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MONEY AND BANKING

Total questions: 52

Worksheet time: 23mins

Name
Class
Date
1.

What is the Cash Reserve Ratio (CRR)?

a)

the fraction of the deposits that commercial banks lend to the customers

b)

the fraction of the deposits that RBI must keep with commercial banks

c)

the fraction of the deposits that commercial banks must keep with RBI

2.

What is the reserve deposit ration (rdr)?

a)

the proportion of money RBI lends to commercial banks

b)

the proportion of total deposits commercial banks keep as reserves

c)

the total proportion of money that commercial banks lend to the customers

3.

What is the ratio of deposits which commercial banks are required to keep with themselves called?

a)

CRR

b)

SLR

c)

both

4.

The rate at which central bank lends to commercial banks is called?

a)

SLR

b)

CRR

c)

bank rate

5.

Which of the following is a commonly accepted definition of money?

a)

Any good which is commonly uiesd as a store of value

b)

Any good which is exchanged foe gold at a fixed rate.

c)

Any good which is acceptable to a bank

d)

Any good which is commonly accepted as medium of exchange

6.

Money which is accepted as a medium of exchange because of trust between the payer and the payee is called-

a)

full bodied money

b)

fait money

c)

fiduciary money

d)

credit money

7.

Money thai is issued by the authority of the government is called-

a)

full bodied money

b)

fiat money

c)

fuduciary money

d)

all the above

8.

commercial bank creat credit money by way of --

a)

Time deposit

b)

Treasury Bill

c)

Bill of Exchange

d)

demand deposit

9.

Maximum credit that commercial bank can legally creat depends on their

a)

Gold Reserve

b)

legal reserve ratio( LRR)

c)

CRR

d)

SLR

10.

SLR requires the commercial bank to build their liquid assets by way of

a)

Reserve of cash

b)

Reserve of gold

c)

resurve of unencumbered secirities

d)

all of these

11.

Credit control means-

a)

Contraction of credit only

b)

Extention of credit only

c)

Extention and contraction of money supply

d)

none of these

12.

Which of the following is not a tools of credit control?

a)

CRR

b)

SLR

c)

Moral suasions

d)

Managed floting

13.

Inflation is to be combated the RBI-

a)

Raise in CRR and lower SLR

b)

Lower CRR and raise SLR

c)

Raise both CRR and SLR

d)

none of these

14.

Open market operation as an instrument of credit control are performed by

a)

Central bank of country

b)

the commercial bank pof country

c)

Both a and b

d)

none of these

15.

Which of the following is a commonly accepted definition of money?

a)

Any good which is commonly uiesd as a store of value

b)

Any good which is exchanged foe gold at a fixed rate.

c)

Any good which is acceptable to a bank

d)

Any good which is commonly accepted as medium of exchange

16.

Money which is accepted as a medium of exchange because of trust between the payer and the payee is called-

a)

full bodied money

b)

fait money

c)

fiduciary money

d)

credit money

17.

In India there are four alternative measures of money supply: M1,M2, M3, and M4 of these M1=

a)

Currency with people

b)

Currency with people+ Demand deposdit

c)

Currency with people+ Demand deposdit+ Other deposit with RBI

d)

none of these

18.

commercial bank creat credit money by way of --

a)

Time deposit

b)

Treasury Bill

c)

Bill of Exchange

d)

demand deposit

19.

SLR requires the commercial bank to build their liquid assets by way of

a)

Reserve of cash

b)

Reserve of gold

c)

resurve of unencumbered secirities

d)

all of these

20.

Maximum credit that commercial bank can legally creat depends on their

a)

Gold Reserve

b)

legal reserve ratio( LRR)

c)

CRR

d)

SLR

21.

Credit control means-

a)

Contraction of credit only

b)

Extention of credit only

c)

Extention and contraction of money supply

d)

none of these

22.

Open market operation as an instrument of credit control are performed by

a)

Central bank of country

b)

the commercial bank pof country

c)

Both a and b

d)

none of these

23.

What items are not included in M1 measure of supply

a)

Currency and coins with public

b)

Inter banks deposits

c)

Net time deposits with banks

d)

Net time deposits with bank

24.

Money supply refers to

a)

total volume of money held by public at a particular point of time

b)

total volume of money held by public over a period of time

c)

total volume of money held by the government

d)

both a and b

25.

if you have 2 meters cloth and you want wheat against it then how much wheat you should get . Which drawback of barter exchange is highlighted

a)

lack of medium of exchange

b)

lack of store of value

c)

lack of measure of value

d)

none of these

26.

What do you mean by credit creation by commercial banks

a)

process of creation of foreign exchange

b)

process of loan creation

c)

process of total withdrawal creation

d)

process of total deposit creation

27.

Choose the incorrect statement:

a)

All coins (50p, Rs1, Rs5) are token coins

b)

All currency notes issued by RBI are promissory notes

c)

Credit money the value of of monetary purposes is less than its value for non monetary purposes

d)

Demand deposits are claims of creditors against banks

28.

Which is not related to banking in India

a)

Currency issued by RBI is inconvertible

b)

All notes except one rupee is issued by RBI

c)

Legal tender money is also called Fiat money because it serves as money by the order of RBI

d)

Putting all currency notes and coins into circulation, is done by RBI

29.

