MCQ Money and Financial System --- Money: Definition, Functions and Importance
MCQ Money and Financial System
Money: Definition, Functions and Importance
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1, Direct exchange of one commodity for another is termed AS:
(a) Measure of value
(b) Barter (✓)
(c) Price
(d) None of these
2, Meaning of Exchange is:
(a) Doing business
(b) Purchasing goods
(c) Transfer of wealth (✓)
(d) All these
3, Which of the following is a demerit of barter system?
(a) Want of double coincidence (✓)
(b) Absence of money circulation
(c) Absence of natural resources
(d) Scarcity of goods
4, The term money has been derived from the Latin Word:
(a) Moneta (✓)
(b) Peconja
(c) Monate
(d) Menoty
5, Theory of evolution of money was propounded by:
(a) Prof. Crowther (✓)
(b) Prof. Spalding
(c) Prof. Marshall
(d) None of these
6, Theory of spontaneous growth of money was propounded by:
(a) Prof. Marshall
(b) Prof. Spalding (✓)
(c) Prof. Crowther
(d) None of these
7, “Money is what money does”, this definition was given by:
(a) Hartley Withers (✓)
(b) Robbins
(c) Knapp
(d) Friedman
8, “Anything which is declared by the state as money becomes money”, this definition was given by:
(a) Thomas
(b) Hartley Withers
(e) Knapp (✓)
(d) Coulborn
9, “Money may be defined as the means of valuation and payment,” this definition was given by:
(a) Coulborn (✓)
(b) Knapp
(c) Thomas
(d) None of these
10, “Money is one thing that have general acceptability”, this definition was given by:
(a) Seligman (✓)
(c) Keynes
(b) Crowther
(d) Kent
11, “Anything that is generally acceptable as a means of exchange and as the same time as a measure and store of value”, this definition was given by:
(a) Seligman
(b) Crowther (✓)
(c) Keynes
(d) Kent
12, According to conventional approach, money includes:
(a) Currency
(b) Demand Deposit
(c) Currency + Demand Deposits (✓)
(d) None of above
13, According to Chicago Approach, money includes:
(a) Currency+Demand Deposits
(b) Currency+ Demand Deposits+Time Deposits (✓)
(c) Demand Deposits + Time Deposits
(d) None of above
14, Which of the following is a characteristic of money?
(a) General Acceptability
(b) Medium of Exchange
(c) Liquid Asset
(d) All these (✓)
15, Which of the following is not correct about money?
(a) Money is a veil (✓)
(b) Money is not a veil
(c) Money is a means and not an end
(d) Liquid Asset
16, Medium of exchange is the following function of money:
(a) Primary (✓)
(b) Secondary
(c) Contingent
(d) All these
17, Money has been considered as primary invention of man, this statement is given by:
(a) Seligman
(b) Knapp
(c) Coulborne
(d) Crowther (✓)
18, Which of the following is a function of money?
(a) Medium of exchange
(b) Store of value
(c) Transfer of value
(d) All these (✓)
19, Which of the following is the function of money, according to Hartley Withers?
(a) Medium of exchange
(b) Stantard of deferred payment
(c) Store of value
(d) All of the above (✓)
20, Something which is freely used and generally accepted as: a medium of exchange and as a unit of account is called:
(a) Money (✓)
(b) Capital
(c) Assets
(d) Wealth
21, Consider the following:
Scarcity
Homogeneity
Durability
Divisibility
Which of the above are the essential qualities of a good money material?
(a) 1 and 2
(b) 1, 2 and 3
(c) 2, 3 and 4 (✓)
(d) 1, 2, 3 and 4
22, Medium of exchange and measure of value, both are the constituents of:
(a) Primary functions of money (✓)
(b) Contingent functions of money
(c) Secondary functions of money
(d) None of above
23, Consider the following:
Store of value
Measure of value
Transfer of value
Standard of deferred payments
Which of the above are the secondary functions of money?
