Money and

Banking

Test Bank
Choose The Correct Answer:
1- Which of the following is not a function of money?
(A) Act as an intermediate in the exchange process.
(B) Acts as a store of value.
(C) Used as the unit of account.
(D) Used for regulating consumption.
2- What is the defect of the barter system?
(A)Lack of double coincidence of wants
(B) Difficulty in the measurement of value
(C) Difficulty in store of value
(D)All of these
3- To encourage investment in the economy, the Central Bank may ________
(A) Reduce Cash Reserve Ratio
(B) Increase Cash Reserve Ratio
(C) Sell Government securities in the open market
(D) Increase Bank Rate
4- Which of the following is the narrow measure of the money supply?
(A) M2
(B) M3
(C) M1
(D) M4
5- Which one is the difficulty of the Barter System?
(a) Lack of Double Coincidence
(b) Difficulty of Division of the Goods
(c) Lack of General Acceptable Measure of Value
(d) All the above
6- Which is the correct order of money evolution?
(a) Commodity Money, Paper Money, Metal Money
(b) Commodity Money, Metal Money, Paper Money, Credit Money
(c) Credit Money, Metal Money, Paper Money
(d) None of the above
7- Which one is included in the secondary function of money?
(a) To make Deferred Payments
(b) Store of Value
(c) Unit of Account
(d) All of these
8- Which one is included in the primary function of money?
(a) Medium of Exchange
 (b) Measure of Value
(c) Both (a) and (b)
(d) Store of Value
9- The function of money is:
(a) Medium of Exchange
(b) Measure of Value
(c) Store of Value
(d) All the above
10- Which of the following is not a function of money?
(a) Medium of exchange
(b) Price stability
(c) Store of value
(d) Unit of account
11- ………. They used basic Commodities as generally accepted medium of exchange.
A- Animal money
B- Commodity money
C- Metallic money
D- Fiat money
12- The money developed in the form of credit money is referred to as
A- Bank money
B- Commodity money
C- Electronic money
D- Fiat money
13- is defined as the digital payment message, which serves as a medium of exchange
and store of value.
A- Bank money
B- Commodity money
C- Electronic money
D- Fiat money
14- …….. refers to coins prepared out of various metals like Gold, Silver, Bronze,
Nickel etc.
A- Animal money
B- Commodity money
C- Metallic money
D- Fiat money
15- …….. is anything that is acceptable in payment for goods and services.
A- Coins
B- Metal
C- Money
D- Payment
16- This exchange of goods for goods was known as
A- Money
B- Barter
C- Payments
D- Commodity
17- High inflation levels in the economy leads to _______ in the supply of money.
a. Increase
b. Decrease
c. No change
d. None of the above
18- Which of the following concepts is the opposite of inflation?
a. stagflation
b. Deflation
c. Recession
d. None of the above
19- A government resorts to __________ to reduce inflation.
a. Cuts in government spending
b. Increase in government expenditure
c. Reduction in repo rate
d. None of the above
20- When the price levels of goods and services are falling continuously, this
phenomenon is called _________.
a. stagflation
b. Deflation
c. Inflation
d. None of the above
21- Inflation is measured by _______.
a. smith’s index
b. sale price index
c. Consumer price index
d. None of the above
22- The combination of stagnation and inflation is known as _____.
a. Demand-pull inflation
b. Cost-push inflation
c. Stagflation
d. None of the above
23- In India, Inflation is measured by
A- Consumer price index.
B- Agricultural price index.
C- Industrial price index.
 D- Wholesale price index.
24- Purchasing power of money falls when:
A- Price level rises.
B- Income falls.
C- Price level falls.
D- Money supply falls.
25- The process of persistent increase in the price level
A- Deflation
B- Inflation
C- Stagflation
D- None of the above
26- ……. Represents a measure of inflation.
A- Consumer Price Indexes (CPIs)
B- Product Price Indexes (PPIs)
C- Wholesale Price Indexes
D- All the above
27- Represents The Causes Of Inflations
A- Increase in Public Expenditure
B- Deficit Financing
C- Less Production
D- All the above
28- A situation where prices of essential goods and services decline over time.
A- Inflation
B- Deflation
C- Stagflation
D- None of the above
29- Represents The Causes Of Deflations
A- Growth Deflation
B- Bank Credit Deflation
C- Cash-Building Deflation
D- All the above
30- Refers to economic condition where economic growth is very slow, and
prices are rising.
A. Inflation
B. Deflation
C. Stagflation
D. None of the above
31- Who has the right of note issue?
(A) Central Bank
(B) Commercial Bank
(C) Government
(D) Co-operative Bank
32- Which of the following is the function of a Central bank?
(A) Issue of notes
(B) Banker to the Government and Banks
(C) Supply and control of money
(D) All of these
33- The ratio of total deposits that a commercial bank has to keep with RBI is
called:
(A) Statutory liquidity ratio
(B) Deposit ratio
(C) Cash reserve ratio
(D) Legal reserve ratio
34- Demand deposits include
(A) Saving account deposits and fixed deposits
(B) Saving account deposits and current account deposits
(C) Current account deposits and fixed deposits
(D) All type of deposits
35- Which one is the Bank of the Public?
