Macroeconomics || MCQ solution of money and banking

 Macroeconomics  || MCQ of money and banking 

Macroeconomics: Money, Banking, and RBI - MCQs with answers - Part I

1) Which among the following is considered to be the most liquid asset?

a) Gold
b) Money
c) Land
d) Treasury bonds

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ANSWER: b) Money

Liquid assets are those assets that can be exchanged most readily with minimum number of obstacles and minimum time.

2) The number of times a unit of money exchanges hands during a unit period of time is known as:

a) velocity of circulation of money
b) speed of circulation of money
c) momentum of circulation of money
d) count of circulation of money

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ANSWER: a) velocity of circulation of money

3) Who is author of the ancient book on economics, Arthashastra?

a) Kautilya
b) Chanakya
c) Sushrut
d) Bhattacharya

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ANSWER: b) Chanakya

4) Historically, the Indian rupee was a ____ coin:

a) Copper
b) Gold
c) Silver
d) Bronze

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5) Currency notes and coins are called as:

a) Flat money
b) Legal tenders
c) Fiat money
d) Both b and c

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ANSWER: d) Both b and c

6) In the terminology of economics and money demand, the terms M1 and M2 are also known as :

a) Short money
b) Long money
c) Broad money
d) Narrow money

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ANSWER: d) Narrow money

M1= Currency notes plus demand deposits, and M2 means M1 plus Savings deposits with post office savings banks

7) In the terminology of economics and money demand, the terms M3 and M4 are also known as :

a) Short money
b) Long money
c) Broad money
d) Narrow money

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ANSWER: c) Broad money

M3 is M1 plus net time deposits of commercial banks. M4 is M3 plus Total deposits with Post Office savings organisation (excluding National Savings certificate)

8) What is the currency deposit ratio (cdr)?

a) ratio of money held by the public in currency to that of money held in bank deposits
b) ratio of money held by public in bank deposits to that of money held by public in currency
c) ratio of money held in demand drafts to that of money held in treasury bonds
d) none of the above

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ANSWER: a) ratio of money held by the public in currency to that of money held in bank deposits

9) What is the reserve deposit ration (rdr)?

a) the proportion of money RBI lends to commercial banks
b) the proportion of total deposits commercial banks keep as reserves
c) the total proportion of money that commercial banks lend to the customers
d) none of the above

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ANSWER: b) the proportion of total deposits commercial banks keep as reserves

10) What is the Cash Reserve Ratio (CRR)?

a) the fraction of the deposits that commercial banks lend to the customers
b) the fraction of the deposits that RBI must keep with commercial banks
c) the fraction of the deposits that commercial banks must keep with RBI
d) none of the above

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ANSWER: c) the fraction of the deposits that commercial banks must keep with RBI