Inflation and Currency

                           

(1) A cause of inflation is :
[A] increase in money supply
[B] increase in money supply and fall in production
[C] fall of production
[D] decrease in money supply and fall in production
Answer: Option [B]

(2) Inflation brings most benefit to which one of the following ?
[A] Government pensioners
[B] Creditors
[C] Savings Bank Account holders
[D] Debtors
Answer: Option [D]

(3) Inflation is mostly harmful to which one of the following ?
[A] Debtors
[B] Creditors
[C] Business class
[D] Holder of real assets
Answer: Option [B]

(4) Which is correct with respect to inflation ?
[A] rise in budgets deficit
[B] rise in money supply
[C] rise in general price index
[D] rise in prices of consumer goods
Answer: Option [B]

(5) Increasing unemployment and inflation is a situation of :
[A] hyperinflation
[B] galloping inflation
[C] stagflation
[D] reflation
Answer: Option [C]

(6) Who among the following are not protected against inflation ?
[A] Salaried class
[B] Industrial workers
[C] Pensioners
[D] Agricultural farmers
Answer: Option [D]

(7) The period of high inflation, low economic growth and high unemployment is termed as :
[A] stagnation
[B] take-off stage in economy
[C] stagflation
[D] none of these
Answer: Option [C]

(8) Stagflation implies a case of :
[A] galloping inflation
[B] recession plus inflation
[C] adverse balance of trade
[D] rising wages and employment
Answer: Option [B]

(9) Deficit financing aims to put more money into the economy by creating additional paper currency to fill the gap between expenditure and revenue. The device aims at economic development but if it fails, it generates :
[A] inflation
[B] devaluation
[C] deflation
[D] demonetisation
Answer: Option [A]

(10) A steady increase in the general level of prices as a result the aggregate demand is increasing in unsustainable rate as compared to aggregate supply is termed as :
[A] demand-pull inflation
[B] cost-push inflation
[C] stagflation
[D] structural inflation
Answer: Option [A]

(11) Out of the various ways of the financing government’s investment expenditure, which one of the following is a method of inflation control ?
[A] Foreign aid
[B] Deficit financing
[C] Taxation
[D] Public borrowing
Answer: Option [C]

(12) ‘Devaluation’ means :
[A] reduction in the value of a currency vis-a-vis major internationally traded currencies
[B] permitting the currency to seek its worth in the international market
[C] fixing the value of the currency in conjunction with the movement in the value of a basket of pre-determined currencies
[D] fixing the value of currency in multilateral consultation with the IMF, the World Bank and major trading partners
Answer: Option [A]

(13) What do you mean by convertibility of the rupee ?
[A] being able to convert rupee into us dollars
[B] freely permitting the conversion of rupee to other major currencies and vice versa
[C] allowing the value of rupee to be fixed by market forces
[D] developing a international market for currencies in india
Answer: Option [B]

(14) Black money implies :
[A] counterfeit currency
[B] money earned from chit funds
[C] money earned through underhand deals
[D] income on which payment of tax is usually evaded
Answer: Option [D]

(15) In the one decade, which one among the following sectors has attracted the highest Foreign Direct Investment inflows into India ?
[A] Chemicals other than fertilizers
[B] Services sector
[C] Food processing
[D] Telecommunication
Answer: Option [D]

(16) When was decimal coinage introduced in India ?
[A] 15 August, 1947
[B] 26 January, 1952
[C] 1 April, 1957
[D] 31 December, 1963
Answer: Option [C]

(17) USD/JPY, USD/EURO and USD/CAD are the currency pairs in terms of foreign exchange trading. Amongst them which one of the following is referred as the base currency for quotes ?
[A] USD
[B] JPY
[C] Euro
[D] CAD
Answer: Option [A]

(18) Which of the following is/are treated as artificial currency ?
[A] ADR
[B] GDR
[C] SDR
[D] Both ADR and SDR
Answer: Option [C]

(19) In terms of economics, the small gap between the first recession and second recession is known as :
[A] Double Deflation
[B] Deflation
[C] Deep Recession
[D] Double Dip Recession
Answer: Option [C]

(20) Cheap Money implies :
[A] low rate of inerest
[B] low level of savings
[C] low level of income
[D] excess of bank money
Answer: Option [A]

