This quiz works best with JavaScript enabled. Home > General Knowledge > Indian Economy > Basics > Currency And Inflation – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Currency And Inflation Quiz 1 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Inflation is caused as a result of: A) Increase in money supply. B) Fall in production. C) Increase in money supply without a corresponding increase in production. D) Decrease in money supply without a corresponding decrease in production. Show Answer Correct Answer: C) Increase in money supply without a corresponding increase in production. 2. Demand-Pull inflation can be describes as too many ..... chasing too few ..... A) Jobs, workers. B) Consumers, producers. C) Dollars, goods. D) None of above. Show Answer Correct Answer: C) Dollars, goods. 3. No individual in India can legally refuse a payment made ..... A) Deposits. B) Cheque. C) Money. D) Rupees. Show Answer Correct Answer: D) Rupees. 4. Index number that represents general change in wholesale prices of commodities is ..... A) Consumer Price Index. B) Wholesale Price Index. C) Food Basket. D) None of above. Show Answer Correct Answer: B) Wholesale Price Index. 5. Which one of the following is not a modern form of money? A) Demand deposits. B) Paper currency. C) Coins. D) Precious metals. Show Answer Correct Answer: D) Precious metals. 6. Who is the founder of Grameen Bank of Bangladesh? A) Mohammad Tuglaq. B) Mohammad Zakir. C) Mohammad Kasim. D) Mohammad Yunus. Show Answer Correct Answer: D) Mohammad Yunus. 7. Which authority regulate and overlook the credit sysetm and economic activites in India A) CBI. B) NSSO. C) Finance Minister. D) RBI. Show Answer Correct Answer: D) RBI. 8. Choose the correct meaning of organised sector: A) It is outside the control of the government. B) It covers those enterprises where the terms of employment are regular. C) It provides low salaries. D) Jobs are not regular. Show Answer Correct Answer: B) It covers those enterprises where the terms of employment are regular. 9. Which of the following examples does not fall under unorganised sector? A) A farmer irrigating his field. B) A daily wage labourer working for a contractor. C) A doctor in a hospital treating a patient. D) A handloom weaver working on a loom in her house. Show Answer Correct Answer: C) A doctor in a hospital treating a patient. 10. Which of the following act defines a Cheque? A) Companies Act 2013. B) Negotiable Instrument Act 1881. C) RBI Act 1934. D) Banking Regulation Act 1949. Show Answer Correct Answer: B) Negotiable Instrument Act 1881. 11. Bank deposit is a non-marketable security AND Government bond is a long-term security. A) TRUE AND TRUE. B) TRUE AND FALSE. C) FALSE AND TRUE. D) FALSE AND FALSE. Show Answer Correct Answer: A) TRUE AND TRUE. 12. What is the main source of income for banks? A) Interest on loans. B) Interest on deposits. C) Difference between the interest charged on borrowers and depositors. D) None of these. Show Answer Correct Answer: C) Difference between the interest charged on borrowers and depositors. 13. Which of the following is least risky? A) Treasury Bills. B) Equity. C) Corporate Bonds. D) Certificate of Deposits. Show Answer Correct Answer: A) Treasury Bills. 14. Hard Currency is defined as currency: A) Which can hardly be used for international transactions. B) Which is used in times of war. C) Which loses its value very fast. D) Traded in foreign exchange market for which demand is persistently relative to the supply. Show Answer Correct Answer: D) Traded in foreign exchange market for which demand is persistently relative to the supply. 15. Which of the following is not an organized sector in India? A) Nationalized Banks. B) Regional Rural Banks. C) Cooperative Banks. D) Chits and Money lenders. Show Answer Correct Answer: D) Chits and Money lenders. 16. Which of the following types of inflation interferes with a company's ability to plan for the future? A) Expected inflation. B) Unexpected inflation. C) Creeping inflation. D) Galloping inflation. Show Answer Correct Answer: B) Unexpected inflation. 17. In a SHG most of the decisions regarding loan activities are taken by A) Members. B) Cooperative. C) Non-government organisation. D) Banks. Show Answer Correct Answer: A) Members. 18. It is important that the formal credit is distributed more equally so that A) Poor can benefit from cheaper loans. B) Rich can get costly loans. C) Rich can get cheaper loans. D) None of these. Show Answer Correct Answer: A) Poor can benefit from cheaper loans. 19. Black money is : A) Counterfeit currency. B) Illegally earned money. C) Money earned through underhand deals. D) Income on which payment of tax is usually evaded. Show Answer Correct Answer: D) Income on which payment of tax is usually evaded. 20. An asset that the borrowers own, and use this as a guarantee to the lender, until the loan is repaid. A) Security. B) Collateral. C) Property. D) All of these. Show Answer Correct Answer: B) Collateral. 