CBSE Questions for Class 12 Commerce Economics Money And Banking Quiz 11 - MCQExams.com

Increase in cash reserve ratio will lead to __________________.
  • Fall in Aggregate Demand
  • Rise in Aggregate Demand
  • No change in Aggregate Demand
  • None of these
The algebraic relationship between multiplier and MPC is ________________.
  • Multiplier (k) = 1 + MPC
  • Multiplier (k) = 1 - MPC
  • Multiplier $$(k) =\frac{1} {1-MPC}$$
  • Multiplier $$(k) = \frac{1}{MPC}$$

The transaction motive relates to the desire of the people to hold cash for the future transactions.
  • True
  • False
Multiplier is __________  related to MPC.
  • directly
  • not
  • indirectly
  • rarely
Higher the value of MPC, more Is the value of multiplier.
  • True
  • False
The value of multiplier is _____________.
  • $$\frac{1}{MPC}$$
  • $$\frac{1}{MPS}$$
  • $$\frac{1}{1-MPS}$$
  • $$\frac{1}{MPC-1}$$

The amount saved under transaction motive depends on the level of ____________. 
  • savings
  • income
  • interest
  • rent
Select the correct aim/s of the RBI's 'liquidity management framework' by code:
Reducing volatility in the call rate.
Medium-term stability in the loan market. 
  • Only 1
  • Only 2
  • 1 and 2
  • Neither 1 nor 2
MPC = 0.75 and as a result of Multiplier Effect, National Income Increased by Rs. 300 crores by an additional investment of ________.
  • Rs. 400 crores
  • Rs. 225 crores
  • Rs. 1200 acres
  • Rs. 75 crores
Which of the following come under the monetary aggregate M3?
Recurring deposits
Postal savings
Saving accounts
Current accounts
  • 1,2 and 3
  • 2,3 and 4
  • 1,3 and 4
  • 1,2 and 4
 Which of the following expression is correct? 
  • $$ Multiplier\, (k) =\frac { Change\, in\, Income (\Delta \,Y) } { Change\, in\, Investment (\Delta \,l)}$$
  • $$Multiplier (k) = \frac {1}{MPS- 1}$$
  • $$Multiplier (k) = \frac {1}{MPC}$$
  • $$ Multiplier (k) = \frac {Change\, in \,Investment (\Delta\, I)}{Change \,in \,Income (\Delta \,Y)}$$
As per the New Monetary Aggregates of the RBI which of the following doesn't belong to the 'broad money'? Select the answer using the code given below:
Bankers' deposits with the RBI
Demand & Time Deposits of the Banks
Other Deposits with the RBI
Currency & coins with the public
Currency in circulation
Savings of Post Offices 
  • 1,2 and 4
  • 3,4 and 5
  • 1,5 and 6
  • 2,3 and 4
According to Keynes, the transaction demand of money is positively associated with the level of
  • Income
  • Investment
  • Savings
  • Consumption
It is a market for short-term funds which deals in monetary assets whose period of maturity is up to one year.
  • Money market
  • Capital market
  • Secondary market
  • Primary market
In order to encourage investment in the economy, the Central Bank may___________. (Choose the correct alternative)
  • Reduce Cash Reserve Ratio
  • Increase Cash Reserve Ratio
  • Sell Government securities in open market
  • Increase Bank Rate
What is correct about the 'Money Multiplier' in India? Select the answer using the code given below :
This is the ratio of the $$ (M_{3}) $$ to the Minimum Reserve of India.
The concept of Money Multiplier commenced with the idea of Minimum Reserve System in India.
  • Only 1
  • Only 2
  • 1 and 2
  • Neither 1 nor 2
The sum of which of the following constitutes Broad Money in India? Select your answer using the code given below:
Currency and coins with the public
Demand deposits with banks
Time deposits with banks
Other deposits with RBI
  • 1 and 2
  • 2 and 3
  • 1, 3 and 4
  • 1, 2, 3 and 4
Which one of the following International institutions has offered the concessional loans and grants to the world's poorest developing countries?
  • IFC
  • IDA
  • IMF
  • WB
Which of the following does not belong to the monetary aggregate MSelect your answer with code given below: 
  • Currency with the public and other deposits with the RBI
  • Saving deposits of the banks
  • Recurring deposits of the banks
  • Total deposits of the post offices
In the context of Indian economy, which of the following is/are the purpose/purposes of 'Statutory Reserve Requirements'?
1. To enable the Central Bank to control the amount of advances the banks can create
To make the people's deposit with the banks safe and liquid
To prevent the commercial banks from making excessive profits
To force the banks to have sufficient vault cash to meet their day-to-day requirements 
Select the correct answer using the code given below:
  • 1 only
  • 1 and 2 only
  • 2 and 3 only
  • 1, 2, 3 and 4
Select the incorrect one/ones from the given list of items using the code  given below :
'Narrow Money' and 'Broad Money' are categories of money stocks popularised by the banking industry in India.
In 'Narrow Banking' commercial banks are basically doing 'retail banking'.
  • Only 1
  • Only 2
  • 1 and 2
  • Neither 1 nor 2
Select the functions of the RBI, which are correct using the code given below:
as 'banker to the Government' it performs merchant banking function for the central and the state governments and also acts are their 'banker'.
As 'banker to banks', it maintains banking accounts of all scheduled banks.
  • Only 1
  • Only 2
  • 1 and 2
  • Neither 1 nor 2
Select the correct ones which are part of the 'reserve money' of India-use the code:
Banker's deposits with the RBI
India's balance in the foreign central banks
India's balance in the Basel Bank
  • Only 1
  • 1 and 2
  • Only 2
  • 1,2 and 3
Which of the following are not the limitations of barter exchange?
  • Double coincidence of wants
  • legal acceptability
  • Store of value
  • Standard of deferred payments
The capital market consists of
  • Stock exchanges
  • Development banks
  • Commercial banks
  • All of the above
Which of the following is correct?
  • Supply of money is a stock concept
  • Supply of money does not include stock of money held by the government
  • Supply of money does not include stock of money held by the banking system of a country
  • all of these
Which of the following is the function of central bank of the country?
  • Bank of note-issuing
  • Lender's last resort
  • Custodian of foreign exchange
  • All of these
CRR in India is fixed by
  • commercial banks
  • Government
  • RBI
  • supply-demand forces in the money market
A farmer exchanges wheat for cloth. This system of exchange is referred to as _____
  • Barter
  • Monetary exchange
  • Self-consumption
  • None of the above
With an increase in SLR, flow of credit in the economy _____.
  • Increases
  • Decreases
  • Remains unchanged
  • None of these
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