Intermediate Macroeconomics BA Hons Economics MCQs

Question. Bank rate is
(a) The rate of interest charged by banks on their loans
(b) The rate of interest paid by banks on deposits
(c) Official discount rate at which the Central Bank rediscount approved bills of the commercial banks
(d) The interest paid by commercial banks to their beneficiaries   

Question. What is known as the most profitable asset of a commercial bank?
(a) Investment at call and short‐notice
(b) Loans and advances to its customers
(c) Accepting deposits
(d) None of the above     

Question. What is Currency Deposit Ratio (CDR)?
(a) Ratio of money held by the public in currency to that of money held in bank deposits
(b) Ratio of money held by the public in bank deposits to that of money held by public in currency
(c) Ratio of money held in demand drafts to that of money held in treasury bonds
(d) None of the above     

Question. Which of the following is not a function of Central Bank?
(a) Enjoys monopoly of note issue
(b) Acts as the banker’s bank
(c) Creation of credit
(d) Lender of the last resort   

Question. A bank’s capacity to create credit is limited by the
(a) Size of cash
(b) Size of its area
(c) Size of the central bank
(d) All of the above     

Question. 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   

Question. 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     

Question. Which of the following is not a quantitative method of credit control
(a) Bank arte
(b) Open market operation
(c) Variable reserve ratio
(d) Regulation of consumer credit   

Question. Which is the largest private sector bank in India?
(a) ICICI
(b) Axis Bank
(c) HDFC
(d) ICICI     

Question. To what extent the central bank is the lender of the last resort?
(a) As it lends to the government
(b) As it provides finance to agriculture
(c) As it is the ultimate source of credit in times of crisis
(d) As it controls the money supply in the economy     

Question. Which among the following is called the rate of interest charged by RBI for lending money to various commercial banks by rediscounting of the bills in India?
(a) Bank rate
(b) Discount window
(c) Monetary Policy
(d) Overnight rate     

Question. Primary deposit in a commercial bank is called
(a) Active deposit
(b) Passive deposit
(c) Derivative deposit
(d) All of the above 

Question. Variable reserve ratio refers to‐
(a) The ratio which the commercial banks are required to maintain with the central bank
(b) The ratio at which the central bank rediscounts first class bills
(c) The purchase and sale by the central bank to government securities in the money market
(d) All of the above     

Question. The term bank liquidity implies
(a) Management of cash
(b) Creation of credit
(c) The capacity of the bank to give cash on demand in exchange
(d) All of the above   

Question. What is the Reserve Deposit Ratio ?
(a) The proportion of money RBI lends to commercial banks
(b) The proportion of total deposits commercial banks keep as reserves
(c) The total proportion of money that commercial banks lend to the customers
(d) None of the above     

Question. Among the following determinants of growth, which is a non‐economic factor?
(a) Natural resources
(b) Population growth
(c) Favourablelegislation
(d) Capital accumulation 

Question. The concept of economic growth is more relevant for
(a) Developed countries
(b) Underdeveloped countries
(c) European countries  
(d) All of the above   

Question. Which of the following is the indicators of economics growth
(a) National income
(b) Per capita income
(c) Per capita consumption
(d) All of the above   

Question. Economic growth can be measured in terms of changes in
(a) GDP per head in agricultural sector
(b) GDP per head of working population
(c) Real national income per head
(d) All of the above     

Question. The concept of economic growth is
(a) Identical with the concept of economic development
(b) Narrower than the concept of economic development
(c) Wider as compared to that of economic development
(d) Unrelated to the concept of economic development 

Question. Technological progress helps in
(a) Increase in overall productivity
(b) Economic growth
(c) Both of the above
(d) None of the above   

Question. The Solow’s growth model assumes that the two factors of production labour and capital are paid according to
(a) their marginal physical productivities
(b) the skills of the labour
(c) the quality of the output
(d) None of the above   

Question. Besides increase in output, economic development is concerned with
(a) Inputs and their efficiency
(b) Equitable distribution of income
(c) Life sustenance, self‐esteem and freedom from want, ignorance and squalor
(d) All of the above   

Question. Which of the following is acting as an obstacle to economic development
(a) Shortage of money
(b) Urbanization
(c) Political instability
(d) Shortage of labour   

Question. Harrod‐Domar model operates in a
(a) Closed economy
(b) Open economy
(c) Both open and closed economy
(d) None of the above   

Question. The most simple and popular method of measuring economic development is to calculate the trend of Gross National Product (GNP) at
(a) Current prices
(b) Constant prices
(c) Both of the above
(d) None of the above   

Question. The technique of production in which the amount of capital used per unit of labour is larger than that of labour is known as
(a) Capital‐intensive technique
(b) Modern technique
(c) Scientific technique
(d) All of the above     

Question. Harrod‐Domar model of economic growth is based on
(a) Underveloped economy
(b) Advanced capitalist economy
(c) Developing economy
(d) All of the above     

