money supply, banking & financial institutions section 8 MCQ Questions & Answers Detailed Explanation

Question : 1

‘Money is a matter of functions four, a medium, a measure a standard and .....’. What is the fourth function of money indicated in this popular phrase?

a) A flow

b) A payment

c) A store

d) A stock

Question : 2

The Laffer curve is the graphical representation of:

a) The relationship between tax rates and absolute revenue these rates generate for the government.

b) The inequality in income distribution.

c) The inverse relationship between the rate of unemployment and the rate of inflation in an economy.

d) The relationship between environmental quality and economic development.

Question : 3

The term “provisioning” in the banking sector is related to which of the following:

a) It is the amount of fund that the bank needs to set aside when the loan turns NPA

b) It is the minimum amount of funds that the depositors will receive when the bank goes bankrupt

c) It is the loss that the bank incurs on sale of bad assets

d) It is the minimum amount which the borrower will have to pay even if the loan turns NPA

Question : 4

Which of the following measure of the high power money Supply (H) has been used by RBI in India?

a) Cash reserve of the commercial banks + other deposits with the RBI

b) Currency held by the public + Cash reserves of the commercial banks + Time deposits of commercial banks + Other deposits with the RBI

c) Currency held by the public + Cash reserves of the commercial banks + Other deposit with the RBI

d) Currency held by public + other deposits with the RBI

Question : 5

Which action by the Reserve Bank would stimulate the economy in an economic downturn?

a) Selling government securities in the cash market

b) Selling foreign currencies on the foreign exchange market

c) Buying government securities in the cash market

d) Buying foreign currencies on the foreign exchange market

Question : 6

In India, the interest rate on savings accounts in all the nationalised commercial banks is fixed by

a) Union Finance Commission

b) Banks itself

c) Indian Bank’s Association

d) Union Ministry of Finance