1.

“Money is what money does,” this definition was given by;

(a) Emmanuel Kant
(b) Samsung
(c) Walker
(d) Herman Daly.
Answer: (c) Walker
Explanation - According to Walker, 'Money is what money does'. This is considered to be a vague definition
of money. It performs various functions and it does not specify any significant function of money
2. _______ defines money as “anything which is widely accepted in payments for goods or in the discharge of
other kinds of business obligations.”
(a) D.H. Cole
(b) Robertson
(c) Kant
(d) Walker
Answer: (b) Robertson
Explanation - Robertson, “Anything which is widely accepted in payments for goods, or in the discharge of
other kinds of business obligations.”
3. “Money is anything which is habitually and widely used as a means of payment and is generally accepted
in the settlement of debts.” This definition was given by;
(a) GDH Cole
(b) Roberston
(c) Peterson
(d) Walker
Answer: (a) GDH Cole
4. According to _______ “money is anything which is commonly used and generally accepted as a medium of
exchange or as a standard of value.”
(a) GDH Cole
(b) Robertson
(c) Peterson
(d) Kent
Answer: (d) Kent
5. _____ has defined money as “anything that possesses general acceptability.”
(a) Robertson
(b) Kent
(c) Seligman
(d) Daily
Answer: (c) Seligman
Explanation - According to Seligman , “ Money is one thing that possesses general acceptability
6. ________has given the most suitable definition of money
(a) Kent
(b) Crowther
(c) Peterson
(d) Daily
Answer: (b) Crowther
Explanation - Crowther defines money as 'anything that is generally acceptable as a means of exchange and
at the same time acts as measure and store of value.
7. According to Crowther, money is;

1
 (a) anything which is commonly used and generally accepted as a medium of exchange or as a standard
of value.”
(b) Anything which is generally accepted as a means of exchange and at the same time acts as a
measure and store of value.
(c) anything which is habitually and widely used as a means of payment and is generally accepted in the
settlement of debts.”
(d) anything which is widely accepted in payments for goods or in the discharge of other kinds of
business obligations.”
Answer: (b)
Explanation - Crowther defines money as 'anything that is generally acceptable as a means of exchange and
at the same time acts as measure and store of value.
8. Which of the above are the functions of money;
(a) Medium of exchange
(b) Store of value
(c) Measure of value
(d) All of the above
Answer: (d) All of the above
Explanation - To summarize, money has taken many forms through the ages, but money consistently has
three functions: store of value, unit of account, and medium of exchange.
9. The basic character of money is acceptability.
(a) True
(b) False
(c) Neither (a) or (b)
(d) None of the above Ans : (a) True
10. Money possesses the _______.
(a) Measuring power
(b) Medium powers
(c) Purchasing power
(d) None of the above
Answer: (c) Purchasing power
Explanation - Purchasing power refers to the number of commodities that can be purchased with a certain
amount of money.
11. The functions of money are classified as;
(a) Primary functions
(b) Secondary functions
(c) Contingent functions
(d) All of the above
Answer: (d) All of the above
Explanation - To summarize, money has taken many forms through the ages, but money consistently has
three functions: store of value, unit of account, and medium of exchange.
12. Which of the following are the primary functions of money?
(a) Medium of exchange
(b) Measure of value
(c) Both (a)&(b)
(d) None of the above
Answer: (c) Both (a)&(b)
Explanation - money consistently has three functions: store of value, unit of account, and medium of
exchange.

2
13. Money acts as a ;
(a) Measure of value
(b) Unit of account
(c) Both (a)&(b)
(d) None of the above
Answer: (c) Both (a)&(b)
Explanation - One of the most important characteristics of money is that it serves as a unit of account. A unit
of account is something that can be used to value goods and services, record debts, and make calculations.
In other words, it's a measurement for value.
14. Which of the following is a secondary function of money?
(a) Standard of deferred payment
(b) Store of value
(c) Unit of account
(d) Both (a)&(b)
Answer: (d) Both (a)&(b)
Explanation - The secondary function of money i.e. It is the standard of deferred payments, the transfer, and
store of value. 3. Contingent function i.e. The distribution of national income, maximum profit to the
producers, and maximum satisfaction to the consumers, basis of credit and liquidity
15. Which of the following are contingent functions of money?
(a) Maximization of utility
(b) Employment of factor inputs
(c) Distribution of national income
(d) All of the above
Answer: (d) All of the above
Explanation - The functions performed by money in assisting various economic agents such as consumers,
producers, etc., in making economic decisions are called contingent functions of money.
16. Supply of money refers to the stock of money held by the public at a point of time.
(a) True
(b) False
(c) None of these
(d) All of the above Answer: (a) True
17. Public consists of;
(a) Economic units
(b) Business firms
(c) Institutions operating
(d) All of the above
Answer: (d) All of the above
18. Money supply refers to money in motion.
(a) True
(b) False
Ans- True
19. Money supply is a ______ concept.
(a) Flow
(b) Stock
(c) Constant
(d) None of the above

