S.Y B.COM
SEMESTER - 4
MACRO ECONOMIC ISSUES AND POLICIES
(MEIP)
MCQS - FEBRUARY 2020
1. One of the following is not the objectives of fiscal policy.
A. Equality of income distribution
B. High economic growth
C. Price stability
D. Exchange rate stability
2. Read the following statements and choose the correct option.
I. Currency coins and produced and circulated by the government of India.
ll. Currency coins are produced by the government of India and circulated by RBI
A. I is true and II is not true
B. I is not true and II is not false
C. I is false and II is not true
D. I is not false and II is false
3. Which of the following is correct with reference to the money supply in India?
I. The share of currency in circulation is highest in the money supply
II. The share of bank money is highest in the money Supply
III. CRR and credit money are inversely related
A. II and III
B. I and II
C. I and III
C. I, II and III
4. The bank rate policy will be effective if there is _________
A. Efficient banking system
B. Favorable economic environment
C. Cordial relationship between banks and the RBI
D. All of the above
5. Over dependence on borrowing to meet the deficit financing may lead a country to.....
A. Debt Trap
B. Revenue Trap
C. Deficit Trap
D. Financial Trap
6. Following statements are true about Government expenditures.
I. Government expenditures are autonomous in nature and independent in character
II. Government expenditure are induced in a nature and dependent upon level of income
III. Irrespective of nature of investment, government expenditure are injections into the economy
A. II and III
B. I and II
C. I and III
D. I, II and III
7. One of the following is not a type of budget deficit
A. Primary deficit
B. Overhead deficit
C. Fiscal deficit
D. Revenue deficit
8. Which of the following is/are the source of money supply in India?
A. Commercial Banks
B. RBI
C. Government of India
D. All of the above
9. According to Keynes the following statement/s are true
I. Transaction Demand and Precautionary Demand are known and already determined.
II. The precautionary demand for money is volatile in nature.
III. If the interest rate is expected to increase, the speculators would hold more idle cash.
IV. Interest rate and bond prices are directly related.
A. I, II, III
B. I, II, IV
C. I, II, III, IV
D. I, III, IV
10. In order to understand the burden of public borrowings ________.
A. Rely upon government borrowing data
B. We should talk to World Bank and IMF
C. Understand government expenditure
D. Classify borrowing into internal and external segments
11. One of the following is not a source of non tax revenue of government.
A. Divident of the company
B. Profit of public sector units
C. Custom duties
D. External grants
12. If the initial deposit is Rs. 50000 and CRR is 30%, find out the credit multiplier.
A. 2.60
B. 2.25
C. 2
D. 2.33
13. Fisher's equation of quantity theory is __________.
A. Related to wealth of wealth holders
B. Based on liquidity preference
C. Related to aggregate savings of society
D. A mathematical truism
14. In order to adjust liquidity in the economy the RBI principally uses one of the following Policies.
A. Income policy
B. Selective credit control policy
C. Repo rate policy
D. Fiscal policy
15. The commercial banks rush to purchase new securities and treasury bills because
A. Banks wants to invest in low Income yielding securities
B. Securities can enhance capital adequacy norms
C. Securities are not always available
D. Banks will have to comply upon statutory requirements
16, The formula to calculate the credit multiplier (Cm ) is....
B. Cm = ( ∆TD - ∆R) / ∆R
C. Cm = ∆CC / ∆R
D. All of the above
17. Which of the following statements are not false with reference to the store of value function of money?
I. Production and consumption of goods and services are not instantaneous.
II. Certainty of life
III. Accumulative nature of people
IV. Uncertainty of life
A. I,II and III
B. II, III and IV
C. I, II and IV
D. I, III and IV
18. One of the following is not the function of money?
A. Medium of exchange
B. Store of value
C. Difference of payment
D. Measure of Value
19. Match the following
I. Stanley Withers | a. Conventional approach to money |
II. Milton Friedman | b. Chicago approach to money |
II. Gurley and Shaw | c. Weighted sum approach to money |
IV. Radcliffe Committee | d. Central bank approach to money |
A. (I - a) (II - c) (III - b) (IV - d)
B. (I - a) (II - b) (III - c) (IV - d)
C. (I - b) (II - a) (III - d) (IV - c)
D. (I - b) (II - a) (III - c) (IV - d)
20. Which of the following are the basic limitations of the commodity money?
I. Heterogeneity
II. Non divisibility
III. Enforceability
IV. Difficult to store
A. I, II And IV
B. I, III AND IV
C. II, III and IV
D. I, II and III
21. As an objective of monetary policy, price stability is contradictory to the objective of
A. Reduction of unemployment
B. Removal of poverty
C. Equity of income distribution
D. Exchange rate stability
22. Velocity of circulation of money refers to _________.
A. Circulation of money between bank and people
B. Average number of times an unit of currency changes hands
C. Rate of change in currency against deposit
D. Circulation of money among people
23. One of the following method is used by the RBI to control the flow of credit in the economy towards desirable channels.
