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This set of Financial Markets and Institutions Multiple Choice Questions & Answers (MCQs) focuses on Financial Markets And Institutions Set 5

Q1 | If interest rates rise, the present value of any future earnings is bound to:
  • Fall
  • Rise
  • Suffer from inflation
  • Increase in risk
Q2 | In the loanable fund’s theory of interest determination, an increase in the productivity ofcapital equipment should lead to:
  • A reduction in the amount of saving
  • More employment
  • Higher interest rates
  • Higher prices
Q3 | If savers decide to save more, ceteris paribus, the loanable funds theory predicts:
  • A reduction in investment and interest rates
  • An increase in investment and interest rates
  • Higher economic growth
  • A reduction in interest rates and more investment
Q4 | According to the Fisher hypothesis, the nominal rate of interest consists of:
  • A stable real rate plus a variable risk premium
  • A real rate plus a liquidity premium plus a risk premium
  • A stable real rate plus a variable inflation premium
  • An inflation premium plus a liquidity premium
Q5 | According to the liquidity preference theory of interest, an increase in uncertainty, otherthings being equal, will:
  • Decrease output and employment
  • Increase risk aversion
  • Reduce the demand for money
  • Raise interest rates
Q6 | The ability of central banks to influence short-term interest rates rests upon:
  • Government policy
  • Their role as lenders of last resort
  • Their supervisory role
  • Sales of government bonds
Q7 | A central bank which sets the short-term rate of interest must:
  • Buy treasury bills
  • Meet the resulting demand for reserves
  • Sell government bonds
  • Change the reserve ratios
Q8 | According to --------- theory of interest, the rate of Interest is the price of credit which isdetermined by the demand and supply for loanable funds.
  • Loanable Fund theory
  • Productivity theory
  • Abstinence theory
  • None of these
Q9 | According to ------- theory interest arises on account of the productivity of capital.
  • Loanable Fund theory
  • Productivity theory
  • Abstinence theory
  • Classical theory
Q10 | The Time- Preference Theory of Interest was expounded by-----------
  • John Rae
  • Alfred Marshall
  • JM Keynes
  • JB Clark
Q11 | ----------- defined Interest as “an index of the community’s preference for a dollar ofpresent over a dollar of future income.”
  • Fisher
  • Alfred Marshall
  • JM Keynes
  • JB Clark
Q12 | According to ---------- theory, Interest is the reward for the productive use of the capital which is equal to the marginal productivity of physical capital.
  • Loanable Fund theory
  • Productivity theory
  • Abstinence theory
  • Classical theory
Q13 | Loanable Fund theory is also known as-----------
  • Classical theory
  • Neo-classical theory
  • Demand and Supply theory
  • Productivity theory
Q14 | Neo- Classical theory of interest was expounded by------------
  • Prof. Fisher
  • Alfred Marshall
  • Knot Wicksel
  • JB Clark
Q15 | According to Keynes, Interest is purely a ‘monetary phenomenon’.
  • Fisher
  • Alfred Marshall
  • JM Keynes
  • JB Clark
Q16 | Who propounded liquidity preference theory of interest?
  • Prof.Fisher
  • Alfred Marshall
  • JM Keynes
  • JB Clark
Q17 | ----------- is called as “Real Theory of Interest”
  • Classical theory
  • Neo-classical theory
  • Demand and Supply theory
  • Productivity theory
Q18 | Technical consultancy Organisations were set up by........................
  • IFCI
  • IDBI
  • RBI
  • SEBI
Q19 | ICICI was set up in ........................
  • 1955
  • 1964
  • 1989
  • 1935
Q20 | ........................ assists mainly to industrial undertakings in the private sector
  • IFCI
  • IDBI
  • ICICI
  • SEBI
Q21 | LIC was established in........................
  • 1956
  • 1964
  • 1989
  • gcv1935
Q22 | UTI was set up in the year ........................
  • 1956
  • 1964
  • 1969
  • 1948
Q23 | ................known as Brettonwood twins
  • IDBI and IFCI
  • IDBI and UTI
  • IBRD and IMF
  • RBI and SEBI
Q24 | World bank is also known as........................
  • IMF
  • ADB
  • IBRD
  • UNICEF
Q25 | World bank was set up in ........................
  • 1945
  • 1946
  • 1947
  • 1948