3
 Answer: (b) Stock
Explanation - Money supply is a stock concept similar to money demand. the total stock of money in
circulation among the public at particular point of time is called money supply.
20. ________ refers to how easily an asset can be converted into cash
(a) Money supply
(b) Flow of money
(c) Liquidity
(d) Solidity
Answer: (c) Liquidity
Explanation - Liquidity ratios are a measure of the ability of a company to pay off its short-term liabilities.
Liquidity ratios determine how quickly a company can convert the assets and use them for meeting the dues
that arise.
21. In India, RBI uses_____ measures of the money supply.
(a) 2
(b) 4
(c) 1
(d) 3
Answer: (b) 4
Explanation - Money supply, like money demand, is a stock variable. The total stock of money in circulation
among the public at a particular point in time is called money supply. RBI publishes figures for four
alternative measures of money supply, viz. M1, M2, M3, and M4
22. M1 consists of
(a) Currency notes and coins with the public
(b) Demand deposits of the people with commercial banks
(c) Other deposits with RBI
(d) All of the above
Answer: (d) All of the above
Explanation - M1 is constructed by summing currency, demand deposits, and other liquid deposits, each
seasonally adjusted separately.
23. M2 consists of
(a) M1
(b) The post office’s saving deposit
(c) Both (a)&(b)
(d) None of the above
Answer: (c) Both (a)&(b)
Explanation - M2 is a measure of the money supply that includes cash, checking deposits, and other types of
deposits that are readily convertible to cash such as CDs
24. M3 consists of
(a) M2
(b) Time deposits with a commercial banks
(c) M1
(d) Both (a)&(b)
Answer: (d) Both (a)&(b)
Explanation - Broad money (M3) includes currency, deposits with an agreed maturity of up to two years,
deposits redeemable at notice of up to three months and repurchase agreements, money market fund
shares/units and debt securities up to two years
25. M4 consists of
(a) M3

4
 (b) Total deposit with the post office
(c) National saving certificates are excluded
(d) All of the above
Answer: (d) All of the above
Explanation - M4 are known as broad money. These gradations are in decreasing order of liquidity. M1 is
most liquid and easiest for transactions whereas M4 is least liquid of all.
26. Money supply increases when inflation rises in the economy _____
(a) No change
(b) Decrease
(c) Increase
(d) None of these
Answer: (c) Increase
Explanation - In the long run, inflation raises your living costs. Inflation can have a negative impact on the
economy if the rate is high enough. The rise in pricing may indicate that the economy is expanding at a rapid
pace. To avoid rising prices in the future, people buy more than they need. demand for products and services
is fueled by this.
27. _____ tried to compare inflation to robbers.
(a) Professor Brahmand and Wakeel
(b) Professor Key
(c) Amartya Sen
(d) Professor Jagdish Bhagwati
Answer: (a) Professor Brahmand and Wakeel
Explanation - It was like Professor Brahmand and Wakeel were comparing inflation to thieves. According to
them, both of these things take away something from the victims of inflation.
28. Which one of the following principles is the exact reverse of inflation?
(a) Recession
(b) Stagflation
(c) Deflation
(d) None of the above
Answer: (c) Deflation
Explanation - Deflation is when the prices of goods and services go down, which is called deflation. The rate
of inflation is called deflation when it drops below 0%.
29. Whenever the market prices of services and goods are going to fall continuously, this phenomenon is
known as _________.
(a) Inflation
(b) Stagflation
(c) Deflation
(d) None of the above
Answer: (c) Deflation
Explanation - When prices keep going down, this is called deflation.
30. When too many funds are hunting down too few goods, the probable result of inflation is recognised as
__________.
(a) Deflation
(b) Cost-push inflation
(c) Stagflation
(d) Demand-pull inflation

