7. Who stated, βBad money drives good money out of circulation, when both of them are
full legal tenderβ?
Correct : D. Thomas Gresham
8. Value of money is
Correct : B. Inversely related to the price level
9. Who stated, βMoney is what money doesβ?
Correct : B. Walker
10. Barter system means
Correct : C. Purchase and sale of commodity with commodity
11. Which among the following is considered to be the most liquid asset?
Correct : B. Money
12. Currency notes and coins are called as:
Correct : D. Both (b) and (c
13. Convertible money means
Correct : B. Government can give gold against it
14. Barter system has the defect of
Correct : C. Lack of common measure of value
15. Legal money is called so because
Correct : D. It is official medium of exchange
16. The most important feature of money is
Correct : A. General acceptability
17. Which property the paper money does not possess:
Correct : C. Durability
18. In the equation ππππ = ππππ, ππ πππππππππππππππππ‘π‘π‘π‘
Correct : B. Velocity of circulation of money
19. In the equation ππππ = ππππ, ππ ππππππππππππππππππππ
Correct : A. Money supply
20. According to Keynes, motives for holding money are
Correct : B. Three
21. Under normal circumstances, the velocity of circulation of money in a country is
Correct : C. Less than 10
22. Paper money is called fiat money because
Correct : A. It is issued with authority of government
23. Value of money means
Correct : B. General Purchasing power of money
24. If the quantity of money increases 100%, other things remaining constant, value of
money changes by
Correct : B. Decreases by 100 %
25. Value of money and supply of money are related
Correct : A. Inversely
26. The quantity demanded of money rises
Correct : B. As the interest falls
27. Equation of exchange is associated with
Correct : D. Irving Fisher
28. Equation of exchange is converted into the quantity theory of money by assuming the
following variables as constants
Correct : A. V and T
29. Fisher equation of exchange states that
Correct : B. P varies directly with M
30. In the Fisherβs extended equation of exchange MI
VI represents
Correct : A. Credit money
31. In Fisherβs transaction velocity model, which one of the following is not an assumption
Correct : D. P is considered as an active factor
32. The cash balance equation ππ = πΎπΎπΎπΎπΎπΎ was given by
Correct : D. Marshall
33. The quantity theory of money was restated by
Correct : B. Milton Friedman
34. Fisherβs equation of exchange considers money as
Correct : A. A medium of exchange
35. Robertsonβs equation of exchange considers money as
Correct : B. A store of value
36. The number of times a unit of money exchanges hands during a unit period of time is
known as
Correct : A. Velocity of the circulation of money
37. In India, coins are minted at four places, which among the following is one of them
Correct : C. Hyderabad
38. Which of the following is a qualitative or selective method of credit control by the central bank?
Correct : D. None of the above
39. In what way the Central Bank serves as a Bankerβs Bank?
Correct : C. By acting as a lender of the last resort
40. Which of the following is not a function of commercial bank?
Correct : C. Printing bank notes
41. Reserve Bank of India(RBI) was established on
Correct : B. 1st April 1935
42. Primary deposit in a commercial bank is called
Correct : B. Passive deposit
43. Derivative deposit in a commercial bank is also called
Correct : A. Active deposit
44. Bank rate is
Correct : C. Official discount rate at which the Central Bank rediscount approved bills of the commercial banks
45. Which of the following is not a function of Central Bank?
Correct : A. Enjoys monopoly of note issue
46. Which of the following is a qualitative method of credit control of a central bank?
Correct : C. Rationing of Credit
47. If the central bank wants to control credit, it should
Correct : B. Raise the bank rate
48. Which of the following is a selective credit instrument?
Correct : B. credit rationing
49. When the Central Bank intends to expand the credit, it should
Correct : D. Purchase government securities in the open market
50. Open Market Operation is
Correct : A. Buying and selling of government securities
51. Open market operation will become successful if there is a
Correct : C. well-developed bill and security market
52. Which of the following is not an instrument of selective credit control?
Correct : B. Open market operation
53. Bank rate policy is not very effective because-
Correct : A. It requires a well-developed money market
54. Which of the following is not a quantitative method of credit control
Correct : D. Regulation of consumer credit
55. To what extent the central bank is the lender of the last resort?
Correct : C. As it is the ultimate source of credit in times of crisis
56. Variable reserve ratio refers to-
Correct : A. The ratio which the commercial banks are required to maintain with the central bank
57. The term bank liquidity implies
Correct : 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?