A. Variable reserve ratio
B. Margin requirements
C. Open market operation
D. Bank rate policy
24. Bank rate policy will fail if there are _________.
A. Integrated financial system
B. Elastic interest rates
C. Alternative sources of Borrowing available
D. Conducive economic environment
25. According to Chakravarty Committee, Which of the following is the main objective of Monetary Policy?
A. Equitable Distribution of National income
B. Increasing Employment Opportunities
C. Price Stabilization
D. Economics Growth
26. Weighted Index number is superior to simple index number because ________.
A. Weights are assigned as per importance of commodities.
B. Weights are assigned as per choice
C. Weights are arbitrary to the extent of madness
D. Weights are generally uniform in nature
27. Which of the following statements is/are true?
I. Increase in REPO rate leads to increase in money supply.
II. Increase in REPO rate leads to decrease in money Supply.
III. Increase in REPO rate leads to increase in interest rate.
IV. Increase in REPO rate represent the tight money policy.
A. II, III and IV
B. I and II
C. I and III
D. I, II and III
28. The credit creation by the commercial banks directly depends on ________.
A. Primary Deposits and CRR
B. Other Deposits with RBI and CRR
C. Other Deposits with RBI and Bank rate
D. Primary Deposits and Bank Rate
29. To produce new currency , RBI adopted _________ reserve system in the year __________.
A. proportionate, 1956
B. minimum, 1957
C. minimum, 1956
D. proportionate, 1957
30. If we deduct the interest component from fiscal deficit we will obtain
A. Primary deficit
B. Revenue deficit
C. Fiscal deficit
D. Budget deficit
S.Y B.COM
SEMESTER - 4
MACRO ECONOMICS ISSUES & POLICIES
(MEIP)
MCQS - MARCH, 2019
1. Read the following statements and choose the correct option.
I. It is difficult to measure the overall impact of fiscal policy
II. It is difficult to calculate dynamic multiplier.
(A) I is false but II is true
(B) I is true but II is false
(c) I is true and II is correct explanation of I
(d) I is false and II is correct explanation of
2. The definition 'money is what money does' is given by
(A) Alfred Marshall
(b) Stenly Wither
(C) A. W. Walker
(d) H. G. Johnson
3. What is meant by Repo Rate?
(A) Reproduce Operation Rate
(b) Repurchase Open Rate
(c) Repurchase Operation Rate
(D) Reproduce Open Rate
4. Which of the following is a credit control method of the Central Bank to increase credit creation By bank?
(A) Increase in Bank Rate
(B) Raising Repo Rate
(C) Buying government securities in the open market
(D) Raising Reserve Repo Rate
5. Which are the reasons for the demand for money according to Keynes
(A) Precautionary Motive
(B) Speculative Motive
(c) Transaction Motive
(d) All of the above
6. If initial deposit is ₹ 500000, and the total deposit created is ` 2000000 than the CRR would be
(A) 28%
(B) 22%
(c) 25%
(d) 20%
7. Fiscal Deficit means
(A) Total Expenditure - Tax Revenue + Recovery of Loans + Other Receipts
(B) Total Expenditure - Tax Revenue -Recovery of Loans - Other Receipts
(C) Total Expenditure - Tax Revenue - Recovery of Loans + Other Receipts
(D) Total Expenditure - Tax Revenue + Recovery of Loans - Other Receipts
8. In Chicago approach, Time Deposits added in definition of money because
(A) Time deposits and Demand deposits are close substitutes
(B) High Correlation between Time deposits and GNP
(C) Both A and B
(D) None of the Above
9. _____ is the rate at which commercial banks borrow short-term funds from the Central Bank by selling their financial securities to Central Bank.
(A) Statutory Liquidity Ratio
(b) Cash Reserve Ratio
(C) Repo Rate
(d) Bank Rate
10. ____is the rate at which commercial bank borrows from the Central Bank in emergency.
