Money and Banking online Test

Result

Money and Banking online Test - 41

Score
-
out of -
Rank
-
out of -

TIME Taken - -

SHARING IS CARING

If our Website helped you a little, then kindly spread our voice using Social Networks. Spread our word to your readers, friends, teachers, students & all those close ones who deserve to know what you know now.

Weekly Quiz Competition

Question 1
1 / -0

Multiplier is __________ related to MPC.

A
directly

B
not

C
indirectly

D
rarely

Solution

The value of the multiplier and MPC are directly related as the change in consumption with respect to a given change in income becomes the change in investment which keeps on changing unless the income becomes zero.
Question 2
1 / -0

MPC = 0.75 and as a result of Multiplier Effect, National Income Increased by Rs. 300 crores by an additional investment of ________.

A
Rs. 400 crores

B
Rs. 225 crores

C
Rs. 1200 acres

D
Rs. 75 crores

Solution

Investment multiplier refers to the number of time by which the increase in output or income exceeds the increase in investment. It is measured as the ratio between change in income and change in investment and it is denoted as 'k'.
Multiplier(k) => Change in income / change in investment = 1/ {1-MPC(c)} where c is the marginal propensity to consume
If MPC = 0.75 and change in income is Rs. 300 crores, then
Multiplier(k) => 300 / change in investment = 1/ {1-MPC(c)}
=> 300 / change in investment  = 1/ 1- 0.75
=> 300 / change in investment  = 1/ 0.25
                     => 300 / change in investment  = 4

=> change in investment = 300 / 4 = 75 crores rupees.

Therefore, additional investment is of Rs. 75 crores.
Question 3
1 / -0

Which of the following expression is correct?

A
$$ Multiplier\, (k) =\frac { Change\, in\, Income (\Delta \,Y) } { Change\, in\, Investment (\Delta \,l)}$$

B
$$Multiplier (k) = \frac {1}{MPS- 1}$$

C
$$Multiplier (k) = \frac {1}{MPC}$$

D
$$ Multiplier (k) = \frac {Change\, in \,Investment (\Delta\, I)}{Change \,in \,Income (\Delta \,Y)}$$

Solution

Investment multiplier refers to the number of time by which the increase in output or income exceeds the increase in investment. It is measured as the ratio between change in income and change in investment and it is denoted as 'k'.

k= change in income / change in investment.
Question 4
1 / -0

The value of multiplier is _____________.

A
$$\frac{1}{MPC}$$

B
$$\frac{1}{MPS}$$

C
$$\frac{1}{1-MPS}$$

D
$$\frac{1}{MPC-1}$$

Solution

Investment multiplier refers to the number of time by which the increase in output or income exceeds the increase in investment. It is measured as the ratio between change in income and change in investment and it is denoted as 'k'.
Marginal Propensity to save refers to the percentage change in savings for every one rupee of change in the income. It is the ratio between the change in income and its corresponding change in savings.
Multiplier(k) => Change in income / change in investment = 1/ MPS(s) where s is the marginal propensity to save.
Question 5
1 / -0

What is correct about the 'Money Multiplier' in India? Select the answer using the code given below :
1. This is the ratio of the $$ (M_{3}) $$ to the Minimum Reserve of India.
2. The concept of Money Multiplier commenced with the idea of Minimum Reserve System in India.

A
Only 1

B
Only 2

C
1 and 2

D
Neither 1 nor 2

Solution

Money multiplier is the ratio of Reserve Money (M0) to Broad Money (M3). Minimum Reserve) and it has no connection with the Reserve System (it came in 1957 under is which a minimum reserve of Rs. 200 crore is mandated to be maintained by the RBI, of which at least Rs. 115 crore must be in gold-against this reserve India stared printing currencies since then, quitting the tradition of gold standard printing of the paper currency).
Question 6
1 / -0

Select the correct aim/s of the RBI's 'liquidity management framework' by code:
1. Reducing volatility in the call rate.
2. Medium-term stability in the loan market.