Question. When economic development takes place
(a) Share of services in GDP increases
(b) Share of agriculture in GDP increases
(c) Share of industry in GDP increases
(d) Both (a) and (c)     

Question. Assuming that 3 units of capital are required to produce 1 unit of output, then capitaloutput ratio would be
(a) 3 ∶ 2
(b) 3 ∶ 1
(c) 3 ∶ 3
(d) 3 ∶ 4     

Question. Which of the following is generally regarded as the true index of economic growth?
(a) An increase in national income at constant prices during a year
(b) A sustained increase in real per capita income
(c) An increase in national income at current prices over time
(d) An increase in national income along with a corresponding increase in population

Question. The rate of growth of the economy mainly depends upon
(a) The rate of growth of labour force
(b) The proportion of national income saved and invested
(c) The rate of technological improvements
(d) All of the above 

Question. Economic growth is measured as a percentage change in
(a) Gross Domestic Product
(b) Gross National Product
(c) Both (a) and (b)
(d) Government expenditure   

Question. In Solow’s model of economic growth, production takes places under
(a) Increasing returns to scale
(b) Constant returns to scale
(c) decreasing returns to scale
(d) None of the above 

Question. Which growth model analyses the contribution of technological progress to the overall growth rate
(a) Solow model
(b) Kaldor model
(c) Harrod model
(d) All of the above     

Question. With economic growth, the proportion of labour‐force engaged in agriculture
(a) Increases
(b) Decreases
(c) Remains unaffected
(d) Changes in uncertain manner 

Question. Which of the following models formed the basis of India’s First Five Year Plan
(a) Malanobis model
(b) Feldman model
(c) Harrod‐Domar model
(d) Leontief model     

Question. Solow’s model of long‐run growth is an improvement over that of
(a) J.E. Meade
(b) Harrod‐Domar
(c) J. Robinson
(d) A.K.Sen   

Question. For neo‐classical theorists, economic under‐ development is the product of which of the following
(a) Inappropriate economic policies and too much state interference in the economy
(b) Barriers against free trade
(c) Low prices for raw‐materials
(d) Both (a) and (b) 

Question. The major difference between Harrod‐Domar and Solow models of growth lies in
(a) Returns to scale
(b) Returns to variable factors
(c) Substitutability between labour and capital
(d) Growth of income   

Question. According to the neo‐classical theory, economic development is
(a) Gradual
(b) Harmonious
(c) Cumulative
(d) All of the above   

Question. The sequence of the three growth rates in Harod‐Domar model is
(a) actual, warranted and natural growth rates
(b) natural,warranted and actual growth rates
(c) warranted, actual and natural growth rates
(d) natural,actual and warranted growth rates      

Question. Which growth model inspired the use of capital‐output ratio for development planning?
(a) Harrod‐Domar model
(b) Solow model
(c) Kaldor model
(d) Feldman model   

Question. Harrod‐ Domar model is based on
(a) Two distinct rates of growth
(b) Three distinct rates of growth
(c) Four distinct rates of growth
(d) Five distinct rates of growth   

Question. In Harrod‐Domar model, the actual growth rate represented by G, is determined by
(a) Aggregate demand and aggregate supply
(b) Saving ratio and the capital‐output ratio
(c) Increase in productive capacity
(d) Net autonomous investment   

Question. A strategy of heavy industry is sometimes preferred for a developing economy because it can
(a) generate employment opportunities on a large scale
(b) provide a strong base for rapid industrialization
(c) contain inflationary measures
(d) both (a) and (b) (√)   

Question. Which of the following is not an indicator of economic development?
(a) Increase in literacy level
(b) Low growth of population
(c) Low proportion of labour force in the primary section
(d) Decrease in inequality of income   

Question. Which of the following models uses three distinct concepts of growth?
(a) Ramsey model
(b) Harrod‐Domar model
(c) Solow model
(d) Lewis model   

Question. Capital‐output ratio is determined by
(a) Sectoral allocation of capital
(b) Level of economic activity
(c) Human and natural resources
(d) All of the above       

Question. According to Harrod‐Domar model, once the steady growth is interrupted and the economy falls into disequilibrium, cumulative forces tend to perpetuate divergence thereby leading to
(a) inflation in the economy
(b) either secular deflation or secular inflation
(c) Low economic growth rates
(d) All of the above   

Question. The incremental capital‐output ration (ICOR) refers to the
(a) Ratio of investment to change in output
(b) Ratio of capital stock to the total output
(c) Marginal productivity of capital
(d) Financed by the citizens of a country and the income enjoyed by them   

Question. The saving ratio in Solow’s model is
(a) Constant
(b) Negative
(c) Flexible
(d) None of the above     

Question. The most important factor in economic development is
(a) Quality of human resources
(b) Quality of natural resources
(c) Quality of governance
(d) Quality of banking system   

Question. Neo‐classical growth model considered two‐factor production function with
(a) Technology and output
(b) Capital and labour
(c) Labour and technology
(d) Capital and technology 

