This quiz works best with JavaScript enabled. Home > Economics > Monetary Economics > Monetary Economics – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary Economics Quiz 1 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. In institution that accepts deposits and makes loans is defined as A) A bank. B) Insurance. C) Gambling. D) A loan shark. Show Answer Correct Answer: A) A bank. 2. What is essential to effective monetary policy? A) Political will. B) Timing. C) Healthy tax program. D) Spending cuts. Show Answer Correct Answer: B) Timing. 3. M1 and M2 are known as ..... A) Broad money. B) Narrow money. C) Saving deposits. D) None of above. Show Answer Correct Answer: B) Narrow money. 4. The interest that the Fed charges banks to borrow money. A) The Reserve Requirement. B) The Subprime Rate. C) The Discount Rate. D) The Counterbalance Ratio. Show Answer Correct Answer: C) The Discount Rate. 5. What means the government has spent more than it has raised A) Revenue. B) Surplus. C) Deficit. D) Appropriations. Show Answer Correct Answer: C) Deficit. 6. For transacting at an ATM, the customer inserts (swipe) his card in the ATM andenters his A) Personal Identification Number. B) Mobile Number. C) Aadhaar Number. D) Account number. Show Answer Correct Answer: A) Personal Identification Number. 7. The Keynesian money demand function can be expressed as A) Md = L/(y, r). B) Md = L/(y + r). C) Md = L(y, r). D) Md = y + r/L. Show Answer Correct Answer: C) Md = L(y, r). 8. Credit card is an example of A) Money. B) Paper currency. C) Currency. D) Plastic money. Show Answer Correct Answer: D) Plastic money. 9. Which of the following is not an instrument of selective credit control? A) Margin requirements. B) Open market operation. C) Credit rationing. D) None of the above. Show Answer Correct Answer: B) Open market operation. 10. Which of the following is a qualitative method of credit control of a central bank? A) Bank rate. B) Open market operation. C) Rationing of Credit. D) All of the above. Show Answer Correct Answer: C) Rationing of Credit. 11. The assets of the banks which do not perform are called A) Non-Performing Assets (NPA). B) Bad loans. C) Fixed loans. D) A and b. Show Answer Correct Answer: D) A and b. 12. The Federal Reserve will lower the reserve requirement, lower the discount rate, and purchase government securities when: A) They want to impact a Presidential elections. B) They are getting ready to issue currency. C) The economy needs to be stimulated. D) The economy needs to be slowed down. Show Answer Correct Answer: C) The economy needs to be stimulated. 13. What is NOT a characteristic of money? A) Divisible. B) Portable. C) Acceptable. D) Accessible. Show Answer Correct Answer: D) Accessible. 14. What is a Reserve Requirement? A) The interest set by the Fed when they loan out $ to member banks. B) The amount of $ banks must have in their vaults. C) The buying and selling of government bonds (securities). D) When the Fed uses their tools to stabilize currency, they are engaging in this. Show Answer Correct Answer: B) The amount of $ banks must have in their vaults. 15. In India, currency notes are issued by the A) State Bank. B) Reserve Bank of India. C) SBI. D) World Bank. Show Answer Correct Answer: B) Reserve Bank of India. 16. Which of these is the correct definition of monetary policy: A) A policy that aims to control the supply of money in the economy. B) A policy that aims to achieve economic growth. C) A policy that controls taxes. D) A policy that aims to contribute to the supply of money. Show Answer Correct Answer: A) A policy that aims to control the supply of money in the economy. 17. Which is the largest private sector bank in India on the basis of consolidated assets? A) Axis Bank. B) ICICI Bank. C) HDFC Bank. D) South Indian Bank. Show Answer Correct Answer: B) ICICI Bank. 18. If the reserve ratio is 4 percent, then the money multiplier is A) 25. B) 20. C) 4. D) 2. Show Answer Correct Answer: A) 25. 19. The RBI headquarters is located at A) Delhi. B) Mumbai. C) Bengalaru. D) Chennai. Show Answer Correct Answer: B) Mumbai. 20. Which of the following is not a function of the RBI? A) Custodian of foreign exchange. B) Bankers' bank. C) Banker to the public. D) Note issue. Show Answer Correct Answer: C) Banker to the public. Next →Related QuizzesEconomics QuizzesMonetary Economics Quiz 2Monetary Economics Quiz 3Monetary Economics Quiz 4Monetary Economics Quiz 5 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books