(a) 1, 2 and 3
(b) 1, 3 and 4 (✓)
(c) 2, 3 and 4
(d) All of these
24, Consider the following:
Basis of credit
Distributor of collective production
Helps in the maximization of utility
Guarantor of solvency
Which of the above are contingent functions of money?
(a) 1, 2 and 4
(b) 2, 3 and 4
(c) 1, 3 and 4
(d) 1, 2, 3 and 4 (✓)
25, Money performs its contingent functions normally in:
(a) Underdeveloped countries
(b) Developing countries
(e) Both (a) and (b)
(d) Developed countries (✓)
26, Some assets which are very much liquid though not as much as money itself is called:
(a) Near money (✓)
(b) Dear money
(c) Substitute money
(d) Fiat money
27, A Financial bill which does not arises in connection with genuine commercial transaction is called:
(a) Commercial bill
(b) Banker’s bill (✓)
(c) Treasury bill
(d) None of these
28, Promises by the government to pay a fixed sum of money at a prescribed date generally three months ahead, are called:
(a) Treasury bills (✓)
(b) Government bill
(c) Promissory bills
(d) Non-commercial bills
29, Exchange bills, treasury bills, bonds, debentures are the examples of:
(a) Fiat money
(b) Near money (✓)
(c) Liquid money
(d) None of these
30, Wealth that has physical existence and is required either for its own sake or for its contribution to production is called:
(a) Physical wealth
(b) Capital wealth
(c) Real wealth (✓)
(d) Capital assets
31, Which of the following would not be termed “Near Money”?
(a) Bills of
(b) ₹ 1000 notes (✓)
(c) Treasury bills
(d) Debentures
32, Choose the incorrect statement: Asset demand for money is that it:
(a) Is held as an asset
(b) Is held as transactions are unforeseen and unexpected
(c) Is convenient for holding and also certain in terms of value (✓)
(d) Becomes significant during war
33, With the use of currency:
(a) Velocity of money increases (✓)
(b) National Income increases
(c) Capacity increases
(d) Inflation occurs
34, Primary functions of money includes:
(a) Medium of Exchange
(b) Measure of value
(c) Store of value
(d) Both (a) and (b) (✓)
35, Which of the following is not secondary function of money?
(a) Standard of deferred payments
(b) Store of value
(c) Transfer of value
(d) Basis of credit creation (✓)
36, Which of the following is a contingent function of money?
(a) Distribution of National Income
(b) Basis of credit creation
(c) Guarantor of solvency
(d) All above (✓)
37, Who classified the functions of money into static and dynamic functions?
(a) Paul Einzing (✓)
(b) Knapp
(c) Crowther
(d) Marshall
38, Which of the following is static function of money?
(a) Medium of exchange
(b) Transfer of value
(c) Standrad for deferred payment
(d) All above (✓)
39, Which of the following is dynamic function of money?
(a) Full utilization of resources
(b) Facilitates deficit financing
(c) Economic development
(d) All above (✓)
40, Who among the following did not attach much significance to the role of money?
(a) Adam Smith
(b) J.S. Mill
(c) Pigoy
(d) All of these (✓)
41, The……… are of the opionion that money plays a significant role in increasing the level of income and employment.
(a) Adam Smith
(b) Pigou
(c) Keynes
(d) Friedman (✓)
42, “Money is such a path which is used for transporting entire output of the district to the market, but which in itself produces nothing”, this statement is given by:
(a) Adam Smith (✓)
(b) Mill
(c) Pigou
(d) None of these
43, “Money is a wrapper in which things come to you”, this statement is given by:
(a) Pigou (✓)
(b) Keynes
(c) Friedman
(d) Mill
44, “Modern economic life which is founded on specialization would not be possible without money”, who remarked this?
(a) Friedman
(b) Benham (✓)
(c) Mill
(d) Pigou
45, “Money is the Pivot around which the whole economic science clusters”, this statement is given by:
(a) Marshall (✓)
(b) Pigou
(c) Mill
(d) Prof. Dey
46, In which economic system, money plays a vital role?
