Objective Questions

1. What is the defect of barter system?

a) Lack of double coincidence of wants c) Difficulty in the measurement of value

b) Difficulty in store of value d) All of these

2. Which of the following is the credit money?

a) Cheque and draft c) Exchange note

b) Promissory note d) All of these

3. Which of the following is the near money?

a) . Bonds c) c. Securities
b) b. Insurance policy d) d. All of these

4. Which of the following is the feature of money?

a) Homogeneous unit c) General acceptability

b) Liquid asset d) All of these

5. Who was first developed the quantity theory of money?

a. . David Ricardo c. J.S. Mill

b. David Flume d. Davanzatti

6.In order to encourage investment in the economy the central bank may ...

a) Reduce cash reserve ratio d) Sell government securities in the

b) Increase bank rate open market
c) Increase cash reserve ratio
7.Institution that accepts deposits for lending purpose is known as ...

a) central bank c) commercial bank

b) government d) public

8. Which of the following is the function of commercial bank?

a. Accepting deposits c. Agency functions

b. Credit creation d. All of these

9. Giving permission to withdraw money by an amount more than deposited is know as ...

a. Loan c. Overdraft
b. Advance d. None of these

10. Which of the following is the narrow measure of the money supply?

a) M1 c) M3
b) M2 d) M4
11. Which of the following is the apex bank of Nepal?

a) Rastriya Banijya Bank c) Both (a) and (b)

b) Nepal Rastra Bank d) d.None of these

12. Who has the right of note issue?

a) Central bank c) Government

b) Commercial bank d) None of these

13.When prices are rising continuously, the phenomenon is called

a) deflation c) inflation
b) stagflation d) None of these

14. When too much money chases to few goods, the resulting inflation is called

a) deflation c) stagflation
b) cost pus inflation d) demand pull inflation

15. Stagflation means

a. inflation increasing cost c. inflation with unemployment

b. recession with stagflation d. None of these

16. Which is the most effective quantitative method to control inflation in the economy?

a) cash reserve ratio c) Both (a) and (b)

b) Bank rate policy d) None of these

17. Which measures are followed be the government for handling inflation

a. controlling investment c. fiscal measures

b. monetary measures d. All of these

18. Inflation is measured on the basis of

a. wholesale price index c. consumer's price index

b. retain price under d. All of these

19. When price are falling continuously the phenomenon is called ...

a. deflation c. Both (a) and (b)

b. inflation d. stagflation

20. When price rises due to increase in factor prices it is ...

a. stagflation c. demand pull inflation

b. cost pus inflation d. None of these

21.Balance of trade includes ...

a. only visible and tangible items c. Both (a) and (b)

b. only invisible and in tangible items d. All of these
22. Balance of payment includes ...

a. only visible and tangible items c. Both (a) and (b)

b. only invisible and in tangible items d. None of these

23. International trade and domestic trade differ because of

a. Trade restrictions c. Immobility of factors

b. Different government policies d. All of the above

24. Government policy about exports and imports is called

a. fiscal policy c. commercial policy

b. monetary policy d. finance policy

25. Market in which currencies buy and sell and their prices settle on is called the

a. international capital market c. Euro currency market

b. international both market d. Foreign exchange market

26. Under what circumstances can the bank close a partnership account?

a. Death of partner c. Insolvency is a partner

b. Retirement of a partner d. Combination of (a) and (c)

27. A government duty imposed on imports or exports to stimulate or dampen the economy is known as:

a. Levy c. Excise
b. Tariff d. All of the above

28. The difference between a country’s exports and imports of goods and services:

a. Balance of payments c. Balance sheet

b. Balance of trade a. d. All of the above

29. The point in business activity when total revenue equals to total expenses:

a. Balanced budget c. Capital gains

b. Capital budget d. Break-even point

30. Money serves as a:

a. Medium of Exchange c. Store of Value

b. Measure of Value d. All of the above

31. The open market operations conducted by the central bank refers to the sale and purchase of ...

a. Foreign currency c. Trade bills

b. Government securities d. Corporate securities
32.Fiscal deficit implies differences between

a. Grants and loan c. Current and fixed account receipts

b. Export and import d. Public revenue and expenditure

33.M2 Implies:

a. Narrow medium of exchange c. Broader medium of exchange and store

b. Broader medium of exchange of value
d. Short term store of value

34. M3 implies:

a. Narrow medium of exchange c. Broader medium of exchange and store

b. Broader medium of exchange of value
d. Short term store of value

35. Main cause of trade deficit of Nepalese economy is

a. Landlocked economy c. No direct access to sea

b. Lack of export diversification d. All of the above

36. If the government wishes to reduce the rate of inflation, it is most likely to increase ...

a. Welfare benefits paid to pensioners and c. The burden of direct taxation

households on low incomes. d. The wages of people working in the
b. Income tax allowances national health service.

