Money and Banking

Q1.What is the defect of the barter system?

(A) Lack of double coincidence of wants
(B) Difficulty in the measurement of value
(C) Difficulty in store of value
(D) All of these

Q2.Which of the following is the credit money?

(A) Cheque and draft
(B) Promissory note
(C) Exchange note
(D) All of these

Q 3. Which among the following is the near money?

(A) Bonds
(B) Insurance policy
(C) Securities
(D) All of these

Q 4.Which of the following is the feature of money?

(A) General acceptability
(B) Homogeneous unit
(C) Liquid asset
(D) All of these

Q5.In order to encourage investment in the economy, the Central Bank may ________
(A) Reduce Cash Reserve Ratio
(B) Increase Cash Reserve Ratio
(C) Sell Government securities in the open market
(D) Increase Bank Rate

Q6.Institution that accepts deposits for lending purpose is known as __________

(A) Commercial Bank
(B) Central Bank
(C) Government
(D) Public

Q 7.Which of the following is the function of a commercial bank?

(A) Accepting deposits
(B) Credit creation
(C) Agency function
(D) All of these

Q 8.The central bank can increase the availability of credit by:

(A) Raising repo rate
(B) Raising reverse repo rate
(C) Buying government securities
(D) Selling government securities

Q 9.Giving permission to withdraw money by an amount more than deposited to is

known as _________
(A) Advance
(B) Overdraft
(C) Loan
(D) None of these

Q10.What are the alternative measures of money supply in India?

(A) M1
(B) M2
(C) M3 and M4
(D) All of these

Q 11.Who circulates all mint and one rupee not in India?

(A) Ministry of Finance
(B) RBI
(C) Ministry of External Affairs
(D) State Government

Q12.Which of the following is the narrow measure of the money supply?

(A) M2
(B) M3
(C) M1
(D) M4

Q 13.When was the minimum reserve system started in India?

(A) 1947
(B) 1948
(C) 1951
(D) 1957

Q14.Which is the most liquid measure of the money supply?

(A) M4
(B) M3
(C) M2
(D) M1

Q 15.High Powered Money includes:

(A) C + DD + OD
(B) C + R + OD
(C) C + R + TD
(D) C + DD + TD

Q16.Indian Monetary System is based on ________

(A) Paper Standard
(B) Metallic Standard
(C) Gold Standard
(D) Credit Money Standard
Q17.Which of the following is the apex bank of India?
(A) RBI
(B) SBI
(C) SBP
(D) PNB

Q 18.Who has the right of note issue?

(A) Central Bank
(B) Commercial Bank
(C) Government
(D) Co-operative Bank

Q19.Which of the following is the function of a Central bank?

(A) Issue of notes
(B) Banker to the Government and Banks
(C) Supply and control of money
(D) All of these

Q20.The ratio of total deposits that a commercial bank has to keep with RBI is called:
(A) Statutory liquidity ratio
(B) Deposit ratio
(C) Cash reserve ratio
(D) Legal reserve ratio

Q21.Demand deposits include

(A) Saving account deposits and fixed deposits
(B) Saving account deposits and current account deposits
(C) Current account deposits and fixed deposits
(D) All type of deposits

Q22.What are the necessary conditions of the Barter System?

(a) Limited Needs
(b) Limited Exchange Area
(c) Economically Backward Society
(d) All the above

Q23. What are the advantages of the Barter System?

(a) Simple System
(b) More Mutual Co-operation
(c) No Economic Disparities
(d) All the above

Q24. Which one is the difficulty of the Barter System?

(a) Lack of Double Coincidence
(b) Difficulty of Division of the Goods
(c) Lack of General Acceptable Measure of Value
(d) All the above

Q25.Which is the correct order of money evolution?

(a) Commodity Money, Paper Money, Metal Money
(b) Commodity Money, Metal Money, Paper Money, Credit Money
(c) Credit Money, Metal Money, Paper Money
(d) None of the above
Q26. Money is what money does.” Who said it?
(a) Hartley Withers
(b) Hawtrey
(c) Thomas
(d) Keynes

Q27. Which one is included in the primary function of money?