(a) Capitalist Economy
(b) Socialism
(c) Mixed Economy
(d) All of these (✓)
47, Money plays a important role in:
(a) Economic fields
(b) Social fields
(c) Political fields
(d) All of these (✓)
48, “Lack of money is the root of all evils,” who said this?
(a) Bernard Shaw (✓)
(b) Robertson
(c) Pigou
(d) Mill
49, “Money is a good servent but bad master,” this statement is given by:
(a) Robertson (✓)
(b) Mill
(c) Pigou
(d) Marshall
50, Economic evil of money is:
(a) Instability of value
(b) Over capitalisation
(c) Unequal distribution of wealth
(d) All of the above (✓)
51, Which of the following is social evil of money?
(a) Problem of black money
(b) Unequal distribution of wealth
(c) Economic wastage
(d) Encourage Materialism (✓)
52, In which of the following economic system sovereignty of the consumer become possible?
(a) Capitalism (✓)
(b) Socialism
(c) Mixed economy
(d) None of these
53, Near money is….. than money:
(a) More liquid
(b) Less liquid (✓)
(c) Narrow term
(d) None of these
54, Quality of good money
(a) Acceptability
(b) Durability
(c) Portability
(d) All these (✓)
55, Currency includes:
(a) Metallic coins
(b) Notes
(c) Credit money
(d) Both (a) and (b) (✓)
56, The money whose intrinsic value is not equal is its face value, is termed as:
(a) Commodity Money
(b) Representative Money (✓)
(c) Actual Money
(d) None of these
57, Paper money is an example of:
(a) Commodity money
(b) Representative money (✓)
(c) Actual money
(d) None of these
58, Fiat money is also termed as:
(a) Convertible money
(b) Inconvertible money (✓)
(c) Commodity money
(d) None of these
59, Legal Tender Money includes:
(a) One-rupee coin
(b) Paper currency notes
(c) Cheque
(d) Both (a) and (b) (✓)
60, Optional money includes:
(a) Cheques
(b) Drafts
(e) Bills of Exchange
(d) All of these (✓)
61, The coins whose face value is more than intrinsic value termed as:
(a) Standard coins
(b) Token coins (✓)
(c) Subsidiary coins
(d) None of these
62, Gresham law is applicable to:
(a) Public expenditure
(b) Banks
(c) Finance
(d) Money (✓)
63, The qualities of a good money are:
(a) General acceptability
(b) Portability
(c) Cognizability
(d) All of these (✓)
64, As economy grows, the relative importance of credit money:
(a) Increases (✓)
(b) Decreases
(c) Remains constant
(d) None of these
65, Money which is a source of many blessings to mankind, becomes also, unless we control it, a source of perils and confusion.” Who has given this view point?
(a) Crowther
(b) Robertson (✓)
(c) Alfred Marshall
(d) None of these
66, Which is the most convenient medium of exchange?
(a) Currency (✓)
(b) Deposit money
(c) Credit card
(d) None of these
67, Concept of inside money was introduced by:
(a) Gurley R. Show (✓)
(b) R. Solow
(c) Stigler
(d) Sweezy
68, What is the correct sequence of following developments?
Barter system
Plastic money
Paper money
Gold standard
Credit money
(a) 1, 4, 3, 5, 2
(b) 1, 3, 5, 4, 2
(c) 1, 2, 3, 4, 5
(d) 5, 3, 4, 2, 1
69, Inconvertible paper money which circulates in the country, under extraordinary circumstances on the command of the State is called:
(a) Imposed money
(b) Fiat money (✓)
(c) Near Money
(d) Fiat currency
70, None-legal tender money like cheques, bank drafts, hundies, bills of exchange, etc. are called:
(a) Optional money (✓)
(b) Near money
(c) Near money
(d) Liquid-money
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