(21) An essential attribute of inflation is:
[A] Increase in prices
[B] Less production
[C] Presence of black market
[D] Absence of black market
Answer: Option [A]

(22) Inflationary Gap is a defined by:
[A] Inflation coupled with recession
[B] Inflation that usually prevails in a developing country
[C] Gap between Galloping Inflation and Runaway Inflation
[D] Excess of Aggregate Demand over Aggregate Supply at the full employment level
Answer: Option [D]

(23) Cause/causes of inflation is/are:
[A] Fall in production
[B] Increase in money supply
[C] Increase in money supply without a corresponding increase in production
[D] decrease in money supply without a corresponding decrease in production
Answer: Option [C]

(24) The Inflation experienced in the country at present is:
[A] Cost-push inflation
[B] Unrealistic inflation
[C] Secondary inflation
[D] Demand Pull inflation
Answer: Option [A]

(25) Ten rupee notes bear the signature of:
[A] President
[B] Finance Minister
[C] Secretary, Ministry of Finance
[D] Governor, Reserve Bank of India
Answer: Option [D]

(26) For international payments, the Indian currency is linked to:
[A] British Sterling
[B] Gold Standard
[C] American Dollar
[D] Euro
Answer: Option [C]

(27) The States debt does not include:
[A] Agricultural loans
[B] Loans from State Bank of India
[C] Loans from the Central Government
[D] Treasury bills issued to international financial institutions
Answer: Option [D]

(28) How many languages are used on a ten rupee note ?
[A] 10
[B] 12
[C] 15
[D] 18
Answer: Option [C]

(29) The best means of saving during inflation is to keep:
[A] Equity
[B] Money
[C] Government Bonds
[D] Time deposits with Banks
Answer: Option [B]

(30) Why a high rate of inflation tends to worsen balance of payments ?
[A] Prices of imported goods rise
[B] Prices of imported goods fall and hence more is imported
[C] Prices of exported goods rise making exports less competitive
[D] Prices of exported goods fall and hence less amount is obtained in terms of foreign exchange
Answer: Option [C]


(31) A very rapid or out of control growth in prices in which money loses its value to the point where ever barter may be preferable is known as:
[A] Inflation
[B] Deflation
[C] Disinflation
[D] Hyper- inflation
Answer: Option [D]

(32) Which of the following can contain Inflation ?
[A] Surplus Budget
[B] Increase in taxation
[C] Reduction in public expenditure
[D] All the above
Answer: Option [D]

(33) The effect of inflation on tax revenue results in a situation known as:
[A] Reflation
[B] Stagflation
[C] Fiscaldrag
[D] None of the above
Answer: Option [C]

(34) Which of the following accounts for Cost-Push Inflation ?
[A] Increase in population
[B] Increase in non-plan expenditure
[C] Increase in money supply
[D] Increase in indirect taxation like higher VAT, excise duties etc
Answer: Option [D]

(35) Whose signature is found in one-rupee currency note ?
[A] Finance Secretary of India
[B] Finance Minister of India
[C] President of India
[D] Prime Minister of India
Answer: Option [A]

(36) Broad money in India is:
[A] M1
[B] M2
[C] M3
[D] M4
Answer: Option [C]

(37) Increasing prices related to:
[A] Generation of black money
[B] Adverse effect on speculation
[C] Promotion of inequalities
[D] Adverse effect on balance of payments
Answer: Option [B]

(38) Immediately prior to change in the measure of Food Inflation, which of the following indexes was being used for measuring it ?
[A] Wholesale Price Index
[B] Export price index
[C] Consumer Price Index
[D] Interest Rates offered by banks on deposits
Answer: Option [A]
(39) M1 includes:
[A] Demand deposit with bank
[B] Currency with public
[C] Other deposits with RBI
[D] All of the above
Answer: Option [D]

(40) Monetary policy is regulated by:
[A] Money leaders
[B] Private entrepreneurs
[C] Central Bank
[D] Microfinance organizations
Answer: Option [C]

(41) In which year the decimal system of currency introduced in India ?
[A] 1948
[B] 1950
[C] 1955
[D] 1957
Answer: Option [D]

(42) Which of the following is not a remedy of Inflation ?
[A] Lowering bank rate
[B] Reducing budgetary deficit
[C] Better capacity utilization
[D] An efficient public distribution system
Answer: Option [A]

(43) The Indian Rupee is fully convertible ?
I. In respect of Current Account of Balance of Payments
II. In respect of Capital Account of Balance of Payments
III. Into Gold
Which of these statements is/are correct ?

