money supply, banking & financial institutions section 8 MCQ Questions & Answers Detailed Explanation
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The following question based on Money Supply, Banking and Financial Institutions topic of indian economy mcq
(a) Price stabilisation
(b) Value measurement
(c) Transfer of value
(d) Store of value
The correct answers to the above question in:
Answer: (a)
Generally, economists have defined four types of functions of money which are as follows:
- Medium of exchange (transfer of value)
- Measurement of value,
- Standard of deferred payments, and
- Store of value. Price stabilization is a function of monetary policy.
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Question : 1
Debenture holders of a company are its
a) Debtors
b) Directors
c) Shareholders
d) Creditors
Answer »Answer: (d)
Companies issue debentures instead of shares to extend their business. These debentures are issue to borrow loans from the general public; interest is paid on the borrowed money to the debenture holders.
So a debenture holder is essentially a creditor who simply gives a loan to the company.
Question : 2
What is USP in marketing field?
a) US Programme based
b) Exclusive marketing features
c) Uninterrupted power supply
d) Universal standards of production
Answer »The Unique Selling Proposition (a.k.a. Unique Selling Point, or USP) is a marketing concept that was first proposed as a theory to understand a pattern among successful advertising campaigns of the early 1940s.
It states that such campaigns made unique propositions to the customer and that this convinced them to switch brands. The term was invented by Rosser Reeves of Ted Bates & Company.
Today the term is used in other fields or just casually to refer to any aspect of an object that differentiates it from similar objects. The term USP has been largely replaced by the concept of a Positioning Statement.
Question : 3
“Bad money will drive out good money from circulation.” This is known as :
a) Say’ Law
b) Wagner’s Law
c) Engle’s Law
d) Gresham’s Law
Answer »Answer: (d)
Gresham's law is an economic principle that states:
"When a government compulsorily overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation."
It is commonly stated as: "Bad money drives out good.”
Question : 4
Devaluation of money means :
a) decrease in both internal and external value of money
b) the government takes back currency notes of any denominations
c) decrease in the internal value of money
d) decrease in the external value of money
Answer »Answer: (d)
Devaluation refers to a decline in the value of a currency in relation to another, usually brought about by the actions of a central bank or monetary authority.
Devaluation is sometimes used more generally to describe any significant drop in a currency’s international exchange rate, although usually a decline caused by market forces with no government intervention is termed a depreciation.
Devaluations are most often associated with developing countries that don’t allow their currency prices to float freely on the open market.
Question : 5
Consider the following statements.
- The repo rate is the rate at which other banks borrow from the Reserve Bank of India.
- A value of ‘0’ for Gini Coefficient in country implies that there is perfectly equal income for everyone in its population.
a) Only 2
b) Neither 1 nor 2
c) Both 1 and 2
d) Only 1
Answer »Answer: (c)
Question : 6
The Indian rupee was made convertible into which of the following accounts since March 1993?
a) Current Account
b) Revenue Account
c) Both (A) and
d) Capital Account
Answer »Answer: (a)
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