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