MCQs on Money, Money Supply, and Inflation

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MCQs on Money, Money Supply, and Inflation

1. What is the primary function of money?

a) To create employment
b) To measure temperature
c) To act as a medium of exchange
d) To increase inflation

a) Currency with the public
b) Gold reserves in temples
c) Demand deposits with banks
d) Time deposits

3. Which authority is responsible for regulating money supply in India?

a) Ministry of Finance
b) Reserve Bank of India (RBI)
c) SEBI
d) NITI Aayog

4. Inflation refers to:

a) Increase in employment
b) Decrease in prices
c) General rise in prices over time
d) Decrease in money supply

5. Demand-pull inflation occurs when:

a) Demand exceeds supply
b) Supply exceeds demand
c) Prices fall rapidly
d) Currency is withdrawn

6. Which of the following can cause cost-push inflation?

a) Increase in productivity
b) Decrease in input costs
c) Increase in wages and raw materials
d) Technological advancements

7. Which index is commonly used to measure inflation in India?

a) Consumer Price Index (CPI)
b) Sensex
c) Net Domestic Product
d) Balance of Payments

8. Which of the following is a monetary measure to control inflation?

a) Increasing repo rate
b) Reducing taxes
c) Increasing subsidies
d) Price control by government

9. Which of the following is a fiscal measure to control inflation?

a) Changing CRR
b) Reducing government expenditure
c) Buying government bonds
d) Open market operations

10. Hyperinflation is characterized by:

a) Stable prices
b) Slow price increase
c) Extremely rapid and uncontrollable price rise
d) Increase in employment

11. Which of the following is considered narrow money (M1) in India?

a) Currency with the public + demand deposits + other deposits with RBI
b) Currency + time deposits
c) Currency with commercial banks
d) Gold and foreign exchange

12. Broad money (M3) includes:

a) Only cash with RBI
b) M1 + time deposits of commercial banks
c) M1 + foreign reserves
d) Cash in ATMs only

13. What does "deflation" mean?

a) General decline in prices
b) Rise in employment
c) Increase in GDP
d) Decrease in money demand

14. What is stagflation?

a) Inflation with high employment
b) Decline in GDP with falling prices
c) Inflation with stagnant economic growth and high unemployment
d) Rapid increase in GDP

15. Which of these can increase the money supply in an economy?

a) Increasing taxes
b) Lowering reserve requirements
c) Reducing public expenditure
d) Raising interest rates

16. Which type of inflation is caused by excessive growth of money supply?

a) Monetary inflation
b) Cost-push inflation
c) Demand-shift inflation
d) Hyperinflation

17. An increase in the repo rate by the RBI will:

a) Decrease money supply and control inflation
b) Increase inflation
c) Increase government spending
d) Have no effect

18. Which of the following is a qualitative tool of monetary policy?

a) CRR
b) SLR
c) Moral Suasion
d) Bank Rate

19. Inflation adversely affects:

a) Debtors
b) Fixed income groups
c) Businessmen
d) Borrowers

20. Which government initiative aims to curb inflation by boosting supply?

a) Make in India
b) Skill India
c) Price Stabilization Fund
d) Jan Dhan Yojana

Chapter NumberPAPER I – INDIAN ECONOMY & INDIAN FINANCIAL SYSTEM
MODULE B: ECONOMIC CONCEPTS RELATED TO BANKING
1. MODULE B: ECONOMIC CONCEPTS RELATED TO BANKING
Fundamentals of Economics, Microeconomics, Macroeconomics, Types of Economies, and Supply & Demand
2. Money Supply and Inflation
3. Theories of Interest - Explained with Examples
4. Business Cycles and Economic Policies - Explained with Examples
5. National Income, GDP and Union Budget - Explained with Examples
QandAs/MCQs 8 MCQs: Economics Fundamentals, Micro and Macro Concepts
QandAs/MCQs 9MCQs on Money, Money Supply, and Inflation
QandAs/MCQs 10 MCQs on Theories of Interest - IS-LM, Classical & Keynesian Theory
QandAs/MCQs 11 MCQs: Business Cycle, Policies, National Income
QandAs/MCQs 12MCQs: Monetary & Fiscal Policy | National Income | Union Budget
MODULE C: INDIAN FINANCIAL ARCHITECTURE
MODULE D: FINANCIAL PRODUCTS AND SERVICES
MODULE A: INDIAN ECONOMIC ARCHITECTURE

Tags: Economics, Money Supply, Inflation, Economic Reforms, MCQs, Quiz, Banking Exams, UPSC, Banking Economics, Indian Economy

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