Correct : B. Loans and advances to its customers
59. The fundamental function of a commercial bank is
Correct : B. Advancing loans
60. Which of the following is not a function of commercial bank?
Correct : D. Printing bank notes
61. Loans and investment of a commercial bank constitute its
Correct : A. Derivative deposits
62. Bankβs liquidity means
Correct : D. Its capacity to convert its assets into cash
63. A bankβs capacity to create credit is limited by the
Correct : A. Size of cash
64. A bank can increase the supply of money by
Correct : B. Creating credit
65. Which of the following public sector banks has the highest number of branches in India?
Correct : A. State Bank of India
66. Derivative deposits are created during the time of β
Correct : C. Making loans to the customers
67. The securities and bonds which a commercial banks holds is also known as
Correct : C. Secondary deposits of the bank
68. Which is known as the most profitable asset of the bank?
Correct : A. loans and advance to its customers
69. The derivative deposit created by a bank results in-
Correct : B. an increase in the total stock of money
70. What is Currency Deposit Ratio (CDR)?
Correct : 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 ?
Correct : 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?
Correct : A. Bank rate
73. What method is used by the Bank to read code on cheque?
Correct : A. MICR
74. Which is the largest private sector bank in India?
Correct : C. HDFC
75. Who was the first Indian to become Governor of Reserve Bank of India(RBI)?
Correct : D. C.D. Deshmukh
76. In July 1969, 14 major Indian Scheduled Banks were nationalized and 6 more banks were
nationalized in
Correct : A. April 1980
77. Which is the largest private sector bank in India?
Correct : B. ICICI Bank
78. The term business cycle refers to
Correct : A. Fluctuations in aggregate economic activity over time
79. Which one of the following is not the characteristic of business cycle?
Correct : C. They have uniform causes
80. The turning points of the business cycle are
Correct : D. Peak and Trough
81. Which of the following is referred to the top or the highest point of business cycle
Correct : B. Peak
82. Trade cycles are caused by
Correct : C. Both monetary and non-monetary factors
83. During the phase of recovery
Correct : B. Aggregate demand increases
84. Who stated that βTrade Cycle is purely a monetary phenomenonβ.
Correct : B. Hawtrey
85. According to Hayekβs overinvestment theory of trade cycle, fluctuation of investment
occurs when
Correct : 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
Correct : C. Increased public expenditure
87. According to Keynes, fluctuations in the volumes of investment is due to
Correct : B. Fluctuations in the marginal efficiency of capital
88. During the phases of recession of a trade cycle
Correct : A. Investment, income, employment and demand decline
89. During the downward phase of trade cycle, the central bank of the country should
Correct : B. Lower-down the cash reserve ratio
90. During depression, government expenditure on public works will function as
Correct : B. a pumb-priming
91. To attain long-term economic stability, the government can introduce
Correct : A. Compensatory action
92. When the cause of business cycles is attributed to some factor outside the economic
system, it is called
Correct : C. An exogenous theory
93. During the upward swing of the trade cycle, the central bank of the country will
Correct : B. Raise the bank rate
94. Who stated that βa sudden collapse of the marginal efficiency of capital leads to crisisβ
Correct : A. Keynes
95. The trough of a business cycle is referred to as
Correct : C. Trough
96. When aggregate economic activity is increasing, the economy is said to be in
Correct : A. An expansion
97. When aggregate economic activity is declining, the economy is said to be in
Correct : B. A contraction
98. Peaks and troughs of the business cycle are collectively known as
Correct : B. Turning points
99. Who officially determines whether the economy is in recession or expansion?
Correct : D. The National Bureau of Economic Research
100. In which way recessions affect the real level ofGDP?
Correct : C. Recessions cause both temporary and permanent declines in real level of GDP