21. As per the latest released FSR, Indian Banking system has remained resilient mainly due to: A) Improvement in profitability. B) Adequate capital buffer. C) High level of non-performing loans. D) None of the above. Show Answer Correct Answer: B) Adequate capital buffer. 22. The exchange rate is A) The value of a currency relative to inflation. B) The price of one currency relative to gold. C) The change in the value of money over time. D) The price of one currency relative to another. Show Answer Correct Answer: D) The price of one currency relative to another. 23. The cause of inflation is: A) Increase in money supply. B) Fall in production. C) Increase in money supply and fall in production. D) Decrease in money supply and fall in production. Show Answer Correct Answer: C) Increase in money supply and fall in production. 24. Which of the following governmental steps has proved relatively effective in controlling the double digit rate of inflation in the Indian economy during recent years? A) Containing budgetory deficits and unproductive expenditure. B) Streamlined public distribution system. C) Enhanced rate of production of all consumer goods. D) Pursuing an export-oriented strategy. Show Answer Correct Answer: A) Containing budgetory deficits and unproductive expenditure. 25. Which one of the following is the main source of credit for rich urban households in India? A) Money lenders. B) Informal sector. C) Formal sector. D) Traders. Show Answer Correct Answer: C) Formal sector. 26. A financial institution which accepts deposits from public and provide loans to them. A) Share Market. B) Insurance Company. C) Banks. D) All of these. Show Answer Correct Answer: C) Banks. 27. An agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future payment. A) Cheque. B) Bank. C) Chit fund. D) Credit(loan). Show Answer Correct Answer: D) Credit(loan). 28. To meet the growing needs for coins in the country, where does the Government propose to set up another mint? A) Noida. B) Dewas. C) Hoshangabad. D) Nasik. Show Answer Correct Answer: A) Noida. 29. Number of Reserve Banks in a country is A) Three. B) Two. C) Five. D) One. Show Answer Correct Answer: D) One. 30. 'Devaluation' means: [RRB 1992] A) Converting rupee into gold. B) Lowering of the value of one currency in comparison of some foreign currency. C) Making rupee dealer in comparison to some foreign currency. D) None of these. Show Answer Correct Answer: B) Lowering of the value of one currency in comparison of some foreign currency. 31. What percentage of deposits are kept as cash by the commercial banks in India? A) 25%. B) 10%. C) 20%. D) 15%. Show Answer Correct Answer: D) 15%. 32. The latest released FSR refers to Bank for International Settlements (BIS) quarterly review ( Dec 2022). According to the BIS estimates US $ 80 trillion of dollar debt is " missing" , the missing debt as per BIS report is mainly in the form of: A) Household debt. B) Government Bonds. C) FX Swaps. D) Private debt. Show Answer Correct Answer: C) FX Swaps. 33. Inflation can be contained by: A) Surplus budget. B) Increase in taxation. C) Reduction in public expenditure. D) All the above. Show Answer Correct Answer: D) All the above. 34. Which of the following mints undertakes refining of gold for licensed gold dealers and production of medals for defence services? A) The Hyderabad Mint. B) The Mumbai Mint. C) The Kolkata Mint. D) None of the above. Show Answer Correct Answer: B) The Mumbai Mint. 35. If Net capital flows led by foreign portfolio investment (FPI), foreign direct investment (FDI) and trade credit fell short of the funding requirements of CAD, it will result in: A) A depletion of foreign exchange reserves. B) An increase of foreign exchange reserves. C) Unchanged foreign exchange reserves. D) None of the above. Show Answer Correct Answer: A) A depletion of foreign exchange reserves. 36. The inflation experienced in the country at present is: A) Galloping inflation. B) Secondary inflation. C) Unrealistic inflation. D) Cost-push inflation. Show Answer Correct Answer: D) Cost-push inflation. 37. "Scheduled bank" in India means a bank ..... A) Governed by the Banking Regulation Act, 1949. B) Included in the Second schedule to the Reserve Bank of India Act 1934. C) Incorporated under the Companies Act, 1956. D) Authorized to the Banking business. Show Answer Correct Answer: B) Included in the Second schedule to the Reserve Bank of India Act 1934. 38. Which one of the following is an asset that the borrower owns and uses as a guarantee until the loan is repaid to the lender? A) Property. B) Deposits. C) Money. D) Collateral. Show Answer Correct Answer: D) Collateral. 