Chapter MCQ Test 2 — Money and Banking

A farmer with rice wants cloth, but the weaver wants wheat, not rice. In a barter economy they cannot trade because there is no:

If a bank keeps 20% of deposits as reserve and lends the rest, the banking system can create total credit that is ____ the initial cash.

To fight high inflation, the central bank may raise the repo rate, which tends to make borrowing:

Unlike a commercial bank, the central bank does NOT primarily aim at:

During a banking panic, the central bank's role as 'lender of last resort' is vital because it:

Money's function as a 'standard of deferred payments' is what makes ____ possible.

A bank reduces its cash reserve ratio. Other things equal, its ability to create credit will:

Keeping the government's accounts and managing its receipts and payments is the central bank acting as:

Currency notes in India are uniform and trustworthy largely because they are issued only by the:

Why are money, commercial banks and the central bank studied together?