5
 Answer: (d) Demand-pull inflation
Explanation - As demand rises, prices go up. This is called demand-pull inflation. Economists call this just so
much money chasing too many products.
31. Once the reserve fund ratio (CRR) is continued to increase by the RBI, this will: (a)
Add more money to the economy.
(b) There will be no change in the amount of money in the economy.
(c) Decrease the supply of money in the economy
(d) At first, it influences the availability, but later on, it will automatically decrease.
Ans: (c) Decrease the supply of money in the economy
Explanation - There are fewer funds available to banks when the CRR is raised by the RBI. This is because the
banks have to keep more of their cash in hand with the RBI.
32. Once inflation is an outcome of a rise in the value of production factors, the outcome is ________.
(a) Cost-push inflation
(b) Stagflation
(c) Demand-pull inflation
(d) Devaluation
Answer: (a) Cost-push inflation
Explanation - It’s called “cost push inflation” and it’s when the prices of things like labour, raw materials, and
so on go up. The price of these goods goes up due to a shortage of supply.
33. The mix of inflation and stagnation is called_____.
(a) Demand-pull inflation
(b) Cost-push inflation
(c) Devaluation
(d) Stagflation
Answer: (d) Stagflation
Explanation - Stagflation refers to a market that is experiencing both a rise in inflation and a slowdown in
economic output at the same time.
34. Once the central government cuts the value of a currency in terms of the international exchange rate;
this phenomenon is known ______.
(a) Devaluation
(b) Depreciation (c) Stagflation
(d) Appreciation
Answer: (a) Devaluation
Explanation - Yet another reason a country might lower the value of its currency is to make up for a trade
deficit.
35. Inside the sense of controlling inflation, what would one make once they say forced sterilization of
foreign inflow?
(a) Going to comply with the rules for importing and exporting things
(b) Filtering out the money that isn’t supposed to be there in a business
(c) Withdrawing an equivalent local currency to maintain the desired rate of exchange (d) All of these
Answer: (c) Withdrawing an equivalent local currency to maintain the desired rate of exchange
Explanation - Sterilization is a type of financial action during which a central bank tries to keep the money
supply from being affected by changes in the amount of money coming in and going out.
36. The Reserve Bank of India (RBI) could indeed hold the estimate of _________ To keep inflation in the
country under control.
(a) Creating a tax system that is more progressive
(b) Controlling the public’s spending
(c) Improving the profits of the government

6
 (d) Rationing of credit
Answer: (d) Rationing of credit
Explanation - The Reserve Bank of India has the power to control inflation through monetary policies, which
it does by raising bank rates, repo rates, cash reserve ratios, buying dollars, Rationing credit, regulating the
money supply, and making credit easier to get.
37. The acquiring power of money differs ______. (a)
Directly, the number of jobs grows.
(b) With the interest rate,
(c) With the price level,
(d) Inversely with the price level
Answer: (d) Inversely with the price level
Explanation - It is the value of services and goods that can be bought with one monetary unit. Because prices
keep going up, the value of money decreases over time.
38. The item that has the most weight in the Wholesale Cost Index is _______.
(a) Fuel and power
(b) Manufactured products
(c) Power
(d) Food items
Answer: (b) Manufactured products
Explanation - Manufactured Products make up 65% of the weight of the basket used in the Wholesale Price
Index. Primary Articles like food, for example, make up 20% of the weight, and Fuel and Power make up 1%
of the weight (14.9 percent).
39. The Consumer Prices help in measuring the extent to which _______.
(a) Prices for goods and services have gone up more than wages in the
(b) Distribution of income between two different sets of income recipients during different periods
(c) Income that is given to two different groups of people at the same time.
(d) All of the above
Answer: (b) Distribution of income between two different sets of income recipients during different
periods
Explanation - Consumer Price Index shows how prices have changed over time for a basket of goods and
services that people buy. It is the most common way to figure out how much inflation is going on in a given
area.
40. Stagflation called:
(a) Recession with stagnation
(b) Inflation & increasing output
(c) Inflation galloping like stage
(d) Inflation with stagnation
Answer: (d) Inflation with stagnation
Explanation - Stagflation is when the economy doesn’t grow very quickly, and there are a lot of people out of
work. At the same time, prices go up (i.e., inflation). Stagflation is when the money supply grows while the
supply is limited.
41. Which one of the following groups will not be negatively affected by the rise in prices?
(a) The debtor class
(b) The consumer class
(c) Pensioner class
(d) Business class
Answer: (d) Business class
Explanation - The business class will be richer because they will get the goods at a higher price.

