Lecturer Commerce Part 02 (Banking)

 

Which of the following is not a function of money?

A. Medium of exchange B. Unit of account C. Standard of deferred payments D. Stabilization of price level

Fiat money refers to:

A. Credit money B. Legal money C. Full bodied money D. International money

Which one of the following is an example of quasi-money or near-money?

A. Bills of exchange B. Cheque C. Bank notes D. Coins

When the commodity value of money and its value as money are equal, it is called:

A. Token money B. Full-bodied money C. Quasi-money D. Fiat money

The limited legal-tender money stands for the component of money which:

A. Is issued in a limited amount B. Is legal tender for payment upto a certain maximum amount C. Is legal tender in specified areas D. Is to be used in specific transactions

Identify the country which was the first to adopt the gold standard:

A. UK B. France C. Germany D. USA

Who is generally regarded as the founder of the Modern Quantity Theory of Money?

A. J.M.Keynes B. Milton Friedman C. M.L.Bursten D. Don Patinkin

The Quantity Theory of Money establishes the relationship between quantity of money in an economy and the level of:

A. Employment B. National income C. Prices D. Savings

In the Fisher's equation of exchange MV = PT, what does T denote?

A. Period of time B. Volume of trade C. Total money wealth D. Trend value of general price level

Cost-push inflation is caused by:

A. Increase in the quantity of money B. In-crease in investment C. Creation of credit money D. Increase in the prices of inputs

The relationship between the market rate of interest and the market price of a bond is:

A. Inverse B. Direct C. Positive and proportionate D. Uncertain

The degree of elasticity in respect of speculative demand for money, under the liquidity trap conditions, is:

A. Zero B. One C. Greater than one D. Infinite

A retail price index is a good measure of changes in:

A. Consumers' cost of living B. General purchasing power of money C. Average standard of living D. Patterns of consumer expenditure

Which of the following is not an instrument of monetary policy?

A. Taxation B. Bank rate C. Open-market operations D. Credit rationing

At a very low rate of interest, the interest-elasticity of the speculative demand for money becomes:

A. Low B. High C. Very high D. Infinite

The liquidity trap condition occurs at a:

A. Low rate of interest B. Very low rate of interest C. High rate of interest D. Very high rate of interest

In which capacity does a person stand to gain from deflation?

A. As a pensioner B. As a debtor C. As an entrepreneur D. As an equity-holder

According to the classical approach, the demand for money primarily depends upon:

A. Rate of interest B. Economic transactions C. Speculative activity D. Precautionary motive

Which of the following measures is helpful in controlling inflation?

A. Raising the bank rate B. Price control and rationing of essential goods C. Reduction of government expenditure D. All of the above

Stagflation refers to a situation which is characterised by:

A. Deflation and rising unemployment B. Inflation and deflation C. Sustained price-rise and rising unemployment D. Stagnant employment and deflation

The reduction or elimination of inflation is known as:

A. Disinflation B. Deflation C. Creeping inflation D. Stagflation

Which of the following is not a function of a commercial bank?

A. Accepting public deposits B. Granting loans and advances C. Undertaking agency functions D. Banker to the Government

Which of the following is not a liability of commercial banks?

A. Demand deposits B. Time deposits C. Advances from the central bank D. Security holdings

Which is not a function of the central bank of a country?

A. Lender of the last resort B. Controller of credit C. Custodian of nation's foreign exchange reserves D. Supervisor of nation's fiscal policy

The branch banking system is currently in vogue in most countries of the world. Identify the country where it first developed:

A. South Africa B. UK C. Canada D. Australia

In which country was the instrument of minimum legal cash reserves ratio for banks first introduced?

A. USA B. UK C. Germany D. Japan

Which one of the following will reduce the capacity of commercial banks to lend?

A. Sales of securities in the open market by the central bank B. Reduction in the discount rate C. Reduction of the required cash reserves ratio D. Purchase of securities by the Central bank in the open market

If there is a significant decrease in the demand for loans, banks will be forced to:

A. Sell securities to the public B. Adjust their portfolios C. Resort to creating credit D. Increase liquidity

Open market operations refer to the buying and selling of:

A. Commercial bills B. Foreign exchange C. Gold D. Government securities

Bank rate refer to the interest rate at which:

A. Commercial banks receive deposits from the public B. Central bank gives loans to commercial banks C. Government loans are floated D. Commercial banks grant loans to their customers

The immediate effect of credit-creation by banks is:

A. Rise in prices B. Increase in money supply C. Increase in real national income D. Reduction of poverty

Selective credit control devices are used by the central bank of a country to:

