General Economics 2 Set 8

Bachelor of Arts in Political Science (BA Political Science),

Union Public Service Commission (UPSC),

Indian Administrative Service (IAS)

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This set of General Economics 2 Multiple Choice Questions & Answers (MCQs) focuses on General Economics 2 Set 8

Q1 | In India the standard money is
  • Gold coins
  • Rupee
  • Dollar
  • Paisa
Answer: Rupee
Q2 | In the case of a ‘full bodied money’:
  • Intrinsic value is less than face value
  • Intrinsic value is equal to face value
  • Intrinsic value is greater than face value
  • None of the above
Answer: Intrinsic value is equal to face value
Q3 | In the case of a ‘token money’
  • Face value is less than the metal value
  • Face value is equal to the metal value
  • Face value is greater than the metal value
  • None of the above
Answer: Face value is greater than the metal value
Q4 | Demand for money arises from
  • Money acts as a medium of exchange
  • Money acts as a store of value
  • Both A and B
  • Neither A nor B
Answer: Both A and B
Q5 | People are said to be suffered from “money illusion” since:
  • People merely consider with nominal money holdings
  • People consider the real money balances
  • Both A and B
  • None of the above
Answer: People merely consider with nominal money holdings
Q6 | Which of the following is a concept of ‘broad money”:
  • M1
  • M2
  • M3
  • All of the above
Answer: M3
Q7 | In the Quantity Theory of Money, Fischer states that while other things remains the same:
  • Price level varies directly with the quantity of money
  • Price level varies inversely with the quantity of money
  • Value of money varies directly with the quantity of money
  • None of the above
Answer: Price level varies directly with the quantity of money
Q8 | Inflation is a situation where
  • Prices are falling
  • Value of money is falling
  • Value of money is rising
  • All of the above
Answer: Value of money is falling
Q9 | ‘Stagflation’ is a situation where the economy faces:
  • Inflation
  • Inflation as well as stagnation
  • Stagnation
  • None of the above
Answer: Inflation as well as stagnation
Q10 | Cost – push inflation arises due to:
  • Rise in wages
  • Rise in the prices of raw materials
  • Rise in profit
  • All of the above
Answer: All of the above
Q11 | Which of the following is not a function of a commercial bank:
  • Accepting deposits
  • Advancing loans
  • Issuing currency
  • Credit creation
Answer: Issuing currency
Q12 | Which of the following represents the major functions of the central bank?
  • Note issuing agency
  • Controller of credit
  • Banker to the governmen
  • All of the above
Answer: All of the above
Q13 | Find the odd man out:
  • Bank rate policy
  • Taxation
  • Open market operation
  • Variable reserve ratio
Answer: Taxation
Q14 | Bank rate refers to:
  • Discount rate
  • Rediscount rate
  • Market rate
  • None of the above
Answer: Rediscount rate
Q15 | Open market operation influences:
  • The reserves of commercial banks
  • The market rate of interest
  • Both A and B
  • None of the above
Answer: Both A and B
Q16 | Which of the following is an anti‐deflationary monetary policy?
  • Purchase of government securities from commercial banks and from the public
  • Sale of government securities from commercial banks and from the public
  • Raising the cash reserve ratio
  • All of the above
Answer: Purchase of government securities from commercial banks and from the public
Q17 | Which of the following is not a measure of selective credit control?
  • Variable reserve ratio
  • Regulation of consumer credit
  • Regulation of margin requirements
  • Rationing of credit
Answer: Variable reserve ratio
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