7
42. Which one of the following ideas is just totally opposite to deflation?
(a) Disinflation
(b) Inflation
(c) Stagflation (d) Recession
Answer: (b) Inflation
Explanation - It means that the price of goods is going up, and it means that the price of goods is going
down. Deflation is when the prices of goods and services go down, which is called deflation.
43. Which one of the following observers is adopted to deduct inflation?
(a) Reduction in Repo rate
(b) Reduction in bank rate
(c) Increase in government expenditure
(d) Cuts in government spending
Answer: (d) Cuts in government spending
Explanation - Government spending is cut back, which lowers the amount of money in the economy, which
lowers inflation even more.
44. Stagflation assumes a situation of:
(a) adverse balance of trade
(b) recession plus inflation
(c) rising wages and employment
(d) galloping inflation
Answer: (b) recession plus inflation
Explanation - Stagflation is when the inflation rate is very high, the economic growth rate is very slow, and
unemployment is very high.
45. Which of the following products has heavy capacity in the wholesale cost index in India?
(a) Manufactured product
(b) Fuel and power
(c) Primary article
(d) Food items
Answer: (a) Manufactured product
Explanation - Manufactured Products make up 65% of the weight of the basket used in the Wholesale Price
Index. Primary Articles like food, for example, make up 20% of the weight, and Fuel and Power make up 1%
of the weight.
46. _______ is the Banker’s Bank in India :
(a) SBI
(b) PNB
(c) RBI
(d) OBC
Answer: (c) RBI
Explanation - In India, Reserve Bank of India is called as bankers bank. RBI acts as a bank for all the
commercial banks in India.
47. Which of the following is not a qualitative credit control measure of the RBI ?
(a) Capital Rationing
(b) Moral Suasion
(c) SLR
(d) Margin requirement
Answer: (c) SLR
Explanation - Statutory Liquidity Ratio Rate is a percentage of deposits that banks are required to maintain in
the form of liquid assets such as cash, gold, and government securities.

8
48. RBI was Nationalized in :
(a) 1959
(b) 1947
(c) 1945
(d) 1949
Answer: (d) 1949
Explanation - On the 1st of January, 1949, the RBI was nationalised by the Government of India. It then

9
 started functioning as the central bank of India.
49. When the bank rate increases the demand for loans______:
(a) Reduces
(b) Increases marginally
(c) Remains unchanged
(d) Increases drastically
Answer: (a) Reduces
Explanation - When the bank rate is increased, it becomes more expensive for banks to borrow from the
central bank, which in turn increases the cost of borrowing for customers.
50. Which of the following is not a selective credit control method :
(a) Rationing of credit
(b) Direct Action
(c) Changes in margin requirements
(d) Reserve Requirement
Answer: (d) Reserve Requirement
Explanation - Reserve requirements are a tool used by the central bank to increase or decrease the money
supply in the economy and influence interest rates.
51. The Reserve Bank of India issues all currency notes except:
(a) 500 Rupee note
(b) 100 Rupee note
(c) 10 Rupee note
(d) 1 Rupee note
Answer: (d) 1 rupee note
Explanation - The Indian 1-rupee note (₹1) is the smallest Indian banknote in circulation and the only one
being issued by the Government of India, as all other banknotes in circulation are issued by the Reserve Bank
of India.
52. Buying and selling of securities or bills in open market is called:
(a) Cash Reserve Ratio
(b) Open Market operation
(c) Bank rate policy
(d) None of these
Answer: (b) Open Market operation
Explanation - Open market operation (OMO) is a term that refers to the purchase and sale of securities in
the open market by the Federal Reserve (Fed).
53. Which of the following methods cannot be used as an instrument of quantitative control of credit by the
central Bank?
(a) Bank Rate policy
(b) Open Market operations
(c) Taxation
(d) Variations in reserve ratio
Answer: (c) Taxation
Explanation - the Margin requirement of loan is not a quantitative instrument for credit control by the
Central Bank. Bank Rate- The RBI can influence money supply by changing the rate at which it gives loans to
the commercial banks.

