This quiz works best with JavaScript enabled. Home > General Knowledge > Indian Economy > Basics > Currency And Inflation – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Currency And Inflation Quiz 2 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. One-rupee currency notes bear the signature of: A) Finance Secretary of India. B) President of India. C) Prime Minister of India. D) Finance Minister of India. Show Answer Correct Answer: A) Finance Secretary of India. 2. A typical SHG has ..... members. A) 30 to 35. B) 15 to 20. C) 25 to 30. D) 20 to 25. Show Answer Correct Answer: B) 15 to 20. 3. Reserve bank of India grants loans to A) General public. B) Private Companies. C) Commercial Banks. D) All of these. Show Answer Correct Answer: C) Commercial Banks. 4. As per FSR, India's share of dollar-denominated debt has been: A) Increasing. B) Falling. C) Remained stagnant. D) Rapidly increasing. Show Answer Correct Answer: B) Falling. 5. Which one is the following is the important characteristic of modern form of currency? A) It is made from precious metal. B) It is authorized by commercial banks. C) It is authorized by the Government of the country. D) It is made from thing of everyday use. Show Answer Correct Answer: C) It is authorized by the Government of the country. 6. Why do banks keep a small proportion of the deposits as cash with themselves? A) To pay the depositors who might come to withdraw money. B) To extend loan to the poor. C) To pay salary to their staff. D) To extend loan facility. Show Answer Correct Answer: A) To pay the depositors who might come to withdraw money. 7. SEBI was primarily set up to A) Regulate the activities of the merchant banks. B) To control the operations of mutual funds. C) To work as a regulator of the stock exchange activities. D) All of the above. Show Answer Correct Answer: D) All of the above. 8. Deficit financing creates additional paper currency to fill the gap between expenditure and revenue. This device aims at economic development but if it fails, it generates : [IFS 1990] A) Deflation. B) Inflation. C) Demonetization. D) Devaluation. Show Answer Correct Answer: B) Inflation. 9. As per FSR, Banks have also been drawing down their high-quality-liquid assets (HQLAs) to fund credit growth. This will most likely ..... Liquidity Coverage Ratio (LCR): A) Increase. B) Decrease. C) No Impact on. D) None of the above. Show Answer Correct Answer: B) Decrease. 10. An index that measures the prices of a market basket of goods that typical consumers purchase. A) Federal Reserve. B) Bank. C) Deflation. D) Consumer Price Index. Show Answer Correct Answer: D) Consumer Price Index. 11. The States' debt does not include: A) Provident Funds. B) Loans from State Bank of India. C) Treasury bills issued to international financial institutions. D) Loans from the Central Government. Show Answer Correct Answer: C) Treasury bills issued to international financial institutions. 12. The effect of inflation on tax revenue results in a situation known as : A) Fiscaldrag. B) Reflation. C) Disinflation. D) Stagflation. Show Answer Correct Answer: A) Fiscaldrag. 13. After ..... or ....., if the SHG is regular in savings, it becomes eligible for availing loan from the bank. A) A year or two. B) 3 years or 4 years. C) 6 months or 1 year. D) 5 years or 6 years. Show Answer Correct Answer: A) A year or two. 14. ..... are the building blocks of organisation of the rural poor A) SHGs. B) Formal sources of credit. C) Banks. D) Cooperative societies. Show Answer Correct Answer: A) SHGs. 15. ..... and ..... credit is crucial for the country's development A) Accessible and affordable. B) Timely and feasible. C) Less and high amount of. D) Cheap and affordable. Show Answer Correct Answer: D) Cheap and affordable. 16. The period of high inflation and low economic growth is termed as: [RRB 1992] A) Stagnation. B) Take-off stage in economy. C) Stagflation. D) None of these. Show Answer Correct Answer: C) Stagflation. 17. Most countries try to maintain an inflation rate of ..... per year. A) One percent or less. B) Six to seven percent. C) Four to five percent. D) Two to three percent. Show Answer Correct Answer: D) Two to three percent. 18. Which one is an example of Informal Source of Credit A) Banks. B) Cooperative Societies. C) Money Lender. D) All of these. Show Answer Correct Answer: C) Money Lender. 19. Which of the following accounts for Cost-Push Inflation? A) Increase in population. B) Increase in money supply. C) Increase in non-plan expenditure. D) Increase in indirect taxation. Show Answer Correct Answer: D) Increase in indirect taxation. 20. Which one of the following is not a feature of money? A) A unit of account. B) Medium of exchange. C) Lack of divisibility. D) A store of value. Show Answer Correct Answer: C) Lack of divisibility. 