Currency and Inflation Set 1

Bachelor of Business Administration (BBA),

Bachelor of Arts (BA),

Bachelor of Arts in Economics (BA Economics),

Union Public Service Commission (UPSC)

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This set of Indian Economy Multiple Choice Questions & Answers (MCQs) focuses on Currency and Inflation Set 1

Q1 | One-rupee currency notes bear the signature of:
  • Prime Minister of India
  • President of India
  • Finance Minister of India
  • Finance Secretary of India
Answer: Finance Secretary of India
Q2 | Ten rupee notes bear the signature of:
  • President
  • Finance Minister
  • Secretary, Ministry of Finance
  • Governor, Reserve Bank of India
Answer: Governor, Reserve Bank of India
Q3 | When was the decimal system of currency introduced in India?
  • 1948
  • 1950
  • 1954
  • 1957
Answer: 1957
Q4 | Which of the following prints currency notes of the denomination of Rs. 100?
  • The Bank Note Press, Dewas
  • The Indian Security Press, Nasik Road
  • The Security Printing Press, Hyderabad
  • All of the above
Answer: The Bank Note Press, Dewas
Q5 | The highest denomination of currency notes in circulation as legal tender in India is at present:
  • Rs. 50
  • Rs.100
  • Rs. 500
  • Rs.1000
Answer: Rs.1000
Q6 | The special paper required for printing of currency notes by the Security Presses In the country is manufactured at :
  • Hyderabad
  • Kolkata
  • Hoshangabad
  • Dewas
Answer: Hoshangabad
Q7 | Which of the following mints undertakes refining of gold for licensed gold dealers and production of medals for defence services?
  • The Hyderabad Mint
  • The Mumbai Mint
  • The Kolkata Mint
  • None of the above
Answer: The Mumbai Mint
Q8 | To meet the growing needs for coins in the country, where does the Governmentpropose to set up another mint?
  • Nasik
  • Hoshangabad
  • Dewas
  • Noida
Answer: Noida
Q9 | For international payments, the Indian currency is linked to :
  • American Dollar
  • British Sterling
  • Gold Standard
  • None of the above
Answer: American Dollar
Q10 | How many languages are used on a ten rupee note?
  • 2
  • 7
  • 10
  • 15
Answer: 15
Q11 | Convertibility of the rupee implies: [IAS 1994]
  • being able to convert rupee notes into gold
  • freely permitting the conversion of rupee to other major currencies and vice versa
  • allowing the value of the rupee to be fixed by market forces
  • developing an international market for currencies in India
Answer: freely permitting the conversion of rupee to other major currencies and vice versa
Q12 | Black money is :
  • counterfeit currency
  • illegally earned money
  • money earned through underhand deals
  • income on which payment of tax is usually evaded
Answer: income on which payment of tax is usually evaded
Q13 | Broad money in India is :
  • M1
  • M2
  • M3
  • M4
Answer: M3
Q14 | The Issue Department of the RBI maintains a _______ against printing of notes:
  • Minimum Reserve System
  • Proportional Reserve System
  • Proportional Gold Reserve System
  • Proportional Foreign Securities Reserve System
Answer: Minimum Reserve System
Q15 | Devaluation of currency by a country is meant to lead to : 1. expansion of import trade 2. promotion of import substitution 3. expansion of export trade
  • 1 only
  • 2 and 3
  • 1 and 2
  • 1 and 4
Answer: 2 and 3
Q16 | Which of the following is incorrect about convertibility?
  • The exchange rate should be determined by the forces of demand and supply of the currency
  • The exchange rate' would indicate the strength of the economy
  • It would discourage black market transactions
  • The RBI will be a direct player now rather than being an indirect one
Answer: The RBI will be a direct player now rather than being an indirect one
Q17 | The States' debt does not include:
  • loans from State Bank of India
  • loans from the Central Government
  • Provident Funds
  • treasury bills issued to international financial institutions
Answer: treasury bills issued to international financial institutions
Q18 | Consider the following statement: The price of any currency in international market is determined by the: 1. WTO 2. Demand for goods/services provided by the country concerned 3. Inflation differential between the country concerned and its major trading partners 4. Stability of the government of the concerned country Of these statements:
  • 1, 2, 3, and 4 are correct
  • 1, 2 and 4 are correct
  • 1, 3 and 4 are correct
  • 2, 3 and 4 are correct
Answer: 2, 3 and 4 are correct
Q19 | Hard Currency is defined as currency:
  • which can hardly be used for international transactions
  • which is used in times of war
  • which loses its value very fast
  • traded in foreign exchange market for which demand is persistently relative to the supply
Answer: traded in foreign exchange market for which demand is persistently relative to the supply
Q20 | The Indian Rupee is fully convertible: 1. In respect of Current Account of Balance of Payments 2. In respect of Capital Account of Balance of Payments 3. Into Gold Which of these statements is/are correct ?
  • 1 only
  • 3 only
  • 1 and 2 only
  • 1, 2 and 3
Answer: 1 only
Q21 | Consider the following statements:The price of any currency in international market is decided by the [IAS 1998] 1. World Bank 2. Demand for goods/services provided by the country concerned 3. stability of the government of the concerned country 4. economic potential of the country in question Of these statements:
  • 1, 2, 3 and 4 are correct
  • 2 and 3 are correct
  • 3 and 4 are correct
  • 1 and 4 are correct
Answer: 2 and 3 are correct
Q22 | Inflation implies: [Railways 1994]
  • rise in budget deficit
  • rise in money supply
  • rise in general price index
  • rise in prices of consumer goods
Answer: rise in general price index
Q23 | The situation with increasing unemployment and inflation is termed as: [CPO AC 2003]
  • hyperinflation
  • galloping inflation
  • stagflation
  • reflation
Answer: stagflation
Q24 | Which of the following factors contributes to an inflationary trend?
  • 15% fall in production of industrial goods
  • 15% increase in prices of agricultural products
  • 15% increase in supply of money in the market
  • none of these
Answer: 15% increase in supply of money in the market
Q25 | Which of the following can be used for checking inflation temporarily?
  • Increase in wages
  • Decrease in money supply
  • Decrease in taxes
  • None of the above
Answer: Decrease in money supply
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