(a) Medium of Exchange
(b) Measure of Value
(c) Both (a) and (b)
(d) Store of value

Q28.Which one is included in the secondary function of money?

(a) To make Deferred Payments
(b) Store of Value
(c) Transfer of Value
(d) All of these

Q29. Money is a pivot around which the whole economy clusters.” Who said it?
(a) Keynes
(b) Robertson
(c) Marshall
(d) Hawtrey

Q30. The function of money is:

(a) Medium of Exchange
(b) Measure of Value
(c) Store of Value
(d) All the above

Q31. The functions of money include:

(a) Value determination
(b) Store of value
(c) Means of exchange
(d) All of these

Q32. Money is a matter which is:

(a) a measure of value
(b) accepted as a means of exchange
(c) used to store wealth
(d) All of these

Q33. By supply of money we mean :

(a) Money deposited in the bank
(b) Money available with the public
(c) Deposits with post office savings bank
(d) All of these

Q34. Which of the following is not a function of money?

(a) Medium of exchange
(b) Price stability
(c) Store of value
(d) Unit of account
Q35. Which one is the Bank of the Public?
(a) Commercial Bank
(b) Central Bank
(c) Both (a) and (b)
(d) None of the above

Q36. The primary function of Commercial Bank is?

(a) Accepting Deposits
(b) Advancing Loans
(c) Credit Creation
(d) All of these

Q37.Deposits accepted by the Commercial Banks:

(a) Current Deposits
(b) Saving Deposits
(c) Time Deposits
(d) All of these

Q38. What type of loan is advanced by Commercial Banks?

(a) Cash Credit
(b) Overdraft
(c) Loan and Advance
(d) All of these

Q39. Which function is the Secondary Function of Commercial Banks?

(a) Agency Function
(b) General Utility Function
(c) Social Function
(d) All of these

Q40. Which is the Agency Function of Commercial Banks?

(a) Advancing Loans
(b) Accepting Deposits
(c) Act as Trustee
(d) Locker Facility

Q41. Credit Multiplier is:

(a) 1/CRR
(b) cash×1 CRR 
(c) Cash x CRR
(d) None of these

Q42. Credit money is increased when CRR:

(a) Falls
(b) Rises
(c) Both (a) and (b)
(d) None of these

Q43. The full form of ATM is:

(a) Any Time Money
(b) All Time Money
(c) Automated Teller Machine
(d) Both (a) and (b)
Q44. The main function of a commercial bank is:
(a) Credit control
(b) Loaning to other banks
(c) Accept deposits from customers
(d) All the above

Q45. What is the Central Bank of India?

(a) Commercial Bank
(b) Central Bank
(c) Private Bank
(d) None of these

Q46. Commercial banks:

(a) Issue currency notes
(b) Accepts deposits from customers
(c) Provide loans to customers
(d) Only (b) and (c)

Q47. What is true for the Central Bank?

(a) Apex Bank of the Country
(b) Ownership of the Government
(c) Regulates the entire banking system in the country
(d) All the above

Q48. Central Bank of India is:

(a) Reserve Bank of India
(b) State Bank of India
(c) Central Bank of India
(d) Bank of India

Q49. Which of the following is the function of the Central Bank?

(a) Monopoly of Note Issue
(b) Banker of the Government
(c) Custodian of Foreign Exchange Reserves
(d) All the above

Q50. Which type of currency is issued by Central Bank?

(a) Currency
(b) Credit Money
(c) Coins
(d) All of these

Q51. Which is the major objective of credit control?

(a) To maintain Price Stability
(b) To stabilize Exchange Rate
(c) To production and Employment
(d) All the above

Q52. Which one is true?