39. A steady increase in the general level of prices as a result of excessive increase in aggregate demand as compared to aggregate supply is termed as : [CDS 1999] A) Demand-pull inflation. B) Cost-push inflation. C) Stagflation. D) Structural inflation. Show Answer Correct Answer: A) Demand-pull inflation. 40. The service sector includes activities such as: A) Agriculture, dairy, fishing and forestry. B) Making sugar, jaggery and bricks. C) Transport, communication and banking. D) None of above. Show Answer Correct Answer: C) Transport, communication and banking. 41. Which of the following is not related with Money Market? A) Commercial Bills. B) Certificates of Deposit. C) Shares. D) Treasury Bills. Show Answer Correct Answer: C) Shares. 42. Monetary policy is regulated by: A) Government policy. B) Central Bank. C) Private entrepreneurs. D) Money lenders. Show Answer Correct Answer: B) Central Bank. 43. The situation with increasing unemployment and inflation is termed as: [CPO AC 2003] A) Hyperinflation. B) Galloping inflation. C) Stagflation. D) Reflation. Show Answer Correct Answer: C) Stagflation. 44. ..... inflation brings a total collapse of the Economy. A) Creeping. B) Galloping. C) Running. D) Walking. Show Answer Correct Answer: B) Galloping. 45. Ten rupee notes bear the signature of: A) Governor, Reserve Bank of India. B) Secretary, Ministry of Finance. C) Finance Minister. D) President. Show Answer Correct Answer: A) Governor, Reserve Bank of India. 46. Which of the following groups suffer the most from inflation? [CPO SI 2003] A) Business class. B) Holders of real assets. C) Creditors. D) Debtors. Show Answer Correct Answer: C) Creditors. 47. Who is most likely to be hurt by inflation? A) The U.S. government. B) Someone who borrowed money. C) A business owner. D) A retiree on a fixed income. Show Answer Correct Answer: D) A retiree on a fixed income. 48. Terms of credit does not include A) Mode of repayment. B) Interest rate. C) Cheque. D) Collateral. Show Answer Correct Answer: C) Cheque. 49. Stagflation implies a case of: [CDS 1992] A) Galloping inflation. B) Recession plus inflation. C) Adverse balance of trade. D) Rising wages and employment. Show Answer Correct Answer: B) Recession plus inflation. 50. As per the latest FSR, an increase in the value of USD also tend to: A) Decrease inflation by driving up import prices. B) Decrease inflation by driving down import prices. C) Increase inflation by driving down import prices. D) Increase inflation by driving up import prices. Show Answer Correct Answer: D) Increase inflation by driving up import prices. 51. What causes demand pull inflation? A) A rise in price level due to an increase in consumption. B) A decrease in price due to a decrease in supply. C) Rise in price due to a decrease in supply. D) A rise in price due to an increase in the cost of production. Show Answer Correct Answer: A) A rise in price level due to an increase in consumption. 52. The Issue Department of the RBI maintains a ....... against printing of notes: A) Minimum Reserve System. B) Proportional Gold Reserve System. C) Proportional Foreign Securities Reserve System. D) Proportional Reserve System. Show Answer Correct Answer: A) Minimum Reserve System. 53. Rupee was devalued by what percent in July 1991 ? [MP PCS 1990] A) 20. B) 22. C) 18. D) 25. Show Answer Correct Answer: A) 20. 54. After a year or two if the SHG is regular in savings, it becomes eligible for availing loan from A) Traders. B) Money lenders. C) Bank. D) Cooperative societies. Show Answer Correct Answer: C) Bank. 55. The FSR attributes majority of decline in foreign reserves to: A) Intervention in FX market. B) Write-off of Foreign currency assets. C) Sale of Foreign currency assets. D) Valuation losses. Show Answer Correct Answer: D) Valuation losses. 56. Inflation implies: [Railways 1994] A) Rise in general price index. B) Rise in money supply. C) Rise in budget deficit. D) Rise in prices of consumer goods. Show Answer Correct Answer: A) Rise in general price index. 57. ..... inflation affects the poor and middle class people adversely. A) Running. B) Creeping. C) Hyper. D) Walking. Show Answer Correct Answer: A) Running. 58. SHGs help borrowers overcome the problem of lack of ..... A) Collateral. B) Terms of credit. C) Credit. D) Loan. Show Answer Correct Answer: A) Collateral. 59. Which of the following factors contributes to an inflationary trend? A) 15% fall in production of industrial goods. B) 15% increase in prices of agricultural products. C) 15% increase in supply of money in the market. D) None of these. Show Answer Correct Answer: C) 15% increase in supply of money in the market. 60. Minimum inflation in post economic reform was in : A) 2001-02. B) 1999-2000. C) 2002-03. D) 2000-01. Show Answer Correct Answer: B) 1999-2000. Next →Related QuizzesIndian Economy QuizzesGeneral Knowledge QuizzesCurrency And Inflation Quiz 2Currency And Inflation Quiz 3Lifelines Of Indian Economy QuizSectors Of The Indian Economy Quiz 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books