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Test: Money And Banking - 2

40 Questions MCQ Test Crash Course of Macro Economics -Class 12 | Test: Money And Banking - 2

Description

Attempt Test: Money And Banking - 2 | 40 questions in 40 minutes | Mock test for CA Foundation preparation | Free important questions MCQ to study Crash Course of Macro Economics -Class 12 for CA Foundation Exam | Download free PDF with solutions

QUESTION: 1

Money in traditional sense :

A.
Serves as a medium of exchange.
B.
Serves as a store of value.
C.
Serves as both medium of exchange and store of value.
D.
Serves neither as medium of exchange and store of value.

Solution:

QUESTION: 2

Money includes :

A.
Currencies and demand deposits.
B.
Bonds, government securities.
C.
Equity shares.
D.
All of the above

Solution:

QUESTION: 3

Which of the following statements about money is incorrect?

A.
There are many assets which carry the attribute on money.
B.
Money is what money does.
C.
In modern sense, money has stability, high degree of substitutability and feasibility of measuring statistical variation.
D.
None of the above

Solution:

QUESTION: 4

M₁ in the money stock in India refers to :

A.
Post office saving deposits.
B.
Total post office deposits.
C.
Currency plus demand deposits plus other deposits with RBI.
D.
Time deposits with banks.

Solution:

QUESTION: 5

Narrow money refers to

A.
M₁
B.
M₂
C.
M₃
D.
M₄

Solution:

QUESTION: 6

Broad money refers to

A.
M₁
B.
M₂
C.
M₃
D.
M₄

Solution:

QUESTION: 7

The basic distinction between narrow and broad monies is the

A.
Treatment of post office deposits.
B.
Treatment of time deposits of banks.
C.
Treatment of savings deposits of banks.
D.
Treatment of currency.

Solution:

QUESTION: 8

In the present context, total money stock in India refers to

A.
M₁
B.
M₂
C.
M₃
D.
M₄

Solution:

QUESTION: 9

Which of the following statements about banks is incorrect?

A.
Banks encourage saving habits among people.
B.
Banks mobilise savings and make them available for production.
C.
Banks help in creating credit money.
D.
None of the above.

Solution:

QUESTION: 10

Banks perform the function of

A.
Receiving deposits
B.
Lending of money
C.
Agency services
D.
All of the above

Solution:

QUESTION: 11

Commercial banks in India were nationalised in 1969 because

A.
There was urban bias.
B.
Agriculture sector was neglected.
C.
There was concentration of economic power.
D.
All of the above.

Solution:

QUESTION: 12

Nationalisation of banks aimed at all of the following except

A.
Removal of control by a few.
B.
Provision of credit to big industries only.
C.
Provision of adequate credit for agriculture, small industry and export units.
D.
Encouragement of a new class of entrepreneur.

Solution:

Nationalisation of banks aimed at all of the provision of adequate credit, for agriculture and small industry and export only, but not big industries.

QUESTION: 13

Rural bank branches constitute ______ percent of total bank branches in India

A.
14
B.
60
C.
47
D.
82

Solution:

QUESTION: 14

Population per bank in India is

A.
5000
B.
20000
C.
12000
D.
45000

Solution:

QUESTION: 15

In terms of deposit mobilisation, _____________ leads other states.

A.
U.P
B.
Maharashtra
C.
Kerala
D.
Bihar

Solution:

QUESTION: 16

Terms of credit do not include:

A.
interest rate
B.
collateral
C.
documentation
D.
lender's land

Solution:

QUESTION: 17

Which is the Central Bank of India?

A.
State Bank of India.
B.
Punjab and National Bank.
C.
Oriental Bank of Commerce.
D.
Reserve Bank of India.

Solution:

QUESTION: 18

Commercial banks suffer from

A.
Regional imbalances.
B.
Increasing overdues.
C.
Lower inefficiency.
D.
All of the above

Solution:

QUESTION: 19

Who is the official “lender of the last resort” in India?

A.
SBI
B.
PNB
C.
RBI
D.
OBC

Solution:

QUESTION: 20

_____________ refers to that portion of total deposits of a commercial bank which it has to keep with RBI in the form of cash reserves.

A.
CRR
B.
SLR
C.
Bank Rate
D.
Repo Rate

Solution:

QUESTION: 21

___________________ refers to that portion of total deposits of a commercial bank which it has to keep with itself in the form of liquid assets.

