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- CBCSIV SEMESTER;DEPARTMENT OF ECONOMICS;OBJECTIVESNAME OF THE PAPER: MACROECONOMICS -IIPAPER – IVSECTION –AMULTIPLE CHOICE QUESTIONS (200X1=200)MODULE-I : MONEYA. Choose the correct answer:1. The value of money in Fisher’s equation is determined by(a) Demand for money ( )(b) Supply of money ( )(c) Demand and supply of money ( )(d) None of the above ( )2. According to the Quantity Theory of Money, the value of money depends upon(a) Quantity theory of money in circulation ( )(b) Purchasing power of money ( )(c) Demand for money ( )(d) Price level ( )3. According to Cambridge equation, the value of money depends upon(a) Demand for money ( )(b) Supply of money ( )(c) Demand for goods and services ( )(d) All of the above ( )4. The degree of relationship between the demand for and the supply of money in Fisher’sequation will be(a) 𝑠𝑢𝑝𝑝𝑙𝑦 > 𝑑𝑒𝑚𝑎𝑛𝑑 ( )(b) 𝑠𝑢𝑝𝑝𝑙𝑦 = 𝑑𝑒𝑚𝑎𝑛𝑑 ()(c) 𝑠𝑢𝑝𝑝𝑙𝑦 < 𝑑𝑒𝑚𝑎𝑛𝑑 ( )(d) None of the above ( )
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- 5. Which is not the function of money(a) Make demand and supply equal ()(b) Store of value ( )(c) Medium of exchange ( )(d) Measure of value ( )6. High-powered money is also known as(a) Base money ( )(b) Reserve money ( )(c) Narrow money ( )(d) All of the above ()7. Who stated, “Bad money drives good money out of circulation, when both of them arefull legal tender”?(a) Irving Fisher ( )(b) Milton Friedman ( )(c) J.M. Keynes ( )(d) Thomas Gresham ( )8. Value of money is(a) Directly related to the price level ( )(b) Inversely related to the price level ()(c) Proportionately related to the price level ( )(d) All the above ( )9. Who stated, “Money is what money does”?(a) Milton Friedman ( )(b) Walker ( )(c) Irving Fisher ( )(d) Thomas Gresham ( )10. Fisher’s cash transaction equation is expressed as(a) 𝑃 =𝑀𝑉𝑇()(b) 𝐾 =𝑀𝑃𝑇( )(c) 𝑉 =𝐼𝐾( )(d) 𝑃 =𝑀𝐾𝑇( )11. Barter system means(a) Purchase of commodity with money ( )(b) Sale of commodity with money ( )(c) Purchase and sale of commodity with commodity ()
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- (d) None of the above ( )12. Which among the following is considered to be the most liquid asset?(a) Gold ( )(b) Money ()(c) Land ( )(d) Treasury bonds ( )13. Currency notes and coins are called as:(a) flat money ( )(b) legal tenders ( )(c) Fiat money ( )(d) Both (b) and (c ) (√)14. Convertible money means(a) It can buy goods ( )(b) Government can give gold against it ()(c) Illegal money ( )(d) Low value of money ( )15. Barter system has the defect of(a) Goods exchanged are of inferior quality ( )(b) Goods cannot be exchanged for services ( )(c) Lack of common measure of value ()(d) None of the above ( )16. Legal money is called so because(a) The buyer must pay in that money ( )(b) Can be converted into gold ( )(c) Sellers do not accept any other money ( )(d) It is official medium of exchange ()17. The most important feature of money is(a) General acceptability ()(b) Convertibility into gold ( )(c) Store of value ( )(d) Medium of exchange ( )18. Which property the paper money does not possess:(a) acceptability ( )(b) Divisibility ( )(c) Durability ()
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- (d) Portability ( )19. In the equation 𝑀𝑉 = 𝑃𝑌, 𝑉 𝑟𝑒𝑝𝑟𝑒𝑠𝑒𝑛𝑡𝑠(a) Value of money ( )(b) Velocity of circulation of money ( )(c) Variation of national income ( )(d) All of the above ( )20. In the equation 𝑀𝑉 = 𝑃𝑌, 𝑀 𝑟𝑒𝑝𝑟𝑒𝑠𝑒𝑛𝑡𝑠(a) Money supply ()(b) Money demand ( )(c) Maximum output ( )(d) Minimum output ( )21. According to Keynes, motives for holding money are(a) Two ( )(b) Three ()(c) Four ( )(d) Five ( )22. Under normal circumstances, the velocity of circulation of money in a country is(a) 100 % ( )(b) Negative ( )(c) Less than 10 ()(d) Zero ( )23. Paper money is called fiat money because(a) It is issued with authority of government ()(b) It is convertible into gold ( )(c) It can be easily printed ( )(d) It is light weight ( )24. Value of money means(a) Gold purchased by money ( )(b) General Purchasing power of money ()(c) Importance of money ( )(d) Demand for money ( )25. If the quantity of money increases 100%, other things remaining constant, value ofmoney changes by(a) Increases by 100 % ( )(b) Decreases by 100 % ()
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- (c) Decreases by 200% ( )(d) Does not change ( )26. Value of money and supply of money are related(a) Inversely ()(b) Directly ( )(c) Are not related ( )(d) None of the above ( )27. The quantity demanded of money rises(a) As the interest rises ( )(b) As the interest falls ()(c) As the supply of money falls ( )(d) As the numberof banks rises ( )28. Equation of exchange is associated with(a) Pigou ( )(b) J.B.Say ( )(c) Marshall ( )(d) Irving Fisher ()29. Equation of exchange is converted into the quantity theory of money by assuming thefollowing variables as constants(a) V and T ()(b) M and V ( )(c) M and P ( )(d) V and P ( )30. Fisher equation of exchange states that(a) P varies directly with income ( )(b) P varies directly with M ()(c) P and M are constants ( )(d) None of the above ( )31. In the Fisher’s extended equation of exchange MIVIrepresents(a) Credit money ()(b) Primary money ( )(c) Both primary and credit money ( )(d) General Price level ( )32. In Fisher’s transaction velocity model, which one of the following is not an assumption(a) Velocity of circulation of money is constant ( )
