money supply, banking & financial institutions section 12 Practice Questions Answers Test with Solutions & More Shortcuts
Money Supply, Banking and Financial Institutions PRACTICE TEST [12 - EXERCISES]
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money supply, banking & financial institutions section 12
Question : 1 [SSC Stenographer 2011]
Which one of the following is an example of optional money?
a) Cheque
b) Bond
c) Currency note
d) Coins
Answer »Answer: (a)
On the basis of acceptability, money has been classified into legal tender and optional money.
Legal tender money is enforced by law. Optional money is that money that may or may not be accepted as a means of payment; it has no legal sanction.
Different credit instruments, like, cheques, bank drafts, etc., are examples of optional money.
Question : 2
An increase in the Bank Rate generally indicates that the :
a) market rate of interest is likely to fall
b) Central Bank is following an easy money policy
c) Central Bank is no longer making loans to commercial banks
d) Central Bank is following a tight money policy
Answer »Answer: (d)
A tight monetary policy is a course of action undertaken by the Central bank to constrict spending in an economy, or to curb inflation when it is rising too fast.
The increased bank rate increases the cost of borrowing and effectively reduces its attractiveness.
Question : 4
Which of the following factors may lead to an increase in savings in the economy?
- Positive real interest rate
- Low inflation rate
- Rise in per capita income
- Growth of financial intermediaries
a) (iii) & (iv) only
b) (ii) & (iii) only
c) (iii) only
d) All of the above
Answer »Answer: (d)
When inflation in the economy is low, people expenses decrease and they are able to save more.
When per capital income increases it leads to higher savings in the economy.
The growth of financial intermediaries means financial institutions like banks. An increase in banks in the economy leads to increased saving behaviour.
So, all the statements are true.
Question : 5
Consider the following statement:
- Increase in private expenditure
- Increase in exports
- Increase in taxation
- Rapid growth of population
a) 2 only
b) 1 only
c) 3 only
d) 4 only
Answer »Answer: (c)
Factors causing an increase in demand for goods & services:
- Increase in public expenditure
- Increase in private expenditure
- Increase in exports
- Reduction in taxation
- Rapid growth of population
- Black money
- Deficit financing
- Cheap money policy
- Increase in consumer spending
- Department of Tax internal debts.
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Money Supply, Banking and Financial Institutions Shortcuts »
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indian economy MCQ CATEGORIES
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» Introduction to Indian Economy
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» Planning, Economic Development & Five year Plans
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» National Income & Human Development Index
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» Agriculture Sector, Subsidy and Food Processing
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» Industries, Manufacturing & Service Sectors
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» Inclusive growth, Sustainable development and employment
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» Poverty & Unemployment
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» Introduction to Micro Economics
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» Introduction to Macro Economics
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» Macro fundamentals, GDP, Investment, Growth
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» Demand & Supply, Profit Loss, Inflation & Price Index
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» Fiscal Policy, Public Finance and Monetary Policy
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» Money Supply, Banking and Financial Institutions
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» Taxes Types, Methods & Budgeting Process
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» Banking, Security Market & Insurance
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