(a)
(b)
(c)
(d)

10
54. CRR according to October 2007, was:
7.5%
25%
30%
2%
Answer: (A) 7.5%
Explanation - Cash Reserve Ratio or CRR is a part of the RBI's monetary policy, which helps eliminate liquidity
risk and regulate money supply in the economy.
55. Which of the following is the monetary authority of a country?
(a) The government of the country
(b) The Banking system of the country
(c) The Central Bank of the country
(d) All of these
Answer: (c) The Central Bank of the country
Explanation - In finance and economics, a monetary authority is the entity that manages a country's
currency and money supply, often with the objective of controlling inflation, interest rates, real GDP or
unemployment rate.
56. The CRR is determined in India by:
(a) Ministry of finance
(b) State Bank of India
(c) Reserve Bank of India
(d) Parliament
Answer: (c) Reserve Bank of India
Explanation - The sum is determined by the Reserve Bank of India and is kept with them for financial
security. The bank cannot utilize this money for lending or investing, and it receives no interest from the RBI.
57. An increase in money supply _______. in a nations. Economy will decrease the following.
(a) Open market purchase by the nations Central Bank
(b) A deserve in the bank rate
(c) A decrease in the reserve ratio
(d) A decrease in the margin requirement.
Answer: (a) Open market purchase by the nations Central Bank
Explanation - An increase in the supply of money works both through lowering interest rates, which spurs
investment, and through putting more money in the hands of consumers, making them feel wealthier, and
thus stimulating spending.
58. Identify the selective instruments used by RBI for Controlling Credit.
(a) Margin Requirement
(b) Issue of directives
(c) Regulation of consumer credit
(d) All of the above
Answer: (d) All of the above
Explanation - The different instruments of credit control used by the Reserve Bank of India are Statutory
Liquidity Ratio (SLR), Cash Reserve Ratio (CRR), the Bank Rate Policy, Selective Credit Control (SCC), Open
Market Operations (OMOs).
59. Which system of note issue prevails in India at present?

(a)
(b)
(c)
(d)

11
 (a) Minimum Reserve System
(b) Proportionate system
(c) Fixed fiduciancy system,
(d) None of the above
Answer (a) Minimum Reserve System
60. Bank Rate is also known as ________.
Discount Rate
REPO Rate
Reserve Repo Rate
Lending Rate
Answer: (a) Discount Rate
Explanation - discount rate, also called rediscount rate, or bank rate, interest rate charged by a central bank
for loans of reserve funds to commercial banks and other financial intermediaries.
61. Which of the following is a tool of monetary policy stabilize the economy during an inflationary period?
(a) Selling Government Securities
(b) Lowering banks reserve requirements (c) Lowering bank discount rate
(d) None of the above.
Answer: (a) Selling Government Securities
Explanation - The 6 tools of monetary policy are reverse Repo Rate, Reverse Repo Rate, Open Market
Operations, Bank Rate policy (discount rate), cash reserve ratio (CRR), Statutory Liquidity Ratio (SLR)
62. Central Bank of a country does not deal with______.
(a) State Government
(b) Public
(c) Central Government
(d) Commercial Banks
Answer: (b) Public
Explanation - Accepting deposits of general public is the function of commercial banks, as central bank does
not deal with general public and only deals with commercial bank mainly for its reserve requirement.
63. ._______ is the rate at which the Central Bank discounts the bill of Commercial Banks.
(a) Bank rate
(b) Interest rate
(c) Growth rate
(d) None of the above.
Answer: (a) Bank rate
Explanation - Bank rate is a rate at which the Reserve Bank of India (RBI) provides the loan to commercial
banks without keeping any security.
64. _______ control affect indiscriminately all sectors of the economy.
(a) Selective control
(b) Quantitative
(c) Margin Requirements (d) None of the above.
Answer: (b) Quantitative
Explanation - Quantitative Instruments of Credit Control: These methods or instruments are used to regulate
the total volume of credit in the economy.
65. Which one of the following is not an objective of RBI?