A.
CRR
B.
SLR
C.
Bank Rate
D.
Repo Rate

Solution:

QUESTION: 22

In the terminology of economics and money demand, the terms M1 and M2 are also known as :

A.
Short money
B.
Long money
C.
Broad money
D.
Narrow money

Solution:

QUESTION: 23

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

A.
Gold
B.
Money
C.
Land
D.
Treasury bonds

Solution:

QUESTION: 24

_____________ is the official minimum rate at which the Central Bank of a country is prepared to rediscount approved bills held by banks.

A.
CRR
B.
SLR
C.
Bank Rate
D.
Repo Rate

Solution:

QUESTION: 25

In the terminology of economics and money demand, the terms M1 and M2 are also known as :

A.
Short money
B.
Long money
C.
Broad money
D.
Narrow money

Solution:

QUESTION: 26

In order to control credit in the country, the RBI may

A.
Buy securities in the open market.
B.
Sell securities in the open market.
C.
Reduce CRR.
D.
Reduce Bank Rat.

Solution:

QUESTION: 27

In order to encourage investment in the country, the RBI may

A.
Reduce CRR.
B.
Increase CRR.
C.
Sell securities in the open market.
D.
Increase Bank Rat.

Solution:

QUESTION: 28

In order to discourage investment in the economy, the RBI may

A.
Increase Bank Rate.
B.
Decrease Bank Rate.
C.
Buy securities in the open market.
D.
Decrease CRR.

Solution:

QUESTION: 29

The effect of increase CRR will be reduced or nullified if :

A.
Bank rate is reduced.
B.
Securities are sold in the open market.
C.
SLR is increased.
D.
People do not borrow from non-banking institutions.

Solution:

QUESTION: 30

In order to control credit

A.
CRR should be increased and Bank Rate should be decreased.
B.
CRR should be reduced and Bank Rate should be reduced.
C.
CRR should be increased and Bank Rate should be increased.
D.
CRR should be reduced and Bank Rate should be increased.

Solution:

QUESTION: 31

_______________ controls affect indiscriminately all sectors of the economy.

A.
Selective credit.
B.
Quantitative.
C.
Margin requirements.
D.
None of the above.

Solution:

QUESTION: 32

During depression, it is advisable to

A.
Lower Bank Rate and purchase securities in the market.
B.
Increase Bank Rate and purchase securities in the open market.
C.
Decrease Bank Rate and sell securities in the open market
D.
Increase Bank Rate and sell securities in the open market.

Solution:

During depression, it is advisable to lower bank rate and purchase securities in the market because it will encourage borrowings and investment.

QUESTION: 33

Which of the following statements is correct?

A.
The RBI is just like any ordinary commercial bank in India.
B.
The RBI is responsible for the overall monetary policy in India.
C.
Selective credit control measures affect all banks in a similar manner.
D.
A high rate of interest encourages new investment.

Solution:

RBI regulates commercial banks and non-banking finance companies working in India. It serves as the leader of the banking system and the money market. It regulates money supply and credit in the country. The RBI carries out India's monetary policy and exercises supervision and control over banks and non-banking finance companies in India. RBI was set up in 1935 under the Reserve Bank of India Act,1934.

QUESTION: 34

The lender of last resort’ means

A.
The government coming to the rescue of poor farmers.
B.
Central Bank coming to the rescue of other banks in times of financial crisis.
C.
Commercial banks coming to the rescue of small industrial units.
D.
None of the above

Solution:

QUESTION: 35

Who is the custodian of monetary reserves in India?

A.
SBI
B.
SIDBI
C.
NABARD
D.
RBI

Solution:

QUESTION: 36

Who is called the ‘bank of issue’?

A.
RBI
B.
SBI
C.
IDBI
D.
ICICI

Solution:

QUESTION: 37

Who is the fiscal agent and adviser to government in monetary and financial matters in India?

A.
SBI
B.
IDBI
C.
ICICI
D.
RBI

Solution:

QUESTION: 38

Who is the custodian of national reserves of international currency?

A.
SBI
B.
IDBI
C.
RBI
D.
ICICI

Solution:

QUESTION: 39

The profitability ratio of bank has declined over the years due to

A.
Lower interest on government borrowings from banks.
B.
Subsidisation of credit to priority sector.
C.
High expenditure resulting from overstaffing and mushrooming of branches.
D.
All of the above.

Solution:

QUESTION: 40

What is the 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 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