(a) Bank Rate
(B) Reverse Repo Rate
(C) Statutory Liquidity Ratio
(d) Cash Reserve Ratio
11. Friedman theory of demand for money considered Money as:
(A) Store of value
(B) Wealth
(c) Medium of exchange
(D) All of the above
12. The gap between value of mortgaged property and amount advanced is called
(A) Lending Margin
(b) Credit Margin
(C) Direct Margin
(D) Credit Rationing
13. Over dependence on borrowing to meet the deficit financing may lead a country to....
(A) Debt Trap
(B) Borrowing Trap
(C) Deficit Trap
(d) Financing Trap
14. In the face of inflation, which monetary measure o(price control would the central bank adopt?
(A) Decrease SLR
(B) Increase in CRR
(C) Decrease Bank Rate
(D) Buy Government securities
15. _______ are called legal tenders
(A) Inter-bank deposits
(B) Demand deposits
(c) currency notes and coins
(D) Time deposits
16. Match the followings and choose the correct option.
X Y
I. Inflation a. Decrease in CRR
II. Deflation b. Purchase of government security by central bank
III. Bank Rate c. To prevent shortage of cash
IV. CRR d. Rediscounting bills of exchange
(A) (I-c) (II-d) (III-a) (IV-b)
(B) (I-c) (II-d) (III-b) (IV-a)
(c) (I-b) (II-a) (III-d) (IV-c)
(D) (I-c) (II-a) (III-d) (IV-b)
17. ___defines monetary policy as policy employing central bank‘s control of the supply of money as an instrument of achieving the objectives of general economic policy.
(a) Edward S. Shaw
(B) John G. Gurley
(c) Harry Johnson
(d) G. K. Shaw
18. When price increases, the value of money
(A) Is not related to price
(B) Increases
(C) Remains the same
(d) Falls
19. The currency created by the Central Bank is called___________
(A) High Powered money
(B) Bank Money
(C) Money supply
(D) Money
20. What will be the effect of increase in the Repo Rate on the money supply?
(A) Money supply will remain same
(B) Money supply will initially increase and then it will decrease
(C) money supply will increase
(D) Money supply will decrease
21. Which of the following agency is responsible for issuing ₹ 1 currency note in India?
(A) Reserve Bank of India
(B) Niti Aayog
(c) Ministry of Commerce
(d) Ministry of finance
22. Who regulates money supply?
(A) Government of India
(B) Commercial Banks
(C) Reserve Bank of India
(D) Planning Commission
23. If the initial deposit is ₹ 200000 and CRR is 30%, find out the credit multiplier.
(A) 2
(b) 2.60
(C) 2.25
(d) 3.33
24. Which of the following are the basic characteristics of money?
(A) Generally acceptable
(B) Difficult to counterfeit
(C) Portability
(D) All of the above
25. Credit creation capacity of commercial banks determined by
(A) Loans provide by commercial bank
(B) Interest rate on demand deposit
(c) Cash Reserve Ratio
(D) Cash held by public
26. According to Fischer‘s Quantity Theory of Money, the Demand for Money is
(A) M = 1 / V PV
(B) M = 1 / V PT
(c) M = 1 / V PT
(D) M = 1 / V PV
27. Which of the following approach added the time deposits with commercial bank as a part of money?
(A) Conventional Approach
(B) Chicago Approach
(C) Gurley & Shaw Approach
(D) The Central Bank Approach
28. Which of the following are the Objectives of monetary policy?
(A) Price stability
(B) Economic Growth
(C) Equitable distribution of income
(d) All of the above
29. Read the following dialogue between two people.
Sita: I want 1 kg. of potatoes
Rani: What will you give in exchange?
Sita: I can give you 2 litres of milk in return for the potatoes
Rani: I don‘t need milk. I want a pair of shoe
Which of following problem is being faced by Situ & Rani in their exchange process?
(A) Absence of common units of value
(B) Lack of double coincidence of wants
(C) Lack of standard of deferred payment
(D) Lack of store of value
30. __________is the ratio deposits which banks keep with the Central Bank
(A) Reverse Repo Rate
(B) Bank Rate
(c) Cash Reserve Ratio
(D) Statutory Liquidity Ratio
S.Y B.COM
SEMESTER - 4
MACRO ECONOMICS ISSUES & POLICIES
(MEIP)
MCQS - February 2017
1. Objectives of Monetary Policy does not include
A) Economic Growth
B) Price Stability
C) Full Employment
D) Credit Rationing
2. The capacity of commercial banks of create credit does not depend upon
A) Cash Reserve Ratio
B) Primary Deposit
C) Amount withdrawn to settle old credit
D) Credit rating of commercial banks
3. In the face of inflation, which monetary measure would the central bank adopt?
A) Increase in CRR
B) Decrease SLR
C) Decrease Bank Rate
D) Buy Government securities
The public deposit Rs. 15500 Crores in the saving account of a bank “X”.At the same time Rs. 500 Crores is withdrawn from bank “Y”. The CRR is 14% , SLR is 6% and the repo rate is 4%. Considering the above
information answer questions 4 to 6.