(a)
(b)
(c)
(d)

12
 (a) Economic Stability
(b) Issue of currency
(c) Advancing loans to Public
(d) Maintenance of Foreign Exchange Reserves
Answer: (c) Advancing loans to Public
Explanation - RBI Act, 1934 spells out the objectives of the RBI as: (a) To regulate the issue of bank notes. (b)
To keep reserves with a view to securing monetary stability in India. (c) To operate currency and credit
system of the country to its advantage.
66. When was the first bank established in India?
1865
1770
1806
1921

(a)
(b)
(c)
(d)

13
 Answer: (b) 1770
67. Which of the following banks is the oldest public sector bank in India?
(a) Bank of India
(b) State Bank of India
(c) Punjab National Bank
(d) Union Bank of India
Answer: (b) State Bank of India
Explanation - State Bank of India (SBI) is the oldest public sector bank in India, having been founded in 1955.
It was previously known as the Imperial Bank of India, which was established in 1921.
68. Which of the following is not a scheduled commercial bank in India?
(a) HDFC Bank
(b) Yes Bank
(c) ICICI Bank
(d) LIC Housing Finance Limited
Answer: (d) LIC Housing Finance Limited
Explanation - LIC Housing Finance Limited is not a scheduled commercial bank in India. It is a subsidiary of
Life Insurance Corporation of India and primarily provides home loans.
69. Which of the following banks was nationalized in the second phase of bank nationalization in India?
(a) Canara Bank
(b) Central Bank of India
(c) Bank of Baroda
(d) Punjab and Sind Bank
Answer: (c) Bank of Baroda
Explanation - Bank of Baroda was nationalized in the second phase of bank nationalization in India in 1980.
The first phase of nationalization occurred in 1969, when 14 major banks were nationalized.
70. Which of the following is not a type of banking service in India?
(a) Retail banking
(b) Corporate banking
(c) Agriculture banking
(d) Luxury banking
Answer : (d) Luxury Banking
71. What is the maximum amount insured by the Deposit Insurance and Credit Guarantee Corporation
(DICGC) in case of a bank failure?
(a) Rs. 1 lakh
(b) Rs. 2 lakh
(c) Rs. 3 lakh
(d) Rs. 5 lakh
Answer : (d) Rs. 5 Lakh
72. Which of the following banks is not a payment bank in India?
(a) Airtel Payments Bank
(b) India Post Payments Bank
(c) Paytm Payments Bank
(d) IDFC First Bank
Answer: (d) IDFC First Bank
Explanation - IDFC First Bank is not a payment bank in India. A payment bank is a type of bank that can
accept deposits up to a certain limit, provide payment and remittance services, and issue prepaid payment
instruments.
73. Which of the following is a primary function of the Reserve Bank of India (RBI)?

14
 (a) Providing loans to the general public
(b) Regulating the credit system of the country
(c) Providing insurance to depositors
(d) Managing the tax collection system
Answer: (b). Regulating the credit system of the country
Explanation - Regulating the credit system of the country is a primary function of the Reserve Bank of India
(RBI). The RBI is the central bank of India and is responsible for formulating and implementing monetary
policy.
74. Which of the following is a recent initiative by the Reserve Bank of India (RBI) to promote financial
inclusion in India?
(a) PMJDY
(b) Swachh Bharat Abhiyan
(c) Digital India
(d) Make in India
Answer: (a). PMJDY
Explanation - PMJDY (Pradhan Mantri Jan Dhan Yojana) is a recent initiative by the RBI to promote financial
inclusion in India. Under this scheme, bank accounts are opened for every household in the country.
75. Which of the following is a major challenge the banking sector in India?
(a) Low penetration of banking services in rural areas
(b) Lack of competition among banks
(c) Excessive regulation by the government
(d) Over-reliance on foreign capital
Answer: (a) Low penetration of banking services in rural areas
Explanation - Low penetration of banking services in rural areas is a major challenge facing the banking
sector in India. Despite the government’s efforts to promote financial inclusion, a large section of the rural
population still lacks access to basic banking services.
76. Which committee recommended the establishment of Regional Rural Banks (RRBs) in India?
(a) Narasimham Committee
(b) Rangarajan Committee
(c) Gadgil Committee
(d) Narsimha Rao Committee
Answer: (c) Gadgil Committee
Explanation - The Gadgil Committee, appointed in 1969, recommended the establishment of Regional Rural
Banks (RRBs) in India to provide banking services in rural areas.
77. Which of the following is a recent technology-based initiative by the Reserve Bank of India (RBI) to
improve the efficiency of the payment system?
(a) National Electronic Funds Transfer (NEFT)
(b) Real Time Gross Settlement (RTGS)
(c) Unified Payments Interface (UPI)
(d) Immediate Payment Service (IMPS)
Answer: (c) Unified Payments Interface (UPI)
Explanation - Unified Payments Interface (UPI) is a recent technology-based initiative by the RBI to improve
the efficiency of the payment system in India. It enables users to transfer money between bank accounts
instantly using a mobile phone.
78. Which of the following is the first Indian bank to introduce credit cards?
(a) State Bank of India
(b) ICICI Bank
(c) Axis Bank

