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Macroeconomics MCQs for UPPSC (UP) Exam
It covers all Important Questions with answers on Macroeconomics for the UPPSC (UP) exam. The questions are based on important topics. Details about the questions:- Topic: Macroeconomics
- Type of Questions: MCQs with solutions
- Number of Questions: 49
- You can attempt them on EduRev to score high in UPPSC (UP) exam.
This a MCQ (Multiple Choice Question) based practice test of Chapter 3 - Money and Banking of Economics of Class XII (12) for the quick revision/preparation of School Board examinationsQ Central Bank is a- a)Regional bank
- b)Commercial bank
- c)Rural bank
- d)Apex bank
Correct answer is option 'D'. Can you explain this answer?
This a MCQ (Multiple Choice Question) based practice test of Chapter 3 - Money and Banking of Economics of Class XII (12) for the quick revision/preparation of School Board examinations
Q Central Bank is a
a)
Regional bank
b)
Commercial bank
c)
Rural bank
d)
Apex bank
 | Kiran Mehta answered |
Apex is the top or highest part of something, especially one forming a point. An apex institution is a second-tier or wholesale organization that channels funding (grants, loans, guarantees) to multiple microfinance institutions (MFIs) in a single country or region. Funding may be provided with or without supporting technical services.
The Central Bank is the Apex Bank in India because of the following functions:
- Monetary authority, issue of currency. Banker and debt manager to government, banker to banks, regulation of banking system, manager of foreign exchange, regulator and supervisor of the payment and the settlement systems and maintaining financial stability
What do you mean by credit creation by commercial banks?- a)It is the process of total withdrawal creation
- b)It is the process of total deposit creation
- c)It is the process of loan creation
- d)It is the process of creation of foreign exchange
Correct answer is option 'B'. Can you explain this answer?
What do you mean by credit creation by commercial banks?
a)
It is the process of total withdrawal creation
b)
It is the process of total deposit creation
c)
It is the process of loan creation
d)
It is the process of creation of foreign exchange
| | Kavita Joshi answered |
Credit creation is the most significant function of the commercial banks. Commercial banks accept deposits and lend loans and advances. In this process they create two types of deposits, namely primary deposits and derivative or active deposits. The former refers to the cash deposited by a customer in a bank or deposit a cheque with the bank for collection. The banker merely accepts cash am converts it into a deposit. Hence, this is merely a passive role performed by the banks. These primary deposits do not add to the money stock in the economy. From their experience and observation the banks know that not all the customers will withdraw their deposits on any single day. Hence, after providing for some reserve to meet the cash requirement of the depositors, the banks lend the balance to the borrow. The amount of reserve to be maintained by the banks is Cash Reserve Ratio which is determined by the central bank.
Currency notes and coins are called as:- a)Flat money
- b)Legal tenders
- c)Fiat money
- d)Both b and c
Correct answer is option 'D'. Can you explain this answer?
Currency notes and coins are called as:
a)
Flat money
b)
Legal tenders
c)
Fiat money
d)
Both b and c
 | Jeeshan Ahmed answered |
Fiat money refers to any currency lacking intrinsic value that is declared legal tender by a government .so currency notes and coins are called as both legal tender and fiat money
APC= 1-APS. It is- a)True
- b)FALSE
- c)Depends on their values
- d)None of these
Correct answer is option 'A'. Can you explain this answer?
APC= 1-APS. It is
a)
True
b)
FALSE
c)
Depends on their values
d)
None of these
| | Kiran Mehta answered |
The sum of the Average Propensity to Consume (APC) and Average Propensity to save (APS) is always equal to unity, i.e., APC + APS = 1. It is so because the money income can either be spent on consumption or it can be saved.
Money is a medium of- a)Communication
- b)Barter
- c)Speculation
- d)Exchange
Correct answer is option 'D'. Can you explain this answer?
