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Economics M.C.Q (1 Marks)

Money and Banking · Rajasthan Board (RBSE) STD 12 Humanities & Commerce (Rajasthan - English Medium). 65 questions.

Questions

M.C.Q (1 Marks)

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65 questions · 2 auto-graded MCQ + 63 self-marked written.

Question 11 Mark
Demand deposits include.
  1. Saving account deposits and fixed deposits.
  2. Saving account deposits and current account deposits.
  3. Current account deposits and fixed deposits.
  4. All types of deposits.
Answer
  1. Saving account deposits and current account deposits.
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Question 21 Mark
Which of the following is not the function of the central bank?
  1. Banking facilities to government.
  2. Banking facilities to public.
  3. Lendings to government.
  4. Lendings to commercial bank.
Answer
  1. Banking facilities to public.

Solution:

Central bank does not provide banking facilities to public.

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Question 31 Mark
Repo rate is the rate at which:
  1. Commercial banks purchase government securities from the central bank.
  2. Commercial banks can take loans from the central bank.
  3. Commercial banks can keep their deposits with the central bank.
  4. Short-term loans are given by commercial banks.
Answer
  1. Commercial Banks can take loans from the central bank.
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Question 41 Mark
Unforseen obsolescence of fixed capital assets during production is:
  1. Consumption of fixed capital.
  2. Capital loss.
  3. Income loss.
  4. None of the above.
Answer
  1. Capital loss.
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Question 51 Mark
The ratio of total deposits that a commercial bank has to keep with Reserve Bank of India is called:
  1. Statutory liquidity ratio.
  2. Deposit ratio.
  3. Cash reserve ratio.
  4. Legal reserve ratio.
Answer
  1. Cash reserve ratio.
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Question 61 Mark
Credit creation by commercial banks is determined by:
  1. Cash Reserve Ratio (CRR).
  2. Statutory Liquidity Ratio (SLR).
  3. Initial Deposits.
  4. All the above.
Answer
  1. All the above.
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Question 71 Mark
The central bank can increase availability of credit by:
  1. Raising repo rate.
  2. Raising reverse repo rate.
  3. Buying government securities.
  4. Selling government securities.
Answer
  1. Buying government securities.
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Question 81 Mark
In order to control the money supply in the economy, the Central Bank may ________.
  1. Buy securities in the open market.
  2. Sell securities in the open market.
  3. Reduce cash reserve ratio.
  4. Reduce repo rate.
Answer
  1. Buy securities in the open market.
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MCQ 91 Mark
Which of the following task is performed by a commercial bank ?
  • A
    Open market operations
  • B
    Lender of last resort
  • C
    Issue of currency
  • ✓
    Credit creation
Answer
Correct option: D.
Credit creation
D
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MCQ 101 Mark
In Which year was the Reserve Bank of India established ?
  • A
    1920
  • B
    1930
  • ✓
    1935
  • D
    1915
Answer
Correct option: C.
1935
C
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Question 111 Mark
Who is the fiscal agent and adviser to government in monetary and financial matters in India?
  1. SBI.
  2. IDBI.
  3. ICICI.
  4. RBI.
Answer
  1. RBI.
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Question 121 Mark
Who is the custodian of national reserves of international currency?
  1. SBI.
  2. IDBI.
  3. RBI.
  4. ICICI.
Answer
  1. RBI.
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Question 141 Mark
Which out of the following items is not included in money supply of a country?
  1. Time deposits.
  2. Coins and Currency.
  3. Demand deposits.
  4. None.
Answer
  1. Time deposits.
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Question 151 Mark
Which one of the following institutions is not a bank?
  1. HDFC. 
  2. LIC.
  3. UTI.
  4. All of them.
Answer
  1. All of them.
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Question 161 Mark
Which of the following is showing problem of perishability involved in barter exchange system?
  1. Lack of double coincidence of wants.
  2. Lack of common measure of value.
  3. Lack of store of value.
  4. All of these.
Answer
  1. Lack of store of value.
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Question 171 Mark
Which of the following is not the function of the central bank?
  1. Banking facilities to government.
  2. Banking facilities to public.
  3. Lending’s to government.
  4. Lending’s to commercial banks.
Answer
  1. Banking facilities to publc.
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Question 181 Mark
Which of the following instrument deals with the qualitative credit control?
  1. Open Market Operation.
  2. Moral Suasion.
  3. Bank Rate.
  4. None.
Answer
  1. Moral Suasion.
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Question 191 Mark
Which of the following bank account provides overdraft facility?
  1. Saving deposits account.
  2. Current account.
  3. Recurring deposits account.
  4. Fixed deposits account.
Answer
  1. Current account.
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Question 201 Mark
Which of the following agency is responsible for issuing 1 currency note in India?
  1. Reserve Bank of India.
  2. Ministry of Commerce.
  3. Ministry of finance.
  4. Niti Aayog.
Answer
  1. Ministry of finance.
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Question 211 Mark
Which bank in India is the controller of credit?
  1. Axis Bank.
  2. Reserve Bank of India.
  3. ICICI Bank.
  4. Punjab National Bank.
Answer
  1. Reserve Bank of India.
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Question 221 Mark
What can RBI do, if it wants to increase credit in the economy?
  1. Decrease bank rate and CRR.
  2. Increase bank rate and CRR.
  3. Increase bank rate and decrease CRR.
  4. All of the above.
Answer
  1. Decrease bank rate and CRR.
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Question 231 Mark
Under barter exchange system, barter economy is termed as:
  1. C-C economy.
  2. C-M economy.
  3. C-G economy.
  4. Cash less economy.
Answer
  1. C-C economy.
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Question 241 Mark
            is the main source of money supply is an economy.
  1. Central bank
  2. Commercial banks
  3. Both (a) and (b)
  4. Government
Answer
  1. Both (a) and (b)
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Question 251 Mark
The value of deposit multiplier is equal to:
  1. $\frac{1}{\text{CRR}}$
  2. $\frac{1}{\text{SLR}}$
  3. $\frac{1}{\text{LRR}}$
  4. None of the given.
Answer
  1. $\frac{1}{\text{LRR}}$
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Question 261 Mark
The ratio of total deposits that a commercial bank has to keep with Reserve Bank of India is called:
  1. Statutory Liquid Ratio.
  2. Deposit Ratio.
  3. Cash Reserve Ratio.
  4. Legal reserve ratio.
Answer
  1. Cash Reserve Ratio.
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Question 271 Mark
The rate of interest offered by the bank to deposit holders is called the:
  1. Bank rate.
  2. Borrowing rate.
  3. Lending rate.
  4. Inflation rate.
Answer
  1. Borrowing rate.

