money supply, banking & financial institutions section 4 MCQ Questions & Answers Detailed Explanation

Question : 1

Which one of the following best describes the term ‘Merchant Discount Rate’ sometimes seen in news?

a) The amount paid back by banks to their customers when they use debit cards for financial transactions for purchasing goods or services

b) The incentive given by the Government to merchants for promoting digital payments by their customers through Point of Sale (PoS) machines and debit cards

c) The charge to a merchant by a bank for accepting payments from his customers through the bank’s debit cards

d) The incentive given by a bank to a merchant for accepting payments through debit cards pertaining to that bank

Question : 2

What is the difference between Inflation and Deflation?

1. Inflation is an increase in the price of goods while Deflation is that state in which the value of money rises and the price of goods and services falls.
2. Deflation is an increase in the price of goods while Inflation is that state in which the value of money rises and the price of goods and services falls.
3. Inflation is a state in which the value of money rises and the price of goods and services falls while deflation is an increase in the price of goods.

a) 2 only

b) 1 only

c) 3 only

d) 1, 2, 3

Question : 3

What are the measures of checking deflation?

1. Increasing money supply
2. Promote credit creation by the banks.
3. Curtailment in taxes so as to increase the purchasing power of the people.

a) 2 only

b) 1 only

c) 3 only

d) 1, 2, 3

Question : 4

Which of the following is/are treated as artificial currency?

a) SDR

b) Both ADR and GDR

c) GDR

d) ADR