This quiz works best with JavaScript enabled. Home > Finance > Economics > Monetary Economics > Monetary Economics – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary Economics Quiz 2 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The return of a share holder is A) Discount rate. B) Discount value. C) Dividend. D) Rate of interest. Show Answer Correct Answer: C) Dividend. 2. The speculative motive for holding money is closely tied to what function of money? A) Store of wealth. B) Unit of account. C) Medium of exchange. D) Standard of deferred payment. Show Answer Correct Answer: A) Store of wealth. 3. ..... is the most liquid form of capital A) Revenue. B) Liability. C) Money. D) Income. Show Answer Correct Answer: C) Money. 4. When the Central Bank intends to expand the credit, it should A) Raise the variable reserve ratio. B) Raise the margin requirements. C) Lower the bank rate. D) Purchase government securities in the open market. Show Answer Correct Answer: D) Purchase government securities in the open market. 5. The most widely used monetary policy tool among these is? A) Open market operations. B) Issuing of notes. C) Discount rate. D) Close market operations. Show Answer Correct Answer: A) Open market operations. 6. Of the three motives for holding money suggested by Keynes, which did he believe to be themost sensitive to interest rates? A) The precautionary motive. B) The transactions motive. C) The speculative motive. D) The altruistic motive. Show Answer Correct Answer: C) The speculative motive. 7. Because the quantity theory of money tells us how much money is held for a given amount ofaggregate income, it is also a theory of A) Interest-rate determination. B) The demand for money. C) Exchange-rate determination. D) The demand for assets. Show Answer Correct Answer: B) The demand for money. 8. Which of the following is not a function of Central Bank? A) Creation of credit. B) Lender of the last resort. C) Enjoys monopoly of note issue. D) Acts as the banker's bank. Show Answer Correct Answer: A) Creation of credit. 9. Money is the most liquid form of A) Revenue. B) Capital. C) Both a & b. D) None of these. Show Answer Correct Answer: B) Capital. 10. Reserve Bank of India(RBI) was established on A) 1stApril1955. B) 1st April, 1925. C) 1st April 1945. D) 1st April 1935. Show Answer Correct Answer: D) 1st April 1935. 11. The first form of monetary economics is A) Paper money. B) Plastic money. C) Barter system. D) Gold standard. Show Answer Correct Answer: C) Barter system. 12. Rate of interest is increased by RBI at times of: A) Higher inflation. B) Lower inflation. C) From the pressure of commercial banks. D) During war time. Show Answer Correct Answer: B) Lower inflation. 13. What is the science of coins called? A) Greed. B) Numismatics. Show Answer Correct Answer: A) Greed. 14. A bank can increase the supply of money by A) Printing notes. B) Creating credit. C) Issuing cheques. D) None of the above. Show Answer Correct Answer: B) Creating credit. 15. Which of the following is not a quantitative method of credit control A) Open market operation. B) Regulation of consumer credit. C) Variable reserve ratio. D) Bank rate. Show Answer Correct Answer: B) Regulation of consumer credit. 16. Currency notes are issued by A) SBI. B) Government of India. C) Ministry of finance. D) RBI. Show Answer Correct Answer: D) RBI. 17. Paper currency system is managed by the A) State government. B) Central government. C) Bank. D) Central monetary authority. Show Answer Correct Answer: D) Central monetary authority. 18. What is the term for the rate a person or organization must pay to borrow money from a bank? A) Monetary Rate. B) Interest Rate. C) Return Rate. D) Discount Rate. Show Answer Correct Answer: B) Interest Rate. 19. Which of the following metals is no longer used for making coins? A) Tin. B) Silver. C) Bronze. D) Gold. Show Answer Correct Answer: A) Tin. 20. Which among these is not a monetary tool? A) Open market operations. B) SLR. C) CRR. D) Deficit financing. Show Answer Correct Answer: D) Deficit financing. 21. The primary difference between commodity money and fiat money is that A) Commodity money is a medium of exchange but fiat money is not. B) Commodity money has intrinsic value but fiat money does not. C) Fiat money has intrinsic value but commodity money does not. D) Fiat money is a medium of exchange but commodity money is not. Show Answer Correct Answer: B) Commodity money has intrinsic value but fiat money does not. 22. Open Market Operation is A) Buying and selling of government securities. B) Sale of government securities. C) Buying and selling of government cheques. D) All of the above. Show Answer Correct Answer: A) Buying and selling of government securities. 23. How does the government NOT raise money? A) Fees & Fines. B) Taxes. C) Printing more currency. D) Selling Bonds (T Bills). Show Answer Correct Answer: C) Printing more currency. 24. During inflation, who are gainer ..... A) Creditors. B) Wages and salary earners. C) Government. D) Business men. Show Answer Correct Answer: B) Wages and salary earners. 25. If the government wants to stimulate(speed up) the economy the Federal Reserve will A) Sell bonds. B) Collect taxes. C) Lower the discount rate. D) Increase the reserve requirement. Show Answer Correct Answer: C) Lower the discount rate. 26. What is the official term for the TAILS side of the coin? A) Soft under-belly. B) Reverse. C) Flip side. D) Back. Show Answer Correct Answer: B) Reverse. 27. Fiscal policy requires the gov't to spend money on government projects in order to ..... economy. A) Contract. B) Expand. Show Answer Correct Answer: B) Expand. 28. Nominal interest rates are different from real interest rates because: A) Real interest rates are the current bank lending rates. B) Real interest rates take into account inflation. C) Real interest rates take into account changes in house prices. D) Nominal rates are rates which only apply to borrowers and not lenders. Show Answer Correct Answer: B) Real interest rates take into account inflation. 29. What action would Bank Indonesia take to control inflation? (ingin mengurangi JUB) A) Increase the discount rate. B) Decrease the required reserve ratio. C) Buy SBI. D) Increase taxes. Show Answer Correct Answer: A) Increase the discount rate. 30. Money must be scarce. A) Medium of Exchange. B) Limited Supply. C) Store of Value. D) Fiat Money. Show Answer Correct Answer: B) Limited Supply. ← PreviousNext →Related QuizzesEconomics QuizzesFinance QuizzesMonetary Economics Quiz 1Monetary Economics Quiz 3 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books