15
 (d) HDFC Bank
Answer: (a) State Bank of India
Explanation - State Bank of India (SBI) is the first Indian bank to introduce credit cards, with the launch of its
SBI Gold Card in 1981.
79. Which of the following banks is not a private sector bank in India?
(a) HDFC Bank
(b) Axis Bank
(c) ICICI Bank
(d) State Bank of India
Answer: (d) State Bank of India
Explanation - State Bank of India (SBI) is not a private sector bank in India. It is a public sector bank, owned
by the government.
80. Which of the following banks is not a foreign bank operating in India?
(a) Citibank
(b) Standard Chartered Bank
(c) DBS Bank
(d) HDFC Bank
Answer: d. HDFC Bank
Explanation: HDFC Bank is not a foreign bank operating in India. It is an Indian private sector bank.
81. Which of the following is a specialized bank in India?
(a) State Bank of India
(b) Punjab National Bank
(c) National Bank for Agriculture and Rural Development (NABARD)
(d) Oriental Bank of Commerce
Answer: (c) National Bank for Agriculture and Rural Development (NABARD)
Explanation -National Bank for Agriculture and Rural Development (NABARD) is a specialized bank in India,
primarily focused on providing finance and other support services to the agriculture sector and rural
development.
82. Which of the following is the first bank to introduce internet banking in India?
(a) ICICI Bank
(b) HDFC Bank
(c) Axis Bank
(d) State Bank of India
Answer: (a) ICICI Bank
Explanation: ICICI Bank is the first bank to introduce internet banking in India, with the launch of its Infinity
internet banking platform in 1998.
83. Which of the following is the first bank to introduce mobile banking in India?
(a) HDFC Bank
(b) ICICI Bank
(c) Axis Bank
(d) State Bank of India
Answer: (d) State Bank of India
Explanation: State Bank of India (SBI) is the first bank to introduce mobile banking in India, with the launch of
its State Bank Freedom mobile banking platform in 2008.
84. Which of the following is a recent initiative by the Reserve Bank of India (RBI) to promote digital payments
in India?
(a) Jan Dhan Yojana
(b) MUDRA Yojana

16
 (c) BHIM-UPI
(d) PMKVY
Answer : (c) BHIM-UPI
Explanation - BHIM-UPI (Bharat Interface for Money– Unified Payments Interface) is a recent initiative by
the RBI to promote digital payments in India.
85. Which of the following is not a major source of funds for banks in India?
(a) Deposits from customers
(b) Borrowings from other banks
(c) Government grants
(d) Issuance of bonds and debentures
Answer: (c) Government grants
Explanation - Government grants are not a major source of funds for banks in India. Banks primarily raise
funds through deposits from customers, borrowings from other banks, and issuance of bonds and
debentures.
86. Which of the following is the regulatory body for non-banking financial companies (NBFCs) in India?
(a) Reserve Bank of India (RBI)
(b) Securities and Exchange Board of India (SEBI)
(c) Ministry of Finance
(d) National Company Law Tribunal (NCLT)
Answer: (a) Reserve Bank of India (RBI)
Explanation - The Reserve Bank of India (RBI) is the regulatory body for non-banking financial companies
(NBFCs) in India. It regulates and supervises the activities of NBFCs to ensure financial stability and protect
the interests of depositors.
87. Which of the following is a type of bank account that is meant for individuals who do not have a
permanent address? (a) Current account
(b) Savings account
(c) NRI Account
(d) Basic Savings Bank Deposit Account (BSBDA) Answer : (c) NRI Account
88. Which of the following is a program launched by the government of India to provide financial
services to the unbanked population in India?
(a) Jan Dhan Yojana
(b) MUDRA Yojana
(c) Pradhan Mantri Awas Yojana
(d) Swachh Bharat Abhiyan
Answer: (a) Jan Dhan Yojana
Explanation - Jan Dhan Yojana is a program launched by the government of India to provide financial
services to the unbanked population in India. The program aims to provide a bank account.
89. The amount of money in India is controlled by?
(a) Planning Commission
(b) Commercial Bank
(c) Government of India
(d) RBI
Answers : (d) RBI
90. Which of the following is a type of loan that is granted to farmers for agricultural purposes?
(a) Personal loan (b)
Business loan
(c) Housing loan
(d) Kisan Credit Card (KCC) loan