Explanation:

Deposits of the depositors are the liabilities (borrowings) for the bank.

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Question 281 Mark
The process of credit creation in an economy is affected by .......
  1. the amount of initial deposits.
  2. the LRR.
  3. Both (a) and (b).
  4. None of the above.
Answer
  1. Both (a) and (b).
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Question 291 Mark
The part of LRR kept by the banks themselves is called:
  1. SLR.
  2. CRR.
  3. Reverse Repo Rate.
  4. None of the above.
Answer
  1. SLR.
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Question 301 Mark
The money backed by order or authority of the government and do not have instrinsic value like gold and silver coins are called:
  1. Legal tender money.
  2. Credit money.
  3. High powered money.
  4. Fiduciary money.
Answer
  1. Legal tender money.
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Question 311 Mark
The 'lender of last resort' means:
  1. The government coming to the rescue of poor farmers.
  2. Central Bank coming to the rescue of other banks in times of financial crisis.
  3. Commercial banks coming to the rescue of small industrial units.
  4. None of them.
Answer
  1. Central Bank coming to the rescue of other banks in times of financial crisis.
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Question 321 Mark
The effect of increase in CRR will be reduced or nullified if_______.
  1. bank rate is reduced.
  2. securities are sold in the open market.
  3. SLR is increased.
  4. people do not borrow from non banking institutions.
Answer
  1. bank rate is reduced.

Explanation:

The effect of increase in CRR will be reduced or nullified if bank rate is reduced.