A
Only 1

B
Only 2

C
1 and 2

D
Neither 1 nor 2

Solution

It is rather aimed at stability in the loan rate (and not only in the call rate).
Question 7
1 / -0

The sum of which of the following constitutes Broad Money in India? Select your answer using the code given below:
1. Currency and coins with the public
2. Demand deposits with banks
3. Time deposits with banks
4. Other deposits with RBI

A
1 and 2

B
2 and 3

C
1, 3 and 4

D
1, 2, 3 and 4

Solution

Broad Money is, basically, M3 which is the sum of the M1 (i.e., currency and coins with the public + demand deposits of the banks + other deposits with the RBI) and the term deposits of the banks.
Question 8
1 / -0

Which of the following does not belong to the monetary aggregate M3. Select your answer with code given below:

A
Currency with the public and other deposits with the RBI

B
Saving deposits of the banks

C
Recurring deposits of the banks

D
Total deposits of the post offices

Solution

M3=M1 {Currency and coins with public + Demand deposits with the banks (Saving Current accounts) + Other deposits with the RBI} + Time deposits with the banks (Recurring & Fixed deposits). Total deposits of the post offices show up in the M4.
Question 9
1 / -0

In the context of Indian economy, which of the following is/are the purpose/purposes of 'Statutory Reserve Requirements'?
1. To enable the Central Bank to control the amount of advances the banks can create
2. To make the people's deposit with the banks safe and liquid
3. To prevent the commercial banks from making excessive profits
4. To force the banks to have sufficient vault cash to meet their day-to-day requirements
Select the correct answer using the code given below:

A
1 only

B
1 and 2 only

C
2 and 3 only

D
1, 2, 3 and 4

Solution

Statutory Liquidity Ratio (SLR) are maintained by the banks in 'non-cash' form which are used by then to raise cash against it (from the money market) in times of cash mismatch (and 'vault cash' means liquid cash). Profit management is not the aim behind SLR.
Question 10
1 / -0

Select the incorrect one/ones from the given list of items using the code given below :
1. 'Narrow Money' and 'Broad Money' are categories of money stocks popularised by the banking industry in India.
2. In 'Narrow Banking' commercial banks are basically doing 'retail banking'.

A
Only 1

B
Only 2

C
1 and 2

D
Neither 1 nor 2

Solution

Forwarding 'short-term risk-free' loans is known as 'narrow banking' (this was the suggestion given to the weaker banks of India by the M. Narasimhan Committee.)

User

Question Analysis

Correct -
Wrong -
Skipped -

My Perfomance

Score
-
out of -
Rank
-
out of -

Re-Attempt Weekly Quiz Competition

Money and Banking online Test - 41

Result

Money and Banking online Test - 41

Score

-

Rank

-

SHARING IS CARING

Question 1

directly

not

indirectly

rarely

Solution

Question 2

Rs. 400 crores

Rs. 225 crores

Rs. 1200 acres

Rs. 75 crores

Solution

Question 3

$$ Multiplier\, (k) =\frac { Change\, in\, Income (\Delta \,Y) } { Change\, in\, Investment (\Delta \,l)}$$

$$Multiplier (k) = \frac {1}{MPS- 1}$$

$$Multiplier (k) = \frac {1}{MPC}$$

$$ Multiplier (k) = \frac {Change\, in \,Investment (\Delta\, I)}{Change \,in \,Income (\Delta \,Y)}$$

Solution

Question 4

$$\frac{1}{MPC}$$

$$\frac{1}{MPS}$$

$$\frac{1}{1-MPS}$$

$$\frac{1}{MPC-1}$$

Solution

Question 5

Only 1

Only 2

1 and 2

Neither 1 nor 2

Solution

Question 6

Only 1

Only 2

1 and 2

Neither 1 nor 2

Solution

Question 7

1 and 2

2 and 3

1, 3 and 4

1, 2, 3 and 4

Solution

Question 8

Currency with the public and other deposits with the RBI

Saving deposits of the banks

Recurring deposits of the banks

Total deposits of the post offices

Solution

Question 9

1 only

1 and 2 only

2 and 3 only

1, 2, 3 and 4

Solution

Question 10

Only 1

Only 2

1 and 2

Neither 1 nor 2

Solution

User

Question Analysis

My Perfomance

Score

-

Rank

-

Results Announcement on: coming Monday

Stay Tuned: We’ll update you on your result via email or SMS.