A. Regulate the volume of aggregate bank credit in the economy B. Regulate credit-creation on the part of some selected banks C. Control the flow of aggregate bank credit to different productive activities in the economy D. Selectively allocate credit among banks

In a bimetallic standard:

A. Two metals (usually gold and silver) are simultaneously monetized and their monetary values are fixed as legal tender B. Both gold and silver coins circulate as unlimited legal tender C. Coinage as well as exports and imports of both the metals are free D. All of the above

One of the following is an instrument of qualitative credit control. Identify it:

A. Credit rationing B. Bank rate C. Open-market operations D. Minimum statutory cash reserves ratio

Which of the following is an instrument of quantitative credit control?

A. Credit rationing B. Prescribing margin requirements C. Variable reserve ratio D. Consumer credit regulation

Arrange the following assets of a bank in the ascending order of income (i.e. in the descending order of liquidity): I-Bills; II-Loans; III-In-vestments in Government and other approved securities

A. I,II,III B. I,III,II C. II,I,III D. III,II,I

Which of the following is not an item on the assets side of the balance sheet of a commercial bank?

A. Investments B. Money at call and short notice C. Reserves D. Advances

Commercial banks have always to face a conflict between:

A. Sharcholders and depositors B. Central bank and themselves C. Liquidity and profitability D. Demand deposits and time deposits

The main function of legal cash reserve requirements is to:

A. Ensure safely of deposits B. Influence the demand deposit-creating power of commercial banks C. Regulate the inter-sect oral flow of money supply D. Keep a portion of deposits liquid

Identify the country, which first employed credit rationing as an instrument of credit control:

A. Germany B. UK C. USA D. France

The 'terms of trade' refer to:

A. Comparative advantage of one country over another in the production of a particular commodity B. Bilateral trade agreements C. Rates of exchange between two currencies D. Ratio of the index of export prices to the index of import prices.

The market for very short term loans is known as:

A. Capital market B. Money market C. Stock market D. Discount market

If the increase in exports exceeds the increase in imports, and other things remain the same, then the level of income will:

A. Rise B. Remain the same C. Fall D. Move in an uncertain manner

Which of the following was not favoured by the mercantilists?

A. Accomulation of gold by the country B. Free trade C. Export promotion D. Import restriction

Dynamic factors in the realm of international trade theory relate to changes in:

A. Income B. Factor endowments C. Technical knowledge and methods of production D. All of the above

The devaluation of currency by a country is designed to lead to:

A. Expansion of the export trade B. Contraction of import trade C. Promotion of import substitution D. All of these

What would be the impact on the country's balance of payments position, when in the context of inflationary pressures recourse is taken to expenditure reducing policies?

A. Highly unfavourable B. Unfavourable C. Favourable D. Neutral

Which of the following items in the balance of payments is invisible?

A. Government expenditure abroad B. Foreign investment C. Foreign travel D. Goods exported

A deficit disequilibrium in the balance of payments can be corrected through:

A. Devaluation B. Monetary squeeze C. Exchange controls and import quotas D. All of the above

The spot and forward markets in foreign exchange are linked to each other through:

A. Interest arbitrage B. Hedging C. Speculation D. All of the above

What does the modern theory of international trade predict regarding difference in factor prices between nations on account of trade? The difference:

A. Increases B. Diminishes C. Remains the same D. Either diminishes or increases

Under the flexible exchange rate system, the exchange rate is determined by:

A. The central bank of the country B. The forces of demand and supply in the foreign exchange market C. The price of gold D. The purchasing power of currencies

The elasticity of demand for foreign exchange for financing capital outflow is:

A. Zero B. Greater than zero C. One D. Less than infinity

The foreign exchange market performs the function of:

A. Transfer of purchasing power B. Provisions of credit for financing foreign trade C. Furnishing facilities for hedging foreign exchange risks D. All of the above

On which of the following is the law of comparative costs based?

A. Labour theory of value B. Opportunity cost theory C. Law of diminishing returns D. Both (a) and (b)

Which among the following, is not an assumption of the classical - territory of comparative cost advantage?

A. Labour is the only factor of production B. Production takes place under diminishing returns C. There are no tariffs D. Prices are determined by their real labour costs of production

Developing countries usually complain of:

A. Deterioration in their terms of trade B. Serious hurdles in the way of export promotion C. Uncertainty and inadequacy of reign aid D. All of the above

What proportion of international trade is based on absolute differences in costs of production?

A. All B. Substantial C. Very little D. Nil