money supply, banking & financial institutions section 7 Practice Questions Answers Test with Solutions & More Shortcuts

Question : 1 [SSC CGL 2014]

Pegging up of a currency means, fixing the value of a currency

a) at a higher level

b) leaving it to market forces

c) at a constant level

d) at a lower level

Question : 2

What are the causes of inflation?

1. Increase in demand for goods & services
2. Decrease in the supply of goods & services
3. Decrease in demand for goods & services
4. Increase in the supply of goods & services

a) 3 and 4

b) 1 and 2

c) 1 and 4

d) 2 and 3

Question : 3 [SSC CML 2002]

For channelising the unaccounted money for productive purposes the Government Introduced the scheme of :

a) Provident Funds

b) Market Loans

c) Special Bearer Bonds

d) Resurgent India Bonds

Question : 4

Which of the following measures would result in an increase in the money supply in the economy?

1. Purchase of government securities from the public by the Central Bank
2. Deposit of currency in commercial banks by the public
3. Borrowing by the government from the Central Bank
4. Sale of government securities to the public by the Central Bank

a) 2 and 4

b) 1 only

c) 1 and 3

d) 2, 3 and 4

Question : 5

Consider the following statements:

1. Open Market Operation is a monetary policy tool
2. Open Market Operations take place in the secondary market
3. Sterilization is a monetary policy tool

a) (i) & (iii) only

b) (iii) only

c) (i) only

d) All of the above