[A] I only
[B] III only
[C] I and II only
[D] None of the above
Answer: Option [A]

(44) Devaluation of currency by a country is meant to lead to:
I. Expansion of import trade
II. Promotion of import substitution
III. Expansion of export trade
[A] I only
[B] II and III only
[C] I and II only
[D] All of the above
Answer: Option [B]

(45) Hard Currency is defined as currency:
[A] Which is used in times of war
[B] Which can hardly be used for international transaction
[C] Traded in foreign exchange market for which demands is persistently relative to the supply
[D] None of these
Answer: Option [C]


46).When there is a change in demand leading to a shift of the Demand Curve to the right, at the same price as before, the quantity demanded will
[A] Decrease
[B] Increase
[C] Remain the same
[D] Contract
Answer: Option [B]

47).The income elasticity of demand being greater than one, the commodity must be
[A] A necessity
[B] A luxury
[C] An inferior good
[D] None of these
Answer: Option [B]

48).Which of the following can be used for checking inflation temporarily?
[A] None of these
[B] Decrease in taxes
[C] Decrease in money supply
[D] Increase in wages
Answer: Option [C]

49).Inflation occurs when aggregate supply is
[A] More than aggregate demand
[B] Less than aggregate demand
[C] Equal to aggregate demand
[D] None of these
Answer: Option [B]
50).When inflation is in the double or triple digits, we call that
[A] hyperinflation
[B] deflation
[C] galloping inflation
[D] low inflation
Answer: Option [C]

51).The process of curing inflation by reducing money supply is called
[A] Cost-push inflation
[B] Demand-pull inflation
[C] Disinflation
[D] Reflation
Answer: Option [C]

52).A currency having a falling exchange rate due to continuing balance of payments deficit is called a
[A] Soft currency
[B] Hard currency
[C] Scarce currency
[D] Surplus currency
Answer: Option [A]

53).The world Great Depression took place in
[A] 1936
[B] 1929
[C] 1928
[D] 1930
Answer: Option [B]

54).Who benefits the most during the inflationary period?
[A] Corporate servants
[B] Creditors
[C] Entrepreneurs
[D] Government servants
Answer: Option [C]

55).Pegging up of a currency means, fixing the value of a currency
[A] At a constant level
[B] At a lower level
[C] At a higher level
[D] Leaving it to market forces
Answer: Option [A]

56).A currency whose exchange rate is influenced by the government is a/an
[A] Unmanaged Currency
[B] Managed Currency
[C] Scarce Currency
[D] Surplus currency
Answer: Option [B]

57).Increasing unemployment and inflation is a situation of:
[A] hyperinflation
[B] galloping inflation
[C] stagflation
[D] reflation
Answer: Option [C]

58).Who among the following are not protected against inflation?
[A] Salaried class
[B] Industrial workers
[C] Pensioners
[D] Agricultural farmers
Answer: Option [D]

59).The period of high inflation, low economic growth and high unemployment is termed as:
[A] stagnation
[B] take-off stage in economy
[C] stagflation
[D] none of these
Answer: Option [C]

60).Deficit financing aims to put more money into the economy by creating additional paper currency to fill the gap between expenditure and revenue. The device aims at economic development but if it fails, it generates:
[A] inflation
[B] devaluation
[C] deflation
[D] demonetition
Answer: Option [A]

61).A steady increase in the general level of prices as a result the aggregate demand is increasing in unsustainable rate as compared to aggregate supply is termed as:
[A] demand-pull inflation
[B] cost-push inflation
[C] stagflation
[D] structural inflation
Answer: Option [A]

62).Out of the various ways of the financing government’s investment expenditure, which one of the following is a method of inflation control?:
[A] Foreign aid
[B] Deficit financing
[C] Taxation
[D] Public borrowing
Answer: Option [C]