McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Economics (CBCS) .
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 | |
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