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Question 331 Mark
The difference between narrow money and broad money is ……
  1. coins and currency.
  2. only currency.
  3. saving deposits of banks.
  4. time deposits with banks.
Answer
  1. time deposits with banks.
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Question 341 Mark
The central bank can increase availability of credit by :
  1. Raising repo rate.
  2. Raising reverse repo rate.
  3. Buying government securities.
  4. Selling government securities.
Answer
  1. Buying government securities.
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Question 351 Mark
Sum total of currency held by public (C), Demand Deposits in Bank (DD) and Other Deposits with RBI(OD) are combindly known as:
  1. M1
  2. M2
  3. M3
  4. M4
Answer
  1. M1
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Question 361 Mark
...... refers to that portion of total deposits which a commercial bank has to keep with the Central Bank.
  1. SLR.
  2. Bank rate.
  3. CRR.
  4. None of these.
Answer
  1. CRR.
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Question 371 Mark
________ refers to that portion of total deposits of a commercial bank which it has to keep with RBI in the form of cash reserves.
  1. CRR
  2. SLR
  3. Bank Rate.
  4. Repo Rate.
Answer
  1. CRR

Explanation:

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

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Question 381 Mark
_____refers to that portion of total deposits of a commercial bank which it has to keep with itself in the form of liquid assets.
  1. CRR
  2. SLR
  3. Bank Rate.
  4. Repo Rate
Answer
  1. SLR

Explanation:

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

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Question 391 Mark
Quantitative instrument of RBI can be:
  1. Bank Rate policy.
  2. Cash Reserve Ratio.
  3. Statutory Liquidity Ratio.
  4. All of them.
Answer
  1. All of them.
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Question 401 Mark
Plastic money includes:
  1. Debit cards.
  2. Credit cards.
  3. Prepaid cash cards.
  4. All of the above.
Answer
  1. All of the above.

Explanation:

Plastic money is a form of non-cash, which includes debit, credit, prepaid cash, plastic cards, etc. These cards are used for ATM cash withdrawals and shopping, etc.

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Question 411 Mark
Number of times the total deposits would be of the initial deposit is determined by:
  1. Cash Reserve Ratio.
  2. Legal Reserve Ratio.
  3. Statutory Liquidity Ratio.
  4. Bank Rate.
Answer
  1. Legal Reserve Ratio.
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Question 421 Mark
M1 and M2 measures of money supply issued by RBI are known as:
  1. Total money.
  2. Narrow money.
  3. Broad money.
  4. High powered money.
Answer
  1. Narrow money.
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Question 431 Mark
Money was evolved to remove the problems of barter exchange system. Find the correct sequence of evolution of money concepts:
  1. Paper money.
  2. Plastic money.
  3. Metallic money.
  4. Digital money.
Codes:
  1. 3, 1, 4, 2
  2. 1, 2, 3, 4
  3. 3, 4, 1, 2
  4. 3, 1, 2, 4
Answer
  1. 3, 1, 2, 4

Explanation:

Evolution of money was started from the use of gold, silver and other metal coins, later on monetary authorities of countries issued official paper money (currency notes). Due to modernisation and computerisation debit and credit cards are being used as plastic money. Now, the use of money through electronic means is called digital money.

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Question 441 Mark
Money supply in India is:
  1. Currency with the public.
  2. Demand deposits with the banks.
  3. Currency with the public + Demand deposits with the banks.
  4. None of them.
Answer
  1. Currency with the public + Demand deposits with the banks.
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Question 451 Mark
Money is most liquid of all assets because ...... 
  1. it includes shares and equities.
  2. money itself is medium of exchange.
  3. it does not have general acceptability.
  4. it has many functions.
Answer
  1. money itself is medium of exchange.
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Question 461 Mark
Monetary system of India is managed, control and regulated by:
  1. Government of India.
  2. Ministry of Finance.
  3. Reserve Bank of India (RBI).
  4. Commercial Bank.
Answer
  1. Reserve Bank of India (RBI).
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Question 471 Mark
M, in the money stock in India refers to:
  1. Post office savings deposits.
  2. Total post office deposits.
  3. Currency plus demand deposits plus other deposits with the RBI.
  4. Time deposits with banks.
Answer
  1. Currency plus demand deposits plus other deposits with the RBI.
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Question 481 Mark
........ is the minimum rate at which Central Bank is prepared to give credit to the commercial banks:
  1. Repo rate.
  2. Reverse repo.
  3. CRR.
  4. SLR.
Answer
  1. Repo rate.
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Question 491 Mark
...... involves discounting or purchasing of commercial bills arising out of credit sales.
  1. Cash credit.
  2. Bill financing.
  3. Overdraft.
  4. None of these.
Answer
  1. Bill financing.
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Question 501 Mark
In order to encourage investment in the country, the RBI may_______.
  1. reduce CRR.
  2. increase CRR.
  3. sell securities in the open market.
  4. increase bank rate.
Answer
  1. reduce CRR.