Money is a medium of
a)
Communication
b)
Barter
c)
Speculation
d)
Exchange
 | Aryan Khanna answered |
Money is often defined in terms of the three functions or services that it provides. Money serves as a medium of exchange, as a store of value, and as a unit of account.
The process of money creation or credit creation IS done by- a)World bank
- b)commercial banks
- c)Rural bank
- d)Central bank
Correct answer is option 'B'. Can you explain this answer?
The process of money creation or credit creation IS done by
a)
World bank
b)
commercial banks
c)
Rural bank
d)
Central bank
| | Kavita Joshi answered |
It will be seen that the most important function of a commercial bank is the creation of credit money a function which overshadows all other banking functions.
Credit creation or money creation refers to the power of the banks to expand or contract demand deposits through the process of more loans, advances and investments.
Barter system is- a)Exchange of money
- b)Exchange of goods
- c)Exchange of trade
- d)Exchange of foreign exchange
Correct answer is option 'B'. Can you explain this answer?
Barter system is
a)
Exchange of money
b)
Exchange of goods
c)
Exchange of trade
d)
Exchange of foreign exchange
| | Alok Mehta answered |
A barter system is an old method of exchange. Th is system has been used for centuries and long before money was invented. People exchanged services and goods for other services and goods in return.
An example of capital goods is- a)Microwave
- b)Plant
- c)Fan
- d)TV
Correct answer is option 'B'. Can you explain this answer?
An example of capital goods is
a)
Microwave
b)
Plant
c)
Fan
d)
TV
| | Aryan Khanna answered |
Capital goods are man-made, durable items businesses use to produce goods and services. They include tools, buildings, vehicles, machinery and equipment.
Capital goods are also called durable goods, real capital, and economic capital. Some experts just refer to them as "capital." This last term is confusing because it can also mean financial capital. In accounting, capital goods are treated as fixed assets. They’re also known as “plant, property, and equipment.”
Capital goods are also called durable goods, real capital, and economic capital. Some experts just refer to them as "capital." This last term is confusing because it can also mean financial capital. In accounting, capital goods are treated as fixed assets. They’re also known as “plant, property, and equipment.”
An example of durable goods is- a)Coal
- b)Fan
- c)Milk
- d)Pepsi
Correct answer is option 'B'. Can you explain this answer?
An example of durable goods is
a)
Coal
b)
Fan
c)
Milk
d)
Pepsi
 | Rajat Patel answered |
Durable goods are a category of consumer products that do not need to be purchased frequently because they are made to last for a long time (usually
When will the domestic income be greater than the national income?- a)IF Net factor income earned from abroad is zero
- b)IF Net factor income earned from abroad is 1
- c)IF is negative
- d)IF Net factor income earned from abroad is positive
Correct answer is option 'C'. Can you explain this answer?
When will the domestic income be greater than the national income?
a)
IF Net factor income earned from abroad is zero
b)
IF Net factor income earned from abroad is 1
c)
IF is negative
d)
IF Net factor income earned from abroad is positive
 | Vikas Kapoor answered |
Gross National Income = Gross Domestic Income + Net Factor Income from Abroad
where,
Net Factor Income from Abroad = Factor Income earned from Abroad- Factor Income Paid Abroad
Thus, from here we can derive that Domestic Factor Income will be greater than the National Income when Factor income paid Abroad is more than Factor income earned from Abroad.
Net Factor Income from Abroad = Factor Income earned from Abroad- Factor Income Paid Abroad
Thus, from here we can derive that Domestic Factor Income will be greater than the National Income when Factor income paid Abroad is more than Factor income earned from Abroad.
An example of consumption goods is- a)plant
- b)Coal
- c)machine
- d)Fruits
Correct answer is option 'C'. Can you explain this answer?
An example of consumption goods is
a)
plant
b)
Coal
c)
machine
d)
Fruits
 | Sai Mishra answered |
Goods which are consumed for their own sake to satisfy current wants of consumers directly are called consumption (or consumer) goods.