4. The value of K is
A) 5
B) 6
C) 4
D) 3
5. The total deposit created is
A) Rs. 65000 Crores
B) Rs. 75000 Crores
C) Rs. 70000 Crores
D) Rs. 60000 Crores
6. The derivative deposit created is
A) Rs. 60000 Crores
B) Rs. 55000 Crores
C) Rs. 50000 Crores
D) None of the above
7. The measure of money in terms of Ml, M3, M2 and M4 are
A) In descending order of liquidity
B) In ascending order of liquidity
C) In the same order of liquidity
D) None of the above
8. As per the third working group of the RBI,M2 consists of
A) Time liabilities of Saving deposit
B) Currency in circulation
C) Certificates of deposit
D) All of the above
9. If we divide the total deposit created by the initial deposit than we get
A) Money multiplier
B) Deposit multiplier
C) Credit multiplier
D) All of the above
Given the following data, answer questions 10 & 11
Goods | Price in the current year | Price in the base year | Weight |
A | 60 | 20 | 5 |
B | 90 | 30 | 4 |
C | 120 | 40 | 3 |
D | 12 | 2 | 2 |
10. The PIN in the current year is
A) 343
B) 340
C) 304
D) 243
11. The value of money has fallen by
A) 69%
B) 68%
C) 64%
D) None of the above
12. The effectiveness of monetary policy depends upon
A) Size of themonetized sector
B) Existence of NBFI
C) The time lag
D) All of the above
13. The monetary policy can be used to control
A) Real variables
B) Monetary Variables
C) Growth rate
D) BOP deficit
14. As money acts as an intermediate in the process of exchange, it is called
A) Medium of exchange
B) Exchange value
C) Use value
D) Value formoney
15. An index is used to measure the changes
A) In the value of a variable over time
B) In the quantity
C) In the price
D) In the quantity demanded
16. The central bank can increase the money supply by
A) Selling Government securities
B) Buying Government securities
C) Borrowing from Commercial Banks
D) Increasing the Bank rate
17. Milton Friedman is connected with which of the following approaches
A) Traditional
B) Conventional
C) Modern
D) Chicago
18. Which of the following is the main source of income for commercial banks
A) Interest on loans
B) Interest from advances
C) Interest differentials
D) Overdraft facilities
19. The monetary policy of the central bank can affect
A) Inflation only
B) Output only
C) Inflation & output
D) None of the above
20. H is measured as
A) C+R
B) C+OD
C) C+DD
D) R+DD
21. Which of the following is called narrow money
A) M1
B) M2
C) M3
D) M4
22. A policy which keeps the interest rate high is also known as
A) Dear money policy
B) Cheap money policy
C) Inflation policy
D) Investment policy
23. Which of the following can be considered to be the broadest measurement of money
A) Conventional
B) Chicago
C) Central bank
D) Gurley and Shaw
From the information given below answer questions 24 to 26
Particulars | Rs. Crores | Particulars | Rs. Crores | |
Demand Deposits with Banks | 5500 | Post office Savings | 110 | |
Currency with public | 10500 | Bankers Deposit with RBI | 250 | |
Time Deposits with Banks | 550 | Other Deposits with RBI | 750 |
24. Mo is
A) 11500
B) 12500
C) 10550
D) 13500
25. M1 is
A) 15750
B) 16750
C) 17650
D) 14750
26. M3
A) 16300
B) 15300
C) 17300
D) 18300
27. The Reserves with central bank is Rs. 4500 Crores, the volume of demand deposit is Rs.18000 Crores and the reserve ratio is 25%. If the volume of demand deposit increases by Rs. 2000 Crores and the volume reserves is decreased by Rs. 500 crores, than the new ratio will be
A) 22%
B) 23%
C) 21%
D) 20%
28. The basic difference between M1 and M3 is that
A) M3 is greater than M1
B) M3 is lower than M1
C) M3 includes Post office savings also
D) Time deposit is included in M1
29. This definition of money, “ Money means anything which is commonly used and Generally accepted was given by
A) Cassel
B) Kent
C) Crowther
D) Samuelson
30. The CRR is used by the central bank to
A) Encourage savings in the economy
B) Influence cost Borrowing
C) To control volume of credit
D) All of the above