21. Which of the following can be used for checking inflation temporarily? A) Increase in wages. B) Decrease in money supply. C) Decrease in taxes. D) None of the above. Show Answer Correct Answer: B) Decrease in money supply. 22. A high rate of inflation tends to worsen balance of payments because: A) Prices of imported goods rise. B) Prices of exported goods rise making exports less competitive. C) Prices of imported goods fall and hence more is imported. D) Prices of exported goods fall and hence less amount is obtained in terms of foreign exchange. Show Answer Correct Answer: B) Prices of exported goods rise making exports less competitive. 23. Amongst the currency quotes USD/JPY, USD/Euro and USD/CAD, which one of the following is referred as the base currency for quotes? [Punjab & Sindh Bank 2011] A) US $. B) JPY. C) Euro. D) CAD. E) None of these. Show Answer Correct Answer: A) US $. 24. For international payments, the Indian currency is linked to : A) American Dollar. B) British Sterling. C) Gold Standard. D) None of the above. Show Answer Correct Answer: A) American Dollar. 25. What causes cost push inflation A) An increase in demand for goods and services. B) An increase in supply. C) A rise in production costs passed on to consumers. D) A fall in the price of imports. Show Answer Correct Answer: C) A rise in production costs passed on to consumers. 26. The best means of saving during inflation is to keep: A) Equity. B) Money. C) Time deposits with Banks. D) Government Bonds. Show Answer Correct Answer: B) Money. 27. As per the latest FSR, Corporate sector leverage, as reflected in debt-to-equity and debt-to-asset ratios, have been: A) Increasing gradually from pandemic lows. B) Decreasing gradually from pandemic lows. C) Remained unchanged from pandemic lows. D) None of the above. Show Answer Correct Answer: A) Increasing gradually from pandemic lows. 28. In ..... Inflation prices rise very fast at double or triple rate. A) Creeping. B) Running. C) Walking. D) Hyper. Show Answer Correct Answer: D) Hyper. 29. Among the remedies of inflation we cannot include: A) Lowering bank rate. B) An efficient public distribution system. C) Better capacity utilisation. D) Reducing budgetary deficit. Show Answer Correct Answer: A) Lowering bank rate. 30. What cause of inflation comes from an increase in commodity prices such as oil and wheat, or an increase in wages? A) Cost-push inflation. B) Demand-pull inflation. C) Price-push inflation. D) Supply-pull inflation. E) None of the answers. Show Answer Correct Answer: A) Cost-push inflation. 31. Debt-trap means: A) Ability to pay back loan. B) Extravagance. C) None of the above. D) Increasing debt. Show Answer Correct Answer: D) Increasing debt. 32. What is the form of money in medieval period? A) Cowries. B) Paper Notes. C) Metallic Coins. D) Barter System. Show Answer Correct Answer: C) Metallic Coins. 33. Under Barter System the exchange of goods require ..... A) Double coincidence of wants. B) A good transport system. C) Advertising. D) Communication. Show Answer Correct Answer: A) Double coincidence of wants. 34. The Financial Stability Report is a: A) Quarterly publication. B) Semi-annual publication. C) Annual publication. D) None of the above. Show Answer Correct Answer: B) Semi-annual publication. 35. "Financialization of commodities" mainly refers to: A) Increased investments in commodity linked ETFs. B) Decreased investments in commodity linked ETFs. C) Reduced Bank's exposure towards commodities traders. D) None of the above. Show Answer Correct Answer: A) Increased investments in commodity linked ETFs. 36. Which of the following is false about NBFC? A) NBFC cannot accept demand deposits. B) NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself. C) Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs. D) NBFC cannot undertake insurance business. Show Answer Correct Answer: D) NBFC cannot undertake insurance business. 37. Which of the following is incorrect about convertibility? A) The exchange rate should be determined by the forces of demand and supply of the currency. B) The exchange rate' would indicate the strength of the economy. C) It would discourage black market transactions. D) The RBI will be a direct player now rather than being an indirect one. Show Answer Correct Answer: D) The RBI will be a direct player now rather than being an indirect one. 38. Money can be best described as A) Medium of exchange. B) Deposit in Banks. C) Medium of transaction. D) Payment through cheque. Show Answer Correct Answer: A) Medium of exchange. 39. As per FSR the acceleration in credit growth, is most likely to ..... risk weighted assets: A) Reduce. B) Grow. C) Have no impact on. D) None of the above. Show Answer Correct Answer: B) Grow. 40. Under the Constitution, the power to raise and disburse public funds: A) Has been vested in Union Government. B) Has been divided between the Union and State Governments. C) Has been given to the Finance Commission. D) Has not been given to anyone. Show Answer Correct Answer: B) Has been divided between the Union and State Governments. 