CBSE Questions for Class 12 Commerce Economics Money And Banking Quiz 8 - MCQExams.com

For Banks, Central Bank acts as a  _________.
  • Clearing agent
  • Borrower
  • Lender
  • All the above
Liquidity is related ______ to price fluctuation.
  • Inversely
  • Directly
  • Equally
  • None of the above
Liquidity of an asset is _____ related with the average time taken to convert it into cash in the market.
  • Directly
  • Inversely
  • Equally
  • Proportionately
The contingent function of money are
  • Distribution of national income
  • Distribution from of capital
  • Basis of credit
  • All of the above
Difficulty with barter system was
  • Exchange was difficult due to lack of double coincidence of wants.
  • Credit purchase was difficult as nature of commodity kept changing.
  • Evaluation of the commodity was difficult as the commodities exchanged were different.
  • All of the above
A government bond is being matured after five years in comparison to Rs 50000 that is lying with Ram. Which is more liquid?
  • Government bond
  • Rs 50000
  • Both are equally liquid
  • None of the above
It is uncommon for an item to be liquid if
  • It is not acceptable in the market
  • Can not be sold in the market
  • Not accepted by creditors
  • Both a & b
Out of the following which assets is most liquid?
  • shares of stock
  • government securities
  • land
  • currency
Liquidity means
  • A highly acceptable item in the market
  • A credit money
  • A debit money
  • All of the above
When the liquidity trap occurs the demand for money ________________.
  • becomes perfectly interest elastic
  • becomes perfectly interest inelastic
  • means that an increase in money supply leads fall in the interest rate
  • means that an increase in the money supply to an increase in the interest rate
Four Functions money as per functional approach are
  • Medium
  • Measure
  • Saving
  • Both a & b
The purpose of the central banks is _________.
  • to ensure the stability of the financial system
  • to control the availability of money and credit to ensure low inflation, high growth, and the stability of the financial system.
  • only to ensure that the economy sees high growth.
  • only to control the availability of money and to ensure low inflation.
The practice of creating a full-fledged central bank so as to take charge of the existing financial system got an impetus by the recommendations made by the International Financial Conference held at _________.
  • Mumbai
  • London
  • New York
  • Brussels
Which of the following is not a component of bank deposit?
  • Current account deposit
  • Saving account deposit
  • Safe deposit
  • Fixed deposit
________ refers to the percentage of total deposits of the commercial banks that the commercial banks are required to maintain in form themselves in form of cash, gold or approved government securities. 
  • Statutory liquidity ratio
  • Cash reserve ratio
  • Special liquidity ratio
  • Federal reserve ratio
If the Central Bank wishes to boost production and investment activities in the economy, it will ____________.
  • decrease the Bank Rate
  • raises the Bank Rate
  • withdraws the Bank Rate
  • none of above
________ is usually defined as the Central Bank's Policy pertaining to the control of the availability, cost and use of money and credit with the help of monetary measures in order to achieve specific goals. 
  • Foreign trade policy
  • Economic policy
  • Monetary policy
  • Bank policy
The main advantage(s) of granting the monopoly right of note issue to the central bank is/are ___________.
  • it brings uniformity in the monetary system of note issue and notes circulation.
  • to have better control over the money supply in the country.
  • monetary management of the paper currency becomes easier.
  • all of above
The money supply is ________.
  • Money + Bank cards + Credit cards
  • Cheques + Money + Bank cards + Credit cards
  • currency in circulation + bank deposits
  • none of above
The main advantage(s) of granting the monopoly right of note issue to the central bank is/are __________.
  • it enables to exercise control over the creation of credit by the commercial banks.
  • the central bank also earns profit from the issue of paper currency.
  • it avoids the political interference in the matter of note issue
  • all of above
The RBI was established on the basis of the recommendations of the _______.
  • Hilton Young Commision
  • Kumar Mangalam Committee
  • Tondon Commission
  • Kumar & Young Commision
In which of the capacities the central bank acts as the bankers' bank?
  • As custodian of the cash preserves of the commercial banks
  • As the lender of the last resort
  • As clearing agent
  • All of above
Identify which of these is not a function of the Central Bank.
  • Formulating the Government Budget
  • Banker of Banks
  • Arranging for clearing arrangements between Banks
  • All of the above
Identify which of these is a function of the Central Bank.
  • Banker of the State
  • Banker of Banks
  • Issue of Currency
  • All of the above
The Central Bank performs the following function(s):
  • Regulates Currency
  • Performance of general banking and agency services for the State
  • Custody of Cash Reserve of Commercial Banks
  • All of the above
The objective of the Central Bank is to _____________.
  • ensure monetary stability in the country
  • maintain the international value of the Country's currency
  • issue currency
  • all of the above
Which of the following statements about Central Bank is incorrect?
  • Central Bank regulates currency in accordance with the requirements of business and the general public
  • Central Banks performs general banking and agency service for the state
  • Central Bank generally deals with the public and tries to encourage saving habits among people
  • None of the above.
...................is the rate at which commercial banks borrow money from the central bank in case of any shortage of funds they face.
  • Bank rate
  • Treasury rate
  • Reserve repo rate
  • Repo rate
Identify which of these is not a function of the Central Bank.
  • Custodian of Foreign Exchange Reserves
  • Issue of Currency
  • Paying interest on deposits obtained from the public
  • Custodian of Cash Reserves
When the central bank wishes to control credit and inflation in the economy, it................
  • decrease the bank rate
  • raises the bank rate
  • withdraws the bank rate
  • reduces the bank rate
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