Online Test — Money and Banking
15 Questions • 15 min • Chapter MCQ
15:00
Question 1 of 15
Direct exchange of goods for goods is the:
Money system
Barter system
Banking system
Credit system
Explanation: Direct goods-for-goods exchange is barter.
Question 2 of 15
A major problem of barter was the lack of a:
Double coincidence of wants
Government
Market
Producer
Explanation: Barter needed a double coincidence of wants.
Question 3 of 15
Anything generally accepted as a medium of exchange is:
Money
A tax
A subsidy
A loan
Explanation: That is the definition of money.
Question 4 of 15
The primary function of money is as a:
Store of value
Medium of exchange
Measure of value
Deferred payment
Explanation: The medium of exchange is the primary function.
Question 5 of 15
Expressing the value of every good in money is the ____ function.
Medium of exchange
Measure of value
Store of value
Deferred payment
Explanation: Money as a common yardstick is the measure of value.
Question 6 of 15
Saving money for future use shows the ____ function.
Store of value
Medium of exchange
Measure of value
Standard of payment
Explanation: Money can be stored — the store of value function.
Question 7 of 15
A commercial bank's two primary functions are accepting deposits and:
Advancing loans
Issuing currency
Collecting taxes
Printing notes
Explanation: Banks accept deposits and advance loans.
Question 8 of 15
A deposit kept for a fixed period at higher interest is a:
Current account
Savings account
Fixed (time) deposit
Loan
Explanation: A fixed/time deposit is kept for a set period at higher interest.
Question 9 of 15
A bank's profit comes from the difference between interest on loans and interest on:
Deposits
Taxes
Currency
Reserves only
Explanation: Profit = interest charged on loans − interest paid on deposits.
Question 10 of 15
Banks can create credit because they keep only a ____ of deposits as reserve.
Full amount
Small fraction
Zero
Double amount
Explanation: Keeping a small fraction lets them lend the rest and create credit.
Question 11 of 15
The apex institution controlling the banking system is the:
Commercial bank
Central bank
Cooperative bank
Post office
Explanation: The central bank controls the whole banking system.
Question 12 of 15
The central bank of India is the:
SBI
RBI
World Bank
IMF
Explanation: The Reserve Bank of India (RBI) is the central bank.
Question 13 of 15
The sole right to issue currency notes belongs to the:
Commercial banks
Central bank
Government clerks
Public
Explanation: The central bank is the bank of issue.
Question 14 of 15
When the central bank lends to banks in a crisis, it acts as the:
Lender of last resort
Bank of issue
Tax collector
Borrower
Explanation: Lending to banks in crisis is the lender-of-last-resort role.
Question 15 of 15
Which is a tool the central bank uses to control credit?
Cash reserve ratio (CRR)
Advertising
Sales tax
Product design
Explanation: CRR (and the bank rate, open market operations) control credit.