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12th Grade > Economics - 2

THE BANKING SYSTEM MCQs

Total Questions : 27 | Page 2 of 3 pages
Question 11. Commercial banks accept deposits from the public in the form of:
  1.    Chequeable deposits
  2.    Non-chequeable deposits
  3.    Both (a) and (b)
  4.    Gold deposits
 Discuss Question
Answer: Option C. -> Both (a) and (b)
:
C
Banks accept deposits as chequeabledeposits and non-chequeable deposits.
Question 12. If the availability of credit is low, the precautionary demand for money will be:
  1.    Low
  2.    High
  3.    Independent of credit
  4.    Cannot be determined
 Discuss Question
Answer: Option B. -> High
:
B
If credit is highly unavailable, people will hold more money as precaution.
Question 13. The goal of a public sector bank is:
  1.    Profit
  2.    Welfare
  3.    Financial inclusion
  4.    All of the above
 Discuss Question
Answer: Option D. -> All of the above
:
D
A public sector bank has all three goals.
Question 14. Maximum credit that the commercial banks can legally create depends on their:
  1.    Gold reserves
  2.    Cash reserves with the RBI
  3.    Statutory liquidity ratio
  4.    Term deposits
 Discuss Question
Answer: Option B. -> Cash reserves with the RBI
:
B
Cash reserves with the RBI determine the amount of credit banks can create.
Question 15. The number of times a rupee is used in transactions is called:
  1.    Speed
  2.    Velocity
  3.    Change
  4.    Force
 Discuss Question
Answer: Option B. -> Velocity
:
B
Velocity of circulation of money is the number of times a rupee is used in transactions.
Question 16. If money supply is 5,00,000 and high-powered money is 2,00,000, what is the value of the multiplier?
  1.    0.4
  2.    2.5
  3.    3
  4.    7
 Discuss Question
Answer: Option B. -> 2.5
:
B
The multiplier is MH=5,00,0002,00,000=2.5
Question 17. The act of holding money as insurance against cases of emergency gives rise to ______________ demand.
  1.    Transaction
  2.    Speculative
  3.    Precautionary
  4.    Liquidity
 Discuss Question
Answer: Option C. -> Precautionary
:
C
The act of holding money as insurance against cases of emergency gives rise to precautionary demand.
Question 18. The percentage of demand deposits which the commercial banks are legally required to maintain as their liquid assets is called:
  1.    CRR
  2.    Repo rate
  3.    SLR
  4.    Reverse repo rate
 Discuss Question
Answer: Option C. -> SLR
:
C
Statutory Liquidity Ratio (SLR) is the percentage of demand deposits which the commercial banks are legally required to maintain as their liquid assets.
Question 19. Savings are:
  1.    Leakage from the CFD
  2.    Injection into the CFD
  3.    Flow from firms to households
  4.    Flow from households to firms
 Discuss Question
Answer: Option A. -> Leakage from the CFD
:
A
Savings are a leakage from the CFD.
Question 20. The narrowest section of money supply is:
  1.    Monetary Base
  2.    Narrow Money
  3.    Broad Money
  4.    M1+M3
 Discuss Question
Answer: Option A. -> Monetary Base
:
A
The monetary base is the narrowest form of money.

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