High powered money includes

a)

currency and demand deposits

b)

demand deposits and saving deposits

c)

currency held by the public and the cash reserves with banks

d)

None of these

30.

The component not included in money supply

a)

Currency with private individuals

b)

Currency with business firms

c)

Stock of gold with RBI

d)

All of these

31.

The number of times a unit of money exchanges hands during a unit period of time is known as:

a)

velocity of circulation of money

b)

momentum of circulation of money

c)

count of circulation of money

d)

circulation of money

32.

The primary function of Commercial Bank is ?

a)

ACCEPTING DEPOSITS

b)

GIVING LOAN

c)

CREATING CREDIT

d)

ALL OF THESE

33.

Which is the Agency Function of Commercial Banks ?

a)

Advancing Loans

b)

Accepting Deposits

c)

Act as Trustee

d)

Locker Facility

34.

Which reserves do banks use to loan out to borrowers?

a)

Excess

b)

Required

c)

Total

d)

Liquid

35.

Evaluate how the function of money as a "medium of exchange" impacts economic efficiency.

a)

It decreases transaction costs and increases trade.

b)

It increases the cost of goods and services.

c)

It reduces the variety of products available in the market.

d)

It leads to a decrease in consumer spending.

36.

Which of the following is a commonly accepted definition of money?

a)

Any good which is commonly uiesd as a store of value

b)

Any good which is exchanged foe gold at a fixed rate.

c)

Any good which is acceptable to a bank

d)

Any good which is commonly accepted as medium of exchange

37.

In India there are four alternative measures of money supply: M1,M2, M3, and M4 of these M1=

a)

Currency with people

b)

Currency with people+ Demand deposdit

c)

Currency with people+ Demand deposdit+ Other deposit with RBI

d)

none of these

38.

What do you mean by credit creation by commercial banks

a)

process of creation of foreign exchange

b)

process of loan creation

c)

process of total withdrawal creation

d)

process of total deposit creation

39.

Choose the incorrect statement:

a)

All coins (50p, Rs1, Rs5) are token coins

b)

All currency notes issued by RBI are promissory notes

c)

Credit money the value of of monetary purposes is less than its value for non monetary purposes

d)

Demand deposits are claims of creditors against banks

40.

Which is not related to banking in India

a)

Currency issued by RBI is inconvertible

b)

All notes except one rupee is issued by RBI

c)

Legal tender money is also called Fiat money because it serves as money by the order of RBI

d)

Putting all currency notes and coins into circulation, is done by RBI

41.

The currency created by the central bank is called

a)

High powered money

b)

Money

c)

Bank money

d)

Money supply

42.

If the total deposit created by commercial banks is Rs 20000 cr and LRR is 20%,then amount of initial deposit will be

a)

Rs 2000 cr

b)

Rs 3000 cr

c)

Rs 4000 cr

d)

Rs 14000 cr

43.

Deposit creation process comes to an end when

a)

fresh deposit with bank become zero

b)

LRR become zero

c)

money multiplier becomes zero

d)

total reserves equal initial deposits

44.

In case of credit money

a)

money value=commodity value

b)

money value>commodity value

c)

money value<commodity value

d)

none of these

45.

Money is the most liquid of all the asset because

a)

it is a medium of exchange

b)

it is an unit of account

c)

it act as a store of value

d)

it is a standard of deferred payment

46.

  1. Which of the statements gives a true picture of the effect of the central bank selling securities in the market?

a)

  1. The credit creation capacity of commercial banks will fall

b)

  1. The credit creation capacity of commercial banks will rise

c)

  1. The credit creation capacity of commercial banks may rise or fall

d)

  1. There is no effect on the credit creation capacity of commercial banks

47.

  1. Which of the statements gives a true picture of the effect of lowering the cash reserve ratio by the central bank of a country?

a)

  1. The lending capacity of commercial banks will increase

b)

  1. The lending capacity of commercial banks will decrease

c)

  1. The lending capacity of commercial banks may increase or decrease

d)

  1. There is no effect on the lending capacity of commercial banks

48.

  1. Which of the statements gives an accurate picture of the effect of the rise of the reverse repo rate by the central bank of a country?

a)

  1. The demand for goods and services in the country will decrease

b)

  1. The demand for goods and services in the country will increase

c)

  1. The demand for goods and services in the country may increase or decrease

d)

  1. There is no effect on the demand for goods and services in the country

49.

  1. Which of the following statements is true about credit creation by banks?

a)

  1. Banks create credit on the basis of their total assets

b)

  1. Banks create credit on the basis of their total deposits

c)

  1. Banks create credit on the basis of their total securities

d)

  1. Banks create credit out of nothing

50.

In India there are four alternative measures of money supply: M1,M2, M3, and M4 of these M1=

a)

Currency with people

b)

Currency with people+ Demand deposdit

c)

Currency with people+ Demand deposdit+ Other deposit with RBI

d)

none of these

51.

Maximum credit that commercial bank can legally creat depends on their

a)

Gold Reserve

b)

legal reserve ratio( LRR)

c)

CRR

d)

SLR

52.

Open market operation as an instrument of credit control are performed by

a)

Central bank of country

b)

the commercial bank pof country

c)

Both a and b

d)

none of these

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