Capital goods are fixed assets of producers which are repeatedly used in production of other goods and services. Alternatively durable goods which are bought for producing other goods but not for meeting immediate needs of the consumer are called capital goods.
In final goods- a)Value is added
- b)Values is not added
- c)Value cannot be added anymore
- d)Value should not be added
Correct answer is option 'C'. Can you explain this answer?
In final goods
a)
Value is added
b)
Values is not added
c)
Value cannot be added anymore
d)
Value should not be added
 | Sakshi Agrawal answered |
Because it is used for immediate consumption .
it does not required any further processing
it does not required any further processing
One drawback of barter exchange is- a)Lack of goods
- b)Lack of trust
- c)Lack of double coincidence of wants
- d)Lack of coincidence of wants
Correct answer is option 'C'. Can you explain this answer?
One drawback of barter exchange is
a)
Lack of goods
b)
Lack of trust
c)
Lack of double coincidence of wants
d)
Lack of coincidence of wants
| | Rajat Patel answered |
The double coincidence of wants mean that both the parties have to agree to sell and buy each other's commodity i.e. what a person desires to sell is exactly what the other person wishes to buy. In a barter system commodities bare exchanged with commodities of other person without the use of money.
State which one of the following is true.- a)Gross domestic capital formation is always greater than gross fixed capital formation.
- b)Nominal GDP can never be less that real GDP
- c)Capital formation is a flow
- d)Bread is always a consumer good.
Correct answer is option 'C'. Can you explain this answer?
State which one of the following is true.
a)
Gross domestic capital formation is always greater than gross fixed capital formation.
b)
Nominal GDP can never be less that real GDP
c)
Capital formation is a flow
d)
Bread is always a consumer good.
| | Rajat Patel answered |
True, because it is measured over a period of time.
The fraction of deposits kept as Cash Reserves by the commercial banks with themselves is called- a)SLR
- b)LLR
- c)RR
- d)CRR
Correct answer is option 'D'. Can you explain this answer?
The fraction of deposits kept as Cash Reserves by the commercial banks with themselves is called
a)
SLR
b)
LLR
c)
RR
d)
CRR
 | Gowri Nambiar answered |
Definition of CRR
The Cash Reserve Ratio (CRR) is the fraction of deposits that commercial banks keep as reserves with themselves, either in cash or as deposits with the RBI. It is a monetary policy tool used by the central bank to regulate the money supply in the economy.
Importance of CRR
The CRR is an important tool for the RBI to regulate liquidity in the economy. By increasing the CRR, the RBI reduces the amount of money that commercial banks can lend, thereby reducing the money supply in the economy. Similarly, by decreasing the CRR, the RBI increases the amount of money that commercial banks can lend, thereby increasing the money supply in the economy.
Impact of CRR
The impact of CRR on the economy is significant. If the CRR is high, banks will have less money to lend, which can lead to a decrease in economic growth. On the other hand, if the CRR is low, banks will have more money to lend, which can lead to inflation.
Conclusion
In conclusion, the CRR is an important tool for the RBI to regulate the money supply in the economy. It is the fraction of deposits that commercial banks keep as reserves with themselves, either in cash or as deposits with the RBI. The impact of CRR on the economy is significant, and it is important for the RBI to use this tool wisely to achieve its monetary policy objectives.
The Cash Reserve Ratio (CRR) is the fraction of deposits that commercial banks keep as reserves with themselves, either in cash or as deposits with the RBI. It is a monetary policy tool used by the central bank to regulate the money supply in the economy.
Importance of CRR
The CRR is an important tool for the RBI to regulate liquidity in the economy. By increasing the CRR, the RBI reduces the amount of money that commercial banks can lend, thereby reducing the money supply in the economy. Similarly, by decreasing the CRR, the RBI increases the amount of money that commercial banks can lend, thereby increasing the money supply in the economy.
Impact of CRR
The impact of CRR on the economy is significant. If the CRR is high, banks will have less money to lend, which can lead to a decrease in economic growth. On the other hand, if the CRR is low, banks will have more money to lend, which can lead to inflation.
