | None of the above |
Answer» B. Raise the bank rate |
94. |
Who stated that “a sudden collapse of the marginal efficiency of capital leads to crisis” |
A. | Keynes |
B. | Hawtrey |
C. | Hayek |
D. | Schumpeter |
Answer» A. Keynes |
95. |
The trough of a business cycle is referred to as |
A. | Expansion |
B. | Boom |
C. | Trough |
D. | Peak |
Answer» C. Trough |
96. |
When aggregate economic activity is increasing, the economy is said to be in |
A. | An expansion |
B. | A contraction |
C. | A peak |
D. | A turning point |
Answer» A. An expansion |
97. |
When aggregate economic activity is declining, the economy is said to be in |
A. | An expansion |
B. | A contraction |
C. | A peak |
D. | A turning point |
Answer» B. A contraction |
98. |
Peaks and troughs of the business cycle are collectively known as |
A. | Volatility |
B. | Turning points |
C. | Equilibrium points |
D. | Real business cycle events |
Answer» B. Turning points |
99. |
Who officially determines whether the economy is in recession or expansion? |
A. | The President of the United States |
B. | The U.S Congress |
C. | The Federal Reserve Board of Governors |
D. | The National Bureau of Economic Research |
Answer» D. The National Bureau of Economic Research |
100. |
In which way recessions affect the real level ofGDP? |
A. | Recessions cause only temporary reduction in real level of GDP |
B. | Recessions cause large, permanent reductions in the real level of GDP |
C. | Recessions cause both temporary and permanent declines in real level of GDP |
D. | None of the above |
Answer» C. Recessions cause both temporary and permanent declines in real level of GDP |
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