Question. Which of the following models makes the assumption of constantsaving‐income ratio?
(a) Kaldor model
(b) Leontief model
(c) Hoarrod‐Domar model (√)
(d) Joan Robinson model   

Question. The fundamental function of a commercial bank is
(a) Acceptance of deposits
(b) Advancing loans
(c) Issuing bank draft
(d) Creating credit   

Question. Open market operation will become successful if there is a
(a) free‐market economy
(b) developing economy
(c) well‐developed bill and security market
(d) All of the above   

Question. Bank’s liquidity means
(a) Its capacity to create credit
(b) Its capacity to provide a high rate of interest
(c) Its capacity to supply finance
(d) Its capacity to convert its assets into cash   

Question. Which of the following is not a function of commercial bank?
(a) Accepting deposits
(b) Creating credits
(c) Printing bank notes
(d) None of the above   

Question. The derivative deposit created by a bank results in‐
(a) a decrease in the total stock of money
(b) an increase in the total stock of money
(c) an increase in government securities
(d) none of the above   

Question. 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   

Question. Loans and investment of a commercial bank constitute its
(a) Derivative deposits
(b) Primary deposits
(c) Secondary deposits
(d) All of the above     

Question. If the central bank wants to control credit, it should
(a) Lower the rediscount rate
(b) Raise the bank rate
(c) Buy securities in the open market
(d) Raise cash reserve ratio     

Question. Which is the largest private sector bank in India?
(a) Axis Bank
(b) ICICI Bank
(c) HDFC Bank
(d) South Indian Bank 

Question. Which of the following is a qualitative or selective method of credit control by the central bank?
(a) Bank rate or Discount Rate Policy
(b) Open market operations
(c) Cash Reserve Ratio
(d) None of the above   

Question. Which of the following is a selective credit instrument?
(a) variable reserve ratio
(b) credit rationing
(c) Bank rate
(d) All of the above 

Question. Who was the first Indian to become Governor of Reserve Bank of India(RBI)?
(a) Liaquant Ali Khan
(b) T.T. Krishnamachari
(c) John Mathai
(d) C.D. Deshmukh     

Question. Derivative deposit in a commercial bank is also called
(a) Active deposit
(b) Passive deposit
(c) Primary deposit
(d) None of the above

Question. A bank can increase the supply of money by
(a) printing notes
(b) Creating credit
(c) Issuing cheques
(d) None of the above       

Question. In what way the Central Bank serves as a Banker’s Bank?
(a) By maintaining gold reserve
(b) By controlling currency
(c) By acting as a lender of the last resort
(d) By reducing the interest rates   

Fill in the Blanks :

Question. Fisher’s equation considers a period of time which is _____________ in nature.          

Question. Paper currency standard is also referred to as___________.        

Question. When two kinds of metals are used for minting standard coins, it is called __________.          

Question. The value of money varies _________with the price level.           

Question. If mix metals are adopted in the coinage system meant for standard money, it is referred to as __________.        

Question. Cash ‐Balance approach is also known as _______        

Question. Fisher’s equation assumes _____________          

Question. The proportion of real income which the people desire to hold in the form of money is called_______.      

Question. In Fisher’s equation ′𝑉′ refers to __________.          

Question. “Bad money drives good money out of circulation when both of them are___________”.       

Question. The type of standard money used in a monetary system is referred to as _________.        

Question. ‘K’ in Cambridge equation symbolizes a function of _______.     

Question. The cash transaction equation in the present form has been formulated by_________.          

Question. If the volume of credit instruments decreases, the supply of money _________.        

Question. “Basel Committee on Banking Supervision” is also known as ___________.       

Question. The rate at which Reserve Bank of India(RBI) lends money to commercial banks in the event of any shortfall of funds is called ______________.                       

Question. Primary deposit in a commercial bank is called ____________             

Question. The full form of NDTL is____________________.                   

Question. The amount a bank needs to maintain in the form of cash,gold and other securities before giving credit is called ____________________.                     

Question. Initial repayment holiday given to a borrower for repayment of loan is called ______.                

Question. The full form of CRR is ___________.                     

Question. Derivative deposit in a commercial bank is also called ____________           

Question. ___________is the Central Bank in India                     

Question. In India, a one rupee currency note bears the signature of ________________.                     

Question. The buying , selling of treasury bills and other securities by Reserve Bank of India(RBI) is called ______________                     

Question. The full form of CVV is __________.                     

Question. Reserve Bank of India was nationalised on _________.                 

Question. ___________is the first Bank to introduce ATM in India.       

Question. Indian currency notes bear the signature of ______________.                

Question. The banking Regulation Act was passed in ______.                     

Question. The largest foreign Bank in India is _____________.                      

Question. The institution which is legally empowered to issue currency notes is__________         

Question. Deposits which arise from granting of loans are ______.             

Question. The percentage of demand and time liabilities that banks have to keep with RBI is ________     

Question. The trough of a business occurs when ___________ hits its lowest point.