41. ..... inflation is regarded as safe and essential for Economic Growth. A) Walking. B) Running. C) Hyper. D) Creeping. Show Answer Correct Answer: D) Creeping. 42. An essential attribute of inflation is: A) Fall in production. B) Increase in prices. C) Absence of black market. D) Presence of black market. Show Answer Correct Answer: B) Increase in prices. 43. The FSR highlights that the share of fixed assets in total assets remained subdued and at the level observed during H2:2021-22. This most likely indicates that: A) New Private investment has picked up. B) Private debt has increased. C) New Private investment is yet to pickup. D) Households debt has increased. Show Answer Correct Answer: C) New Private investment is yet to pickup. 44. Which of the following does not come under modern forms of money? A) Currency. B) Cheque Payments. C) Demand deposits. D) Loan Payments. Show Answer Correct Answer: D) Loan Payments. 45. Who among the following is most benefitted from inflation? [IAS 1989] A) Government pensioners. B) Debtors. C) Creditors. D) Savings Bank Account holders. Show Answer Correct Answer: B) Debtors. 46. When was decimal coinage introduced in India? [CDS 2005] A) 1950. B) 1947. C) 1957. D) 1960. Show Answer Correct Answer: C) 1957. 47. As per the FSR lending by private sector banks (PVBs), continued to ..... that of PSB counterparts A) Outpace. B) Trail. C) Match. D) None of the above. Show Answer Correct Answer: A) Outpace. 48. A very rapid growth in prices in which money loses its value to the point where even barter may be preferable is known as: A) Disinflation. B) Inflation. C) Hyper-inflation. D) Deflation. Show Answer Correct Answer: C) Hyper-inflation. 49. ..... consist of Food Items of daily individual consumption. A) GDP. B) WPI. C) CPI. D) Food Basket. Show Answer Correct Answer: D) Food Basket. 50. Which of the following is considered to be more secure instrument? A) Hundi. B) Cheque. C) Commercial Paper. D) Draft. Show Answer Correct Answer: D) Draft. 51. Which of the following prints currency notes of the denomination of Rs. 100? A) The Bank Note Press, Dewas. B) The Indian Security Press, Nasik Road. C) The Security Printing Press, Hyderabad. D) All of the above. Show Answer Correct Answer: A) The Bank Note Press, Dewas. 52. As per the FSR Indian equity market valuations are relatively: A) High. B) Ready to go high. C) Stagnant. D) Low. Show Answer Correct Answer: A) High. 53. Organization which supervises the credit activities of lenders in the informal sector? A) Central government. B) Reserve bank of India. C) State government. D) No organisation. Show Answer Correct Answer: D) No organisation. 54. In options, risk reversal means: A) A measure of the difference between the implied volatilities of out-of-the money call and put options. B) A measure of the summation between the implied volatilities of out-of-the money call and put options. C) Volatility. D) Time decay. Show Answer Correct Answer: A) A measure of the difference between the implied volatilities of out-of-the money call and put options. 55. When a person wants to sell exactly what the other person wants to buy. This situation is known as A) Barter System. B) Double coincidence of wants. C) Trading. D) None of these. Show Answer Correct Answer: B) Double coincidence of wants. 56. As per the FSR the moderation in external demand has pulled merchandise exports into: A) Expansion. B) Contraction. C) Flat. D) None of the above. Show Answer Correct Answer: B) Contraction. 57. Broad money in India is : A) $M_1$. B) $M_2$. C) $M_3$. D) $M_4$. Show Answer Correct Answer: C) $M_3$. 58. The highest denomination of currency notes in circulation as legal tender in India is at present: A) Rs. 50. B) Rs.1000. C) Rs.100. D) Rs. 500. Show Answer Correct Answer: B) Rs.1000. 59. If aggregate demand rises faster than producers can supply goods services A) Demand-pull inflation. B) Cost-push inflation. C) Inflation. D) None of above. Show Answer Correct Answer: A) Demand-pull inflation. 60. As per the latest released FSR if in an economy Banks have low market power then the entry of a CBDC that directly competes with bank deposits may result in: A) No impact on deposit rates. B) Lower deposit rates. C) Higher Deposit rates. D) Deposit rates will first decrease then increase. Show Answer Correct Answer: C) Higher Deposit rates. ← PreviousNext →Related QuizzesIndian Economy QuizzesGeneral Knowledge QuizzesCurrency And Inflation Quiz 1Currency And Inflation Quiz 3Lifelines Of Indian Economy QuizSectors Of The Indian Economy Quiz 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books