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- (b) The volume of transaction is constant ( )(c) Full employment ( )(d) P is considered as an active factor ()33. The cash balance equation 𝑀 = 𝐾𝑃𝑌 was given by(a) Keynes ( )(b) Pigou ( )(c) Robertson ( )(d) Marshall ()34. Robertson’s version of the Cambridge equation is(a) 𝑃 =𝑀𝐾𝑇()(b) 𝑃 =𝐾𝑅𝑀( )(c) 𝑀𝑉 = 𝑃𝑇 ( )(d) 𝑀 =𝐾𝑃𝑌( )35. Pigou’s version of Cambridge equation is(a) 𝑃 =𝑀𝐾𝑇( )(b) 𝑃 =𝐾𝑅𝑀()(c) 𝑀𝑉 = 𝑃𝑇 ( )(d) 𝑀 =𝐾𝑃𝑌( )36. The quantity theory of money was restated by(a) Alfred Marshall ( )(b) Milton Friedman ()(c) Irving Fisher ( )(d) JM. Keynes ( )37. Fisher’s equation of exchange considers money as(a) A medium of exchange ()(b) A store of value ( )(c) Measures of value ( )(d) All of the above ( )38. Robertson’s equation of exchange considers money as(a)A medium of exchange ( )(b)A store of value ()(c)Measures of value ( )(d) All of the above ( )
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- 39. The number of times a unit of money exchanges hands during a unit period of time isknown as(a) Velocity of the circulation of money ()(b) Speed of circulation of money ( )(c) Momentum of circulation of money ( )(d) Count of circulation of money ( )40. In India, coins are minted at four places, which among the following is one of them(a) New Delhi ( )(b) Chennai ( )(c) Hyderabad ()(d) All of them ( )ANSWER KEY(UNIT-I)Question No.Answer Key1.C2.A3.A4.B5.A6.D7.D8.B9.B10.A11.C12.B13.D14.B15.C16.D17.A18.C19.B20.A21.B22.C23.A
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- 24.B25.B26.A27.B28.D29.A30.B31.A32.D33.D34.A35.B36.B37.A38.B39.A40.CB. FILL IN THE BLANKS1. Cash -Balance approach is also known as _______2. “Bad money drives good money out of circulation when both of them are___________”.3. Paper currency standard is also referred to as___________.4. The proportion of real income which the people desire to hold in the form of money iscalled_______.5. The cash transaction equation in the present form has been formulated by_________.6. When standard money or coins are madeof only one metal, it is referred to ________.7. When two kinds of metals are used for minting standard coins, it is called __________.8. If mix metals are adopted in the coinage system meant for standard money, it isreferred to as __________.9. The type of standard money used in a monetary system is referred to as _________.10. In Cambridge equation, the value of money depends upon_________11. Fisher’s equation assumes _____________12. Fisher’s equation considers a period of time which is _____________ in nature.13. If the volume of credit instruments decreases, the supply of money _________.14. In Fisher’s equation ′𝑉′ refers to __________.
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- 15. If the velocity of circulation of money increases, the supply of money will__________.16. ‘K’ in Cambridge equation symbolizes a function of _______.17. The value of money varies __________with the purchasing power of money.18. The value of money varies _________with the price level.19. In Fisherian equation, ‘P’ refers to the price level of ___________________.20. _________ is the sum of commercial bank reserves and currency (notes and coins) heldby the public.Answers to Fill in the Blanks:1. The Demand Theory of Money2. legal tender”.3. managed currency standard.4. cash balance.5. Fisher.6. monometallism.7. bimetallism.8. symmetallism.9. monetary standard.10. demand for money11. full employment.12. long period in nature.13. decreases.14. a period of time.15. increase.16. time.17. directly18. inversely19. both final and intermediate goods.20. High–powered money
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- MODULE-II: BANKINGA. Choose the correct answer:1. Which of the following is a qualitative or selective method of credit control by thecentral bank?(a) Bank rate or Discount Rate Policy ( )(b) Open market operations ( )(c) Cash Reserve Ratio ( )(d) None of the above ( )2. In what way the Central Bank serves as a Banker’s Bank?(a) By maintaining gold reserve ( )(b) By controlling currency ( )(c) By acting as a lender of the last resort ()(d) By reducing the interest rates ( )3. Which of the following is not a function of commercial bank?(a) Accepting deposits ( )(b) Creating credits ( )(c) Printing bank notes ()(d) None of the above ( )4. Reserve Bank of India(RBI) was established on(a) 1stApril,1925 ( )(b) 1stApril 1935 ()(c) 1stApril 1945 ( )(d) 1stApril 1955 ( )5. Primary deposit in a commercial bank is called(a) Active deposit ( )(b) Passive deposit ()(c) Derivative deposit ( )(d) All of the above ( )6. Derivative deposit in a commercial bank is also called(a) Active deposit ( )(b) Passive deposit ( )(c) Primary deposit ( )(d) None of the above ( )7. Bank rate is(a) The rate of interest charged by banks on their loans ( )
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