(a) Bank rate is a rate at which Central Bank is ready to give credit to commercial banks
(b) Bank rate and interest rates are different
(c) Bank rate is the discount rate of the Central Bank
(d) All the above
Q53. Which is not a quantitative method of credit control?
(a) Bank Rate
(b) Moral Suasion
(c) Open Market Operations
(d) Change in CRR

Q54. Every bank is required to maintain a fixed percentage of its assets in the form of
cash is called:
(a) Cash Reserve Ratio
(b) Statutory Liquidity Ratio
(c) Both (a) and (b)
(d) None of the above

Q55. Reserve Bank of India was established in :

(a) 1947
(b) 1935
(c) 1937
(d) 1945

Q56. Monetary policy is related with:

(a) Public Expenditure
(b) Taxes
(c) Public Debt
(d) Open market operations

Q57. Which of the following issue paper currency in the country?

(a) Commercial Bank
(b) Central Bank
(c) World Bank
(d) Industrial Bank

Q58. The central bank controls credit through:

(a) Bank rate
(b) Open market
(c) CRR
(d) All the above

Q59. Which of the following is a qualitative method of credit control?

(a) Variation in cash reserve ratio of banks
(b) Restriction on consumer credit
(c) Open market operations
(d) Variation in bank rate

Q60. The major objectives of monetary policy is/are:

(a) Increase in output and employment
(b) Stability in the foreign exchange rate
(c) Price stability
(d) All of these

Q61. Who regulates the money supply?

(a) Govt, of India
(b) Reserve Bank of India
(c) Commercial Bank
(d) Planning Commission

Q62. With which Narsimham Committee is related to?

(a) Tax Reforms
(b) Banking Reforms
(c) Agriculture Reforms
(d) Infrastructure Reforms

Q63. In which year the second Narsimham Committee was constituted?

(a) 1978
(b) 1991
(c) 1997
(d) 1998

Q64. Banking Ombudsman Scheme was announced in the year:

(a) 1990
(b) 1995
(c) 1997
(d) 2000

Q65. Which was included in the purview of the Banking Ombudsman Scheme?
(a) All Scheduled Banks
(b) Co-operative Banks
(c) Commerical Banks
(d) All of these

Q66. Which committee was constituted for suggesting consumer service improvements
in banks?
(a) Raja Chelliah Committee
(b) Goiporia Committee
(c) Verma Committee
(d) Chakrabarty Committee

Q67. For revival and restructuring of weak banks of the public sector, which committee
was constituted?
(a) Verma Committee
(b) Goiporia Committee
(c) Rekhi Committee
(d) Narsimham Committee

Q68. RBI announced the guidelines to issue licenses to new banks of the private sector
on:
(a) January 22, 1993
(b) March 15, 1995
(c) April 1, 1999
(d) None of these

Q69. Who is the custodian of the Indian Banking system?

(a) Reserve Bank of India
(b) State Bank of India
(c) Unit Trust of India
(d) LIC of India
Q70. Banking Sector Reforms in India began in:
(a) 1969
(b) 1981
(c) 1991
(d) 2001

Q71. 14 big scheduled commercial banks in India were nationalised in:

(a) 1949
(b) 1955
(c) 1969
(d) 2000

Q72. Which is associated with reforms in the banking sector?

(a) Year 1991
(b) Narsimham Committee
(c) Y.V. Reddy Committee
(d) Only (a) and (b)

Q73. Money is what money does”. Who said this:

(a) Hartley Withers
(b) Harte
(c) Prof. Thomas
(d) Keynes

Q74. The function of money is:

(a) Medium of exchange
(b) Measure of value
(c) Store of value
(d) All of the above

Q75. The meaning of money supply is:

(a) Money deposits in the bank
(b) Cash available with public
(c) Savings in the post office
(d) All of the above

Q76. What is the Central Bank of India:

(a) Commercial Banks
(b) RBI
(c) Private Bank
(d) None of these

Q77. Through which method we can withdraw money from the bank:
(a) Drawing letter
(b) Cheque
(c) A.T.M.
(d) All of the above

Q78. Who is the guardian of the Indian Banking System:

(a) Reserve Bank of India
(b) State Bank of India
(c) Unit Trust of India
(d) Life Insurance Company of India.

