Money and Banking online Test

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Money and Banking online Test - 23

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Weekly Quiz Competition

Question 1
1 / -0

The rate below which banks cannot generally lend is called the _____________.

A
base rate

B
floor rate

C
REPO rate

D
call money rate

Solution

Base rate is the minimum rate set by the Reserve Bank of India below which banks are not allowed to lend to its customers. Base rate is decided in order to enhance transparency in the credit market and ensure that banks pass on the lower cost of fund to their customers. Loan pricing will be done by adding base rate and a suitable spread depending on the credit risk premium. Hence, correct answer is option A.
Question 2
1 / -0

Many banks have adopted/launched a "Core Banking Solution" (CBS). Which of the following is a Core Banking Solution?

A
A marketing strategy adopted by the banks

B
A new type of ATM useful for rural population

C
A delivery channel for quick and fast delivery

D
A new product launched to help senior citizens only as they are not able to visit branches/ATMs frequently
Question 3
1 / -0

In which of the following fund transfer mechanisms, can funds be moved from one bank to another and where the transaction is settled instantly without being bunched with any other transaction?

A
RTGS

B
NEFT

C
TT

D
EFT

Solution

RTGS means Real-Time Gross Settlement. It enables money to transfer from one bank to another on a gross and real-time basis. In general terms, real-time means the beneficiary bank receives the instructions for fund transfer immediately and gross means that transactions happen individually (without accumulation).
Question 4
1 / -0

When saving are given as a loan and borrower repays the amount, money serves the function of ________.

A
unit of measurement

B
store value

C
standard of deferred payment

D
medium of exchange

Solution

Deferred payments refer to payments made on loans, salaries, pensions, insurance premium, interests, and rents. The necessary condition for deferred payment is that the amount of repaid money should be the same as it was at the time of purchase of the good or at the time of taking loan. Since all the goods and services can be expressed in terms of money, it makes the future payments easy and functional. Moreover, the value of currency does not change with time which makes it easy for the borrower to take money and repay it in future. Therefore, money serve as a standard of deferred payment.
Question 5
1 / -0

_________ affects the demand for money.

A
Real income

B
Price level

C
Rate of interest

D
All the three

Solution

The following variables affects the demand for money:
1. Real income: It refers to the income which is used for consumption of commodities in the market. If it is high, then the demand for money will also be high and if it is low then the demand for money will also be low.
2. Price level: If the general price level in the economy for all the commodities are high as in the case of inflation, then demand for money will be more as now more money will be required to purchase the same set of commodities and if the general price level in the economy for all the commodities are low as in the case of deflation, then demand for money will be less as now less money will be required to purchase the same set of commodities.
3. Rate of interest: Rate of interest is the rate charged on the loans offered by the commercial banks to the people with or without any collateral. If rate of interest is high then it will decrease the real income with the people as a result of which purchasing power would be decreased which will decrease the demand for money in the economy and if rate of interest is low then it will increase the real income with the people as a result of which purchasing power would be increased which will increase the demand for money in the economy.
Question 6
1 / -0

A country is treated a creditor nation if ________.

A
it has a history of more lending than borrowing

B
it has a history of more borrowing than lending

C
it has positive trade surplus

D
it has negative trade surplus

Solution

If a country's lending is more than its borrowing from the rest of the world, it is known as a net lender. In such a case, the country is treated as a creditor nation because it has a history of more lending(giving credits) than borrowings(taking credits).
Question 7
1 / -0

Which of these is not a function of money?

A
Medium of exchange

B
Store value

C
Power indicator

D
Measurement of value

Solution

Money refers to a common medium of exchange that is issued under the law of government and acts as a legal tender for the whole country. The functions of money can be classified into two categories:

1. Primary function: The primary function of money includes money as a medium of exchange and money as a measure of value.

2. Secondary function: The secondary function of money includes money as a store of value and money as a standard of deferred payment.

Therefore, power indicator is not a function of money.
Question 8
1 / -0

If a country's lending is more than its borrowing from the rest of the world,it is a _________.

A
net borrower

B
net lender

C
surplus state

D
deficit state

Solution

If a country's lending is more than its borrowing from the rest of the world, it is known as a net lender. In such a case, the country is regarded as a creditor nation. It is very easy for such nations to raise credit from other nations in monetary terms.
Question 9
1 / -0

If a country's borrowing is more than its lending from the rest of the world,it is a _______.

A
net borrower

B
net lender

C
surplus state

D
deficit state

Solution

If a country's borrowing is more than its lending to the rest of the world, it is known as a net borrower. In such a case, the country is treated as a debtor nation. . It is very difficult for such nations to raise credit from other nations in monetary terms.
Question 10
1 / -0

A country is treated a debtor nation if ______.

A
it has a history of more lending than borrowing

B
it has a history of more borrowing than lending

C
it has positive surplus

D
it has negative surplus

Solution

If a country's borrowing is more than its lending to the rest of the world, it is known as a net borrower. In such a case, the country is treated as a debtor nation because it has a history of more borrowings(taking credits) than
lending(giving credits).

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Re-Attempt Weekly Quiz Competition

Money and Banking online Test - 23

Result

Money and Banking online Test - 23

Score

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Rank

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SHARING IS CARING

Question 1

base rate

floor rate

REPO rate

call money rate

Solution

Question 2

A marketing strategy adopted by the banks

A new type of ATM useful for rural population

A delivery channel for quick and fast delivery

A new product launched to help senior citizens only as they are not able to visit branches/ATMs frequently

Question 3

RTGS

NEFT

TT

EFT

Solution

Question 4

unit of measurement

store value

standard of deferred payment

medium of exchange

Solution

Question 5

Real income

Price level

Rate of interest

All the three

Solution

Question 6

it has a history of more lending than borrowing

it has a history of more borrowing than lending

it has positive trade surplus

it has negative trade surplus

Solution

Question 7

Medium of exchange

Store value

Power indicator

Measurement of value

Solution

Question 8

net borrower

net lender

surplus state

deficit state

Solution

Question 9

net borrower

net lender

surplus state

deficit state

Solution

Question 10

it has a history of more lending than borrowing

it has a history of more borrowing than lending

it has positive surplus

it has negative surplus

Solution

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