Conclusion
In conclusion, the CRR is an important tool for the RBI to regulate the money supply in the economy. It is the fraction of deposits that commercial banks keep as reserves with themselves, either in cash or as deposits with the RBI. The impact of CRR on the economy is significant, and it is important for the RBI to use this tool wisely to achieve its monetary policy objectives.
Which of the following in an example of macro economics- a)Inflation
- b)Consumer’s equilibrium
- c)Price determination
- d)Producer’s equilibrium
Correct answer is option 'A'. Can you explain this answer?
Which of the following in an example of macro economics
a)
Inflation
b)
Consumer’s equilibrium
c)
Price determination
d)
Producer’s equilibrium
| | Vikas Kapoor answered |
Inflation means roaming of money that goes from one hand to other as macro economics deals with whole economy the money in this form passes from one hand to another.
Bank rate is for- a)Central banks by the central bank
- b)Commercial banks by the government
- c)Central bank by the commercial banks
- d)Commercial banks by the central bank
Correct answer is option 'D'. Can you explain this answer?
Bank rate is for
a)
Central banks by the central bank
b)
Commercial banks by the government
c)
Central bank by the commercial banks
d)
Commercial banks by the central bank
 | Shiksha Academy answered |
The Reserve Bank of India (RBI) today gave freedom to banks in deciding their base rate. “Banks may choose any benchmark to arrive at the base rate for a specific tenor that may be disclosed transparently,” RBI said, as it released the final guidelines this evening.
Monitory policy is announced in India by _________- a)Ministry of Finance
- b)Reserve Bank of India
- c)Planning Commission
- d)Government
Correct answer is option 'B'. Can you explain this answer?
Monitory policy is announced in India by _________
a)
Ministry of Finance
b)
Reserve Bank of India
c)
Planning Commission
d)
Government
 | Poonam Reddy answered |
B: Reserve Bank of India
In India, monetary policy is announced by the Reserve Bank of India (RBI). The RBI is the central bank of India and is responsible for implementing and managing monetary policy in the country.
Monetary policy refers to the actions taken by the central bank to influence the supply and demand of money in the economy, with the aim of achieving certain macroeconomic objectives such as price stability, full employment, and economic growth. The RBI uses various tools, such as changing the interest rates, altering the reserve requirements for banks, and engaging in open market operations, to implement monetary policy in India.
The Ministry of Finance is responsible for managing the government's finances, including preparing the annual budget, mobilizing financial resources, and formulating fiscal policy. The Planning Commission is a government body that is responsible for formulating the country's five-year plans and for coordinating the development activities of various sectors of the economy. The government refers to the executive branch of government, which is responsible for implementing the policies and laws of the country.
Which of these is a Quantitative Method of Credit control?- a)Bank Rate
- b)Moral Suasion
- c)Margin Requirement
- d)All of the above
Correct answer is option 'A'. Can you explain this answer?
Which of these is a Quantitative Method of Credit control?
a)
Bank Rate
b)
Moral Suasion
c)
Margin Requirement
d)
All of the above
| | Ræjû Bhæï answered |
The important quantitative methods of credit control is (a) bank rate.The methods used by the central bank to regulate the flows of credit into particular directions of the economy are called qualitative or selective methods of credit control. Unlike the quantitative methods, which affect the total volume of credit, the qualitative methods affect the types of credit, extended by the commercial banks; they affect the composition rather than the size of credit in the economy.
An example of transfer payments is- a)Old age pension
- b)Retirement pension
- c)Free meals in the company canteen
- d)Employers’ contribution for social security
Correct answer is option 'A'. Can you explain this answer?
An example of transfer payments is
a)
Old age pension
b)
Retirement pension
c)
Free meals in the company canteen
d)
Employers’ contribution for social security
| | Poonam Reddy answered |
Transfer payments are unilateral ( one sided payments ) no corresponding flow of goods and services for example: donation, old age pension, unemployment allowance etc
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