McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Economics (CBCS) .
Chapters
| 1. |
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 | |
| 2. |
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 | |
| 3. |
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 | |
| 4. |
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 | |
| 5. |
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 | |
| 6. |
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 | |
| 7. |
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 | |
| 8. |
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 | |
| 9. |
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 | |
| 10. |
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 | |
| 11. |
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 | |
| 12. |
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 | |
| 13. |
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 | |
| 14. |
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 | |
| 15. |
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 | |
| 16. |
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 | |
| 17. |
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 | |
| 18. |
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 | |
| 19. |
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 | |
| 20. |
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 | |
| 21. |
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 | |
| 22. |
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 | |
| 23. |
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 | |
| 24. |
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 | |
| 25. |
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 | |
| 26. |
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 | |
| 27. |
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 | |
| 28. |
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 | |
| 29. |
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 | |
| 30. |
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 | |
| 31. |
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 | |
| 32. |
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 | |
| 33. |
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 | |
| 34. |
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 | |
| 35. |
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 | |
| 36. |
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 | |
| 37. |
Which is the largest private sector bank in India? |
| A. | ICICI |
| B. | Axis Bank |
| C. | HDFC |
| D. | ICICI |
| Answer» C. HDFC | |
| 38. |
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 | |
| 39. |
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 | |
| 40. |
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 | |
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