(a) Commercial Bank
(b) Central Bank
(c) Both (a) and (b)
(d) None of the above
36- The primary function of Commercial Bank is?
(a) Accepting Deposits
(b) Advancing Loans
(c) Credit Creation
(d) All of these
37- Deposits accepted by the Commercial Banks:
(a) Current Deposits
(b) Saving Deposits
(c) Time Deposits
(d) All of these
38- What type of loan is advanced by Commercial Banks?
(a) Cash Credit
 (b) Overdraft
(c) Loan and Advance
(d) All of these
39- Which function is the Secondary Function of Commercial Banks?
(a) Agency Function
(b) General Utility Function
(c) Social Function
(d) All of these
40- Which is the Agency Function of Commercial Banks?
(a) Advancing Loans
(b) Accepting Deposits
(c) Act as Trustee
(d) Locker Facility
41- Credit Multiplier is:
(a) 1CRR
(b) 𝑐𝑎𝑠ℎ×1 CRR
(c) Cash x CRR
(d) None of these
42- Credit money is increased when CRR:
(a) Falls
(b) Rises
(c) Both (a) and (b)
(d) None of these
43- The full form of ATM is:
(a) Any Time Money
(b) All Time Money
(c) Automated Teller Machine
(d) Both (a) and (b)
44- The main function of a commercial bank is:
(a) Credit control
(b) Loaning to other banks
(c) Accept deposits from customers
(d) All the above
45- What is the Central Bank of India?
(a) Commercial Bank
(b) Central Bank
 (c) Private Bank
(d) None of these
46- Commercial banks:
(a) Issue currency notes
(b) Accepts deposits from customers
(c) Provide loans to customers
(d) Only (b) and (c)
47- What is true for the Central Bank?
(a) Apex Bank of the Country
(b) Ownership of the Government
(c) Regulates the entire banking system in the country
(d) All the above
48- Central Bank of India is:
(a) Reserve Bank of India
(b) State Bank of India
(c) Central Bank of India
(d) Bank of India
49- Which of the following is the function of the Central Bank?
(a) Monopoly of Note Issue
(b) Banker of the Government
(c) Custodian of Foreign Exchange Reserves
(d) All the above
50- Which type of currency is issued by Central Bank?
(a) Currency
(b) Credit Money
(c) Coins
(d) All of these
51- Which is the major objective of credit control?
(a) To maintain Price Stability
(b) To stabilize Exchange Rate
(c) To production and Employment
(d) All the above
52- Which one is true?
(a) Bank rate is a rate at which Central Bank is ready to give credit to
commercial banks
(b) Bank rate and interest rates are different
(c) Bank rate is the discount rate of the Central Bank
(d) All the above
53- Which is not a quantitative method of credit control?
(a) Bank Rate
(b) Moral Suasion
(c) Open Market Operations
(d) Change in CRR
54- Every bank is required to maintain a fixed percentage of its assets in the form
of cash is called:
(a) Cash Reserve Ratio
(b) Statutory Liquidity Ratio
(c) Both (a) and (b)
(d) None of the above
55- Reserve Bank of India was established in :
(a) 1947
(b) 1935
(c) 1937
(d) 1945
56- Monetary policy is related with:
(a) Public Expenditure
(b) Taxes
(c) Public Debt
(d) Open market operations
57- Which of the following issue paper currency in the country?
(a) Commercial Bank
(b) Central Bank
(c) World Bank
(d) Industrial Bank
58- The central bank controls credit through:
(a) Bank rate
(b) Open market
(c) CRR
(d) All the above
59- Which of the following is a qualitative method of credit control?
(a) Variation in cash reserve ratio of banks
(b) Restriction on consumer credit
(c) Open market operations
(d) Variation in bank rate
60- The major objectives of monetary policy is/are:
(a) Increase in output and employment
 (b) Stability in the foreign exchange rate
(c) Price stability
(d) All of these
61- Who regulates the money supply?
(a) Govt, of India
(b) Reserve Bank of India
(c) Commercial Bank
(d) Planning Commission
62- With which Narsimham Committee is related to?
(a) Tax Reforms
(b) Banking Reforms
(c) Agriculture Reforms
(d) Infrastructure Reforms
63- Which was included in the purview of the Banking Ombudsman Scheme?
(a) All Scheduled Banks
(b) Co-operative Banks
(c) Commerical Banks
(d) All of these
64- Which committee was constituted for suggesting consumer service
improvements in banks?
(a) Raja Chelliah Committee
(b) Goiporia Committee
(c) Verma Committee
(d) Chakrabarty Committee
65- For revival and restructuring of weak banks of the public sector, which
committee was constituted?
(a) Verma Committee
(b) Goiporia Committee
(c) Rekhi Committee
(d) Narsimham Committee