Chapter 10 ECONOMICS : Money Banking and Inflation — Online MCQ Test
ECONOMICS · CLASS 11 INTER I YEAR · Andhra State Board
Practice Chapter 10 ECONOMICS : Money Banking and Inflation with a free chapter-wise online MCQ test.
This chapter covers: The final chapter details functions of money central and commercial banking systems credit creation mechanisms types causes and remedies of inflation..
AI-generated questions from basic to board-exam level, with instant results and explanations.
Chapter 10 ECONOMICS : Money Banking and Inflation — Important Questions & Answers
Who defines money as 'Anything which is generally acceptable as a means of exchange and at the same time acts as a measure and a store of value'?
- A. Walker
- B. Crowther
- C. Keynes
- D. Adam Smith
Answer: B. Crowther
Crowther provided this classic functional definition of money that emphasizes its role as a medium of exchange and store of value.
Crowther provided this classic functional definition of money that emphasizes its role as a medium of exchange and store of value.
Which of the following is considered a primary function of money?
- A. Standard of deferred payments
- B. Store of value
- C. Medium of exchange
- D. Transfer of value
Answer: C. Medium of exchange
The primary functions of money are medium of exchange and measure of value; store of value is a secondary function.
The primary functions of money are medium of exchange and measure of value; store of value is a secondary function.
Which of the following is a qualitative method of credit control used by the RBI?
- A. Bank Rate Policy
- B. Open Market Operations
- C. Margin Requirements
- D. Cash Reserve Ratio
Answer: C. Margin Requirements
Margin requirements are a qualitative or selective credit control tool, whereas CRR and Bank Rate are quantitative tools.
Margin requirements are a qualitative or selective credit control tool, whereas CRR and Bank Rate are quantitative tools.
If the economy is facing a recession, which policy action would the central bank likely take?
- A. Increase the Bank Rate
- B. Sell government securities in the market
- C. Decrease the CRR and Repo Rate
- D. Increase margin requirements
Answer: C. Decrease the CRR and Repo Rate
To combat recession, the central bank adopts an expansionary monetary policy by lowering rates to encourage borrowing and spending.
To combat recession, the central bank adopts an expansionary monetary policy by lowering rates to encourage borrowing and spending.
If the initial deposit is Rs. 1,000 and the Legal Reserve Requirement (LRR) is 20%, what is the total credit created by the banking system?
- A. Rs. 2,000
- B. Rs. 5,000
- C. Rs. 10,000
- D. Rs. 20,000
Answer: B. Rs. 5,000
Credit multiplier = 1/LRR = 1/0.2 = 5. Total credit = Initial Deposit × Multiplier = 1,000 × 5 = 5,000.
Credit multiplier = 1/LRR = 1/0.2 = 5. Total credit = Initial Deposit × Multiplier = 1,000 × 5 = 5,000.