S.Y B.COM
SEMESTER - 4
MACRO ECONOMICS ISSUES & POLICIES
(MEIP)
MCQS - MARCH, 2019
1. Read the following statements and choose the correct option.
I. It is difficult to measure the overall impact of fiscal policy
II. It is difficult to calculate dynamic multiplier.
(A) I is false but II is true
(B) I is true but II is false
(c) I is true and II is correct explanation of I
(d) I is false and II is correct explanation of
2. The definition 'money is what money does' is given by
(A) Alfred Marshall
(b) Stenly Wither
(C) A. W. Walker
(d) H. G. Johnson
3. What is meant by Repo Rate?
(A) Reproduce Operation Rate
(b) Repurchase Open Rate
(c) Repurchase Operation Rate
(D) Reproduce Open Rate
4. Which of the following is a credit control method of the Central Bank to increase credit creation By bank?
(A) Increase in Bank Rate
(B) Raising Repo Rate
(C) Buying government securities in the open market
(D) Raising Reserve Repo Rate
5. Which are the reasons for the demand for money according to Keynes
(A) Precautionary Motive
(B) Speculative Motive
(c) Transaction Motive
(d) All of the above
6. If initial deposit is ₹ 500000, and the total deposit created is ` 2000000 than the CRR would be
(A) 28%
(B) 22%
(c) 25%
(d) 20%
7. Fiscal Deficit means
(A) Total Expenditure - Tax Revenue + Recovery of Loans + Other Receipts
(B) Total Expenditure - Tax Revenue -Recovery of Loans - Other Receipts
(C) Total Expenditure - Tax Revenue - Recovery of Loans + Other Receipts
(D) Total Expenditure - Tax Revenue + Recovery of Loans - Other Receipts
8. In Chicago approach, Time Deposits added in definition of money because
(A) Time deposits and Demand deposits are close substitutes
(B) High Correlation between Time deposits and GNP
(C) Both A and B
(D) None of the Above
9. _____ is the rate at which commercial banks borrow short-term funds from the Central Bank by selling their financial securities to Central Bank.
(A) Statutory Liquidity Ratio
(b) Cash Reserve Ratio
(C) Repo Rate
(d) Bank Rate
10. ____is the rate at which commercial bank borrows from the Central Bank in emergency.
(a) Bank Rate
(B) Reverse Repo Rate
(C) Statutory Liquidity Ratio
(d) Cash Reserve Ratio
11. Friedman theory of demand for money considered Money as:
(A) Store of value
(B) Wealth
(c) Medium of exchange
(D) All of the above
12. The gap between value of mortgaged property and amount advanced is called
(A) Lending Margin
(b) Credit Margin
(C) Direct Margin
(D) Credit Rationing
13. Over dependence on borrowing to meet the deficit financing may lead a country to....
(A) Debt Trap
(B) Borrowing Trap
(C) Deficit Trap
(d) Financing Trap
14. In the face of inflation, which monetary measure o(price control would the central bank adopt?
(A) Decrease SLR
(B) Increase in CRR
(C) Decrease Bank Rate
(D) Buy Government securities
15. _______ are called legal tenders
(A) Inter-bank deposits
(B) Demand deposits
(c) currency notes and coins
(D) Time deposits
16. Match the followings and choose the correct option.
X Y
I. Inflation a. Decrease in CRR
II. Deflation b. Purchase of government security by central bank
III. Bank Rate c. To prevent shortage of cash
IV. CRR d. Rediscounting bills of exchange
(A) (I-c) (II-d) (III-a) (IV-b)
(B) (I-c) (II-d) (III-b) (IV-a)
(c) (I-b) (II-a) (III-d) (IV-c)
(D) (I-c) (II-a) (III-d) (IV-b)
17. ___defines monetary policy as policy employing central bank‘s control of the supply of money as an instrument of achieving the objectives of general economic policy.
(a) Edward S. Shaw
(B) John G. Gurley
(c) Harry Johnson
(d) G. K. Shaw
18. When price increases, the value of money
(A) Is not related to price
(B) Increases
(C) Remains the same
(d) Falls
19. The currency created by the Central Bank is called___________
(A) High Powered money
(B) Bank Money
(C) Money supply
(D) Money
20. What will be the effect of increase in the Repo Rate on the money supply?
(A) Money supply will remain same
(B) Money supply will initially increase and then it will decrease
(C) money supply will increase
(D) Money supply will decrease
21. Which of the following agency is responsible for issuing ₹ 1 currency note in India?
(A) Reserve Bank of India
(B) Niti Aayog
(c) Ministry of Commerce
(d) Ministry of finance
22. Who regulates money supply?
(A) Government of India
(B) Commercial Banks
(C) Reserve Bank of India
(D) Planning Commission
23. If the initial deposit is ₹ 200000 and CRR is 30%, find out the credit multiplier.
(A) 2
(b) 2.60
(C) 2.25
(d) 3.33
24. Which of the following are the basic characteristics of money?
(A) Generally acceptable
(B) Difficult to counterfeit
(C) Portability
(D) All of the above
25. Credit creation capacity of commercial banks determined by
(A) Loans provide by commercial bank
(B) Interest rate on demand deposit
(c) Cash Reserve Ratio
(D) Cash held by public
26. According to Fischer‘s Quantity Theory of Money, the Demand for Money is
(A) M = 1 / V PV
(B) M = 1 / V PT
(c) M = 1 / V PT
(D) M = 1 / V PV
27. Which of the following approach added the time deposits with commercial bank as a part of money?
(A) Conventional Approach
(B) Chicago Approach
(C) Gurley & Shaw Approach
(D) The Central Bank Approach
28. Which of the following are the Objectives of monetary policy?
(A) Price stability
(B) Economic Growth
(C) Equitable distribution of income
(d) All of the above
29. Read the following dialogue between two people.
Sita: I want 1 kg. of potatoes
Rani: What will you give in exchange?
Sita: I can give you 2 litres of milk in return for the potatoes
Rani: I don‘t need milk. I want a pair of shoe
Which of following problem is being faced by Situ & Rani in their exchange process?
(A) Absence of common units of value
(B) Lack of double coincidence of wants
(C) Lack of standard of deferred payment
(D) Lack of store of value
30. __________is the ratio deposits which banks keep with the Central Bank
(A) Reverse Repo Rate
(B) Bank Rate
(c) Cash Reserve Ratio
(D) Statutory Liquidity Ratio
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