money supply, banking & financial institutions section 5 MCQ Questions & Answers Detailed Explanation

Question : 1

Inflation occurs when aggregate supply is

a) equal to aggregate demand

b) None of these

c) more than aggregate demand

d) less than aggregate demand

Question : 2

Consider the following statements regarding the “Monetary Policy” followed by RBI:

1. It follows a flexible inflation target
2. While inflation is in control, RBI can focus on growth
3. Financial Stability is the explicit mandate of monetary policy
4. Achieving monetary policy objectives will ensure financial stability

a) (i) & (ii) only

b) (ii) & (iv)

c) (i) only

d) (ii), (iii) & (iv)

Question : 3

Consider the following two statements:

1. Headline inflation measures price inflation arising due to all types of commodities in the economy
2. Core inflation measures the headline inflation excluding volatile components i.e. food and fuel items

a) (ii) only

b) Both (i) & (ii)

c) (i) only

d) Neither (i) nor (ii)

Question : 4

Which one among the following is an appropriate description of deflation?

a) It is a persistent recession in the economy

b) it is a sudden fall in the value of a currency against other currencies

c) It is a persistent fall in the general price level of goods and services

d) It is fall in the rate of inflation over a period of time

Question : 5

A rise in ‘SENSEX’ means:

a) a rise in prices of shares of all companies registered with Bombay Stock Exchange

b) an overall rise in prices of shares of group up companies registered with Bombay Stock Exchange

c) a rise in prices of shares of all companies registered with National Stock Exchange

d) a rise in prices of shares of all companies belonging to a group of companies registered with Bombay Stock Exchange

Question : 6

Match the following.

a) i-b, ii-a, iii-c

b) i-a, ii-b, iii-c

c) i-c, ii-b, iii-a

d) i-a, ii-c, iii-b