Money and Banking-Online Practice Exam 1
Money and Banking-Online Practice Exam 1

Money and Banking-Online Practice Exam 1

NET / SET Online Practice Exams

Money and Banking

Test

Multi-choice 1

Question

1. Which of the following is/are the components of money supply?

  1. Currency notes with the public
  2. Coins in circulation with the public
  3. Deposits with the banks
  4. Deposits of banks with the Central Bank

Answers

 Only I and II

Only I, II and III

Only II, III and IV

 I, II, III and IV

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Question

2. Which of the following system has been adopted by the RBI to issue currency notes?

Answers

Simple deposited system

Proportional Reserve System

Minimum Reserve System

Fixed Fiduciary System

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Question

3. Which of the following measure of money supply is termed as Reserve Money?

Answers

Mo

M2

M1

M3

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Question

4. Which of the following measure of money supply is termed as broad money ?

Answers

M1

M1

M3

M4

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Question

5. Which of following is a determinant of money supply?

  1. Stock of high powered money
  2. Actual reserve ratio of commercial banks
  3. Public’s desire to hold currency and deposit

Answers

 I, II and III

 Only I

Only I and II

Only II and III

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Question

6. If H is high powered money, K is the currency deposit ratio, r is the desired deposit ratio and I is the quantity to total legal tenders, then value of money multiplier is

Answers

Eq 1

Eq 2

Eq3

M = H (l+K).(r+K)

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Question

7. Certain factors affect the money supply such as–

  1. Government borrowing from the banking sector
  2. Borrowing of the private or commercial sector from the banking sector.
  3. Changes in net foreign assets held by the central bank caused by changes in balance of payments.
  4. Government’s currency liability to the public

Answers

Only I and II

Only I, II and III

 Only II, III and IV

 I, II, III and IV

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8. Credit creation is a function of

Answers

 Central Bank

 Commercial Banks

Government

Co-operative credit societies

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Question

9. Supply of money over a period of time is a function of–

  1. M (Quantum of money)
  2. V (Velocity of money)
  3. T (Number of transaction)

Answers

Only I and II

Only II and III

I, II and III

Only I and III

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Question

10. Liquidity approach to the concept of money supply advocated by-

Answers

Milton Friedman

The RBI

The Radcliffe Committee

Gurley and Shaw

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