Q79. Narasimham Committee is related to what:

(a) Improvement in Taxation
(b) Improvement in Banking
(c) Improvement in Agriculture
(d) Improvement in Infrastructure

Fill in the blanks:

Question 1.The exchange of goods for goods is called _____ exchange.

Answer: barter

Question 2.______ is a narrow concept of money.

Answer: M1

Question 3.________ is a broad concept of money.

Answer:M3

Question 4._______ are the deposits which are payable by the banks to the customers
after a fixed period.

Answer: Time Deposits

Question 5. Currency money is also known as ______ money.

Answer: Fiat

Question 6.Supply of money is a _______ concept.

Answer: Stock

Question 7. The money multiplier is the rate of change in _____ due to initial deposits.

Answer: Money Supply

Question 8.Currency with public means _____ and ______ with the public outside the
bank.

Answer: Coins, currency notes

Question 9. _______ is the Central Bank of India.

Answer: RBI

Question 10. Commercial banks are an important source of _________ in the economy.

Answer: Money Supply

Question 11. Banks serve as a channel between _______ and investors.

Answer: Depositors

Question 12. Two essential functions of a bank are accepting deposit and ________

Answer: Advancing Loan

Question 13.The Central Bank is the apex institution of the _______ system.

Answer: Monetary

Question 14. Bank rate is the _______ instrument of Central Bank.

Answer: Quantitative

Question 15. Central Bank of India is………………..

Answer: Reserve Bank of India

Question 16. Bank rate is also known as………………..

Answer: Redemption

Question 17. The bank generates……………….. Deposits in credit creation.

Answer: Derivative

Question 18. When CRR decreases, credit creation………………..

Answer: Increases

Question 19. The measure of deferred payment is ……………….. Function of money.

Answer: Secondary

Question 20.Medium of exchange is ……………….. Function of money.

Answer: Primary

Question 21.The static and dynamic function of money is divided by………………..

Answer: Paul Einzig

State true or false:

Question 1.Money as a medium of exchange solves the problem of lack of double
coincidence of want.

Answer: True

Question 2.Legal tender money has a legal sanction behind it by the government.

Answer: True

Question 3.M1 includes saving deposits of post office savings banks.

Answer: False

Question 4. The money supply is a flow variable.

Answer: False

Question 5. Commercial Bank plays no role in stock of money supply in the economy.

Answer: False
Question 6.Credit money is money received as credit from banks.

Answer: False

Question 7.Commercial banks do not create money.

Answer: False

Question 8.Bank rate is a qualitative method of credit control.

Answer: False

Question 9. There is an inverse relation between LRR and the size of the money
multiplier.

Answer: True

Question 10.Money is needed for day-to-day transactions.

Answer: True

Question 11.The precautionary demand for money increases with the proportionate
increase in income.

Answer: True

Question 12.Reserve Bank of India provides loans to the public.

Answer: False

Question 13.Along with the Reserve Bank of India, Commercial banks is also
authorized to issue currency.

Answer: False

Question 14. Reliable money also includes cheques.

Answer: False

Question 15.Reserve Bank of India cannot become the owner of any real estate.

Answer: True

Match the following:

Question 1.

Column I Column -II

1. Primary function of money (a) Paper money
2. Indian Rupee is (b) Bad master
3. An institution which deals with money (c) Measure of value
4. RBI established on (d) Bank
5. Money is a good servant but (e) 1 April 1935.

Answer
1,c, 2.a, 3.d,4.e,5.b

Question 2.

Column-I Column-II
1. Fiat money (A) Reserve Bank of India
2. Legal tender (B) Banking through electronic media
3. Apex bank of India (C) Must be accepted as a medium of exchange
4. Central bank in India (D) Statutory Liquidity Ratio
5. E-banking (E) Circulated with the order of government
6. SLR (F) Cash Reserve Ratio
7. CRR (G) Issuing notes
8. Bank rate (H) The central bank of India
9. Function of commercial bank (I) Determined by the central bank
10. Function of the central bank (J) Accepting deposits

Answer: 1.e, 2.c, 3.h, 4.e, 5.b, 6.d, 7.f, 8.i, 9.j, 10.g