Explanation:

In order to encourage investment in the country, the RBI may reduce CRR.

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Question 511 Mark
In order to discourage investment in the economy, the RBI may:
  1. Increase bank rate.
  2. Decrease bank rate.
  3. Buy securities in the open market.
  4. Decrease CRR.
Answer
  1. Increase bank rate.
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Question 521 Mark
In order to control credit.
  1. CRR should be increased and bank rate should be decreased.
  2. CRR should be reduced and bank rate should be reduced.
  3. CRR should be increased and bank rate should be increased.
  4. CRR should be reduced and bank rate should be increased.
Answer
  1. CRR should be increased and bank rate should be increased.
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Question 531 Mark
In order to control credit in the country, the RBI may_____.
  1. buy securities in the open market.
  2. sell securities in the open market.
  3. reduce CRR.
  4. reduce bank rate.
Answer
  1. sell securities in the open market.

Eaplantion:

In order to control credit in the country, the RBI may sell securities in the open market.

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Question 541 Mark
If an economy is to control recession like most of the Euro-Zone nations, which of the following can be appropriate:
  1. Reducing Repo Rate.
  2. Reducing CRR.
  3. Both (a) and (b).
  4. None of (a) and (b).
Answer
  1. Both (a) and (b).
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Question 551 Mark
From the following, which is a limited legal tender money?
  1. Currency notes.
  2. Coins.
  3. Cheque.
  4. All of these.
Answer
  1. Coins.
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Question 561 Mark
During depression, it is advisable to:
  1. Lower bank rate and purchase securities in the market.
  2. Increase bank rate and purchase securities in the open market.
  3. Decrease bank rate and sell securities in the open market.
  4. Increase bank rate and sell securities in the open market.
Answer
  1. Lower bank rate and purchase securities in the market.
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Question 571 Mark
Credit creation by commercial banks is determined by:
  1. Cash Reserve Ratio (CRR).
  2. Statutory Liquidity Ratio (SLR).
  3. Initial Deposits.
  4. All the above.
Answer
  1. All the above.
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Question 581 Mark
______controls affect indiscriminately all sectors of the economy.
  1. Selective credit
  2. Quantitative
  3. Margin requirements
  4. None of the above
Answer
  1. Quantitative

Explanation:

Quantitative controls affect indiscriminately all sectors of the economy.

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Question 591 Mark
Central Bank of a country does not deal with .......
  1. state Government.
  2. general public.
  3. central Government.
  4. commercial banks.
Answer
  1. general public.
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Question 601 Mark
Central Bank controls credit creation of banks by ......
  1. CRR
  2. SLR
  3. Both (a) and (b)
  4. None of these.
Answer
  1. Both (a) and (b)
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Question 611 Mark
Banks not only accept deposits but also ...... savings.
  1. distribute.
  2. mobilize.
  3. convert.
  4. None of these.
Answer
  1. mobilize.
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Question 621 Mark
Bank creates credit:
  1. On the basis of their securities.
  2. On the basis of their total assets.
  3. On the basis of their cash deposits.
  4. On the basis of their gross liabilities.
Answer
  1. On the basis of their cash deposits.
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Question 631 Mark
As a custodian of nation's reserves, RBI keeps:
  1. Reserves of foreign currencies.
  2. Reserves of gold.
  3. Reserves of foreign treasury bills.
  4. All of the above.
Answer
  1. All of the above.
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Question 641 Mark
Arrange the different forms of money in the order of their liquidity:
  1. Cheque.
  2. Cash.
  3. Debit card.
  4. Equity shares.
  5. Bonds.
Codes:
  1. 2 4 3 1 5
  2. 2 1 3 4 5
  3. 2 3 1 4 5
  4. 2 1 4 3 5
Answer
  1. 2 3 1 4 5
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Question 651 Mark
A person can use more number of cheques if he has:
  1. Saving deposits account.
  2. Current account.
  3. Fixed deposits account.
  4. Recurring deposits account.
Answer
  1. Current account.

Explanation:

Current account deposits are payable on demand and these can be withdrawn by depositors any number of times through cheque facilities.

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