37. Which of the following is a true measure to control the inflation?

a. Expansion of output c. Encouragement to saving

b. Over valuation of domestic currency d. All of the above

38. The monetary policy are mainly related to...

a. Managing taxes, public debt and public c. Managing money supply, bank credit
expenditure and interest rate
b. Managing money supply, interest rate d. Managing money supply, bank credit
and public expenditure and public debt

39. The most pursued goal of monetary policy is ...

a. economic growth c. Price Stability

b. Balance of Payment Stability d. Financial Development

40. Fiscal policy is also known as

a) monetary policy c) Both of the above

b) budgetary policy d) None of the above

41. Which of these is not a function of money?

a. Medium of exchange b. Store of value

 c. Power indicator d. Measurement of value

42. Barter is inconvenient because

a. of the necessity of the double coincidence of wants

b. large amounts of money are required.
c. gold is bulky and difficult to transport during day-to-day transactions.
d. because sources are limited.

43. The primary function of money is

a. the store of value function c. the unit of account function

b. the medium of exchange function. d. the savings function

44. A central bank

a) is a bank located in the center of the capital city.

b) is responsible for the conduct of overall economic policy
c) is responsible for the conduct of a country’s monetary policy
d) is a nation’s single most important deposit accepting institution.

45. The money supply

a) Supply of Money by the c) Supply of Money by Nepal Rastra

government Bank
b) Supply of Money by Financial d) All of them
Intuitions
46. M1 is defined is

a) currency outside banks, chartered banks' demand deposits.

b) currency outside banks, chartered banks' demand deposits and nonpersonal notice deposits
and personal savings deposits at chartered banks.
c) currency in circulation plus demand deposits made at financial institutions.
d) must be highly liquid and thus includes only currency circulating outside the banking system

47. M2 is defined as

a. currency outside banks plus chartered banks' demand deposits.

b. currency outside banks, chartered banks' demand deposits, and non-personal notice
deposits and personal savings deposits at chartered banks.
c. currency in circulation plus demand deposits made at financial institutions.
d. must be highly liquid and thus includes only currency circulating outside the banking
system.

48. One of the functions of Central Bank among the following is

a) Bank of issue c) Bank of delivery

b) Bank of foreign Exchange d) Bank of securities

49.One of the functions of commercial i banks among the following is

 a) Accepting deposits c) Accepting securities
b) Accepting paper d) Accepting coins

50. One of the primary functions of money is

a) Standard of deferred payments c) Store of value

b) Measure of value d) Store of wealth

51. One of the secondary functions of money is

a) Store of wealth c) Medium of Exchange

b) Standard of deferred payment d) Measure of value

52. Which one of the following is not a secondary function of money

a) Can’t say c) Standard of deferred payments

b) Measure of value d) d Store of value

53. Which one of the following is not a secondary functions of money

a) Standard of deferred payments c) Medium of exchange

b) Cant' say d) Store of value

54. Which one of the following is not a primary functions of money

a) Can’t say c) Measure of value

b) Store of value d) Medium of exchange

55. The narrow definition of money is based on

a) Medium of payment function c) Store of value function

b) Transferability of money d) Cant' say

56. The broad definition of money is based on

a) Medium of payment function c) Store of value function

b) Transferability of money d) Cant say

57. The narrow definition of money is not based on

a) Both A & B c) Medium of payment function

b) Store of value function d) Can’t say

58. The broad definition of money is not based on

a) Medium of payment function c) Can’t say

b) Store of value function d) Both A & B
59. Which role of Central Bank makes it as the controller of money supply or credit

a) Issuing only Rs. 100 denomination notes

b) Issuing currency
c) Issuing only Rs.1000 denomination notes
d) Issuing coins

60. One of the various qualitative instruments used by the central bank in during inflation is

a) Raise margin requirements c) Remove margin requirements

b) Reduce margin requirements d) Fix margin requirements

61. One of the various qualitative instruments used by the central bank in during deflation is

a) Raise margin requirements c) Reduce margin requirements

b) Remove margin requirements d) Fix margin requirements

62. "Money is what money does" - who said?

a) Crowther c) Robertson
b) Walker d) Marshall

63. Direct exchange of goods against goods is called:

a) Charter c) Barter
b) Money d) None of these

64. What possess general acceptability?

a) Bank draft c) Bill of exchange

b) Money d) None of these

65. Which type of deposits gives highest rate of interest?

a) Current deposit c) Recurring deposit

b) Fixed deposit d) None of these

66. Which bank deals with short-term credit?

a) Agricultural bank c) Industrial bank

b) Commercial bank d) None of these

67. Which of the following is not the function of the commercial bank?

a) Issue of paper notes. c) Advancing loans

b) Acceptance of deposits d) Credit control

68. Which of the following is not near money?

a) Paper notes c) Bond

b) Treasury bill d) Bill of exchange
69. Which bank is called lender of last resort?

a) Commercial bank c) Industrial bank

b) Agricultural bank d) Central bank

60. For which function, money is accepted as unit of account?

a) Measure of value c) Standard of deferred payment

b) Medium of exchange d) Store of value

Answers

1 2 3 4 5 6 7 8 9 10

d d d d d a c d c a

11 12 13 14 15 16 17 18 19 20

b a c d c a c c a b

21 22 23 24 25 26 27 28 29 30

a c d c d d d d d d

31 32 33 34 35 36 37 38 39 40

b d b c d c d c c b

41 42 43 44 45 46 47 48 49 50

c a b c c a b a a c

51 52 53 54 55 56 57 58 59 60

d b c b a c b b b a

61 62 63 64 65 66 67 68 69 70

c b c b b b a a d a