17
 Answer: (d) Kisan Credit Card (KCC) loan
Explanation - Kisan Credit Card (KCC) loan is a type of loan that is granted to farmers for agricultural
purposes. The loan is offered by banks and other financial institutions and is meant to provide financial
assistance to farmers for the purchase of agricultural inputs and other farming-related expenses.
91. Which of the following isn’t really a central bank’s responsibility:
(a) Banking facilities for the public
(b) Providing credit to commercial banks
(c) Providing financial assistance to the government
(d)Banking facilities for government
Answers : (a) Banking facilities for the public
92. Which of the following is the largest bank in India by market capitalization?
(a) State Bank of India
(b) HDFC Bank
(c) ICICI Bank
(d) Axis Bank
Answer: (b) HDFC Bank
Explanation - HDFC Bank is the largest bank in India by market capitalization. It is a private sector bank that
has consistently ranked among the top banks in India in terms of profitability, asset quality, and customer
satisfaction.
93. Which of the following is the first Indian bank to introduce online banking in India?
(a) ICICI Bank
(b) HDFC Bank
(c) State Bank of India
(d) Axis Bank
Answer: (c) State Bank of India
Explanation - State Bank of India (SBI) is the first Indian bank to introduce online banking in India, with the
launch of its online banking platform in 1996.
94. Which of the following is the first Indian bank to introduce a mobile banking app?
(a) HDFC Bank
(b) ICICI Bank
(c) Axis Bank
(d) SBI
Answer: (b) ICICI Bank
Explanation - ICICI Bank is the first Indian bank to introduce a mobile banking app, with the launch of its
Mobile app in 2008.
95. Which of the following is a program launched by the government of India to provide credit to small and
micro enterprises?
(a) Pradhan Mantri Mudra Yojana
(b) Swachh Bharat Abhiyan
(c) Digital India program
(d) Make in India initiative
Answer: (a). Pradhan Mantri Mudra Yojana
Explanation - Pradhan Mantri Mudra Yojana is a program launched by the government of India to provide
credit to small and micro enterprises.
96. Which of the following is a type of credit facility offered by banks to their customers to withdraw more
money than what is available in their account?
(a) Overdraft
(b) Term loan

18
 (c) Cash credit
(d) Letter of credit
Answer: (a) Overdraft
Explanation - Overdraft is a type of credit facility offered by banks to their customers to withdraw more
money than what is available in their account. The customer can withdraw up to a certain limit, and interest
is charged only on the amount withdrawn.
97. Which of the following is a type of insurance policy that covers a borrower’s outstanding loan amount in
case of his/her death or disability?
(a) Health insurance
(b) Life insurance
(c) Motor insurance
(d) Home insurance
Answer: (b). Life insurance
Explanation - Life insurance is a type of insurance policy that covers a borrower’s outstanding loan amount
in case of his/her death or disability.
98. Which of the following is the first Indian bank to be fully owned by Indians?
(a) Allahabad Bank
(b) Bank of India
(c) Punjab National Bank
(d) Union Bank of India
Answer: (c) Punjab National Bank
Explanation - Punjab National Bank (PNB) is the first Indian bank to be fully owned by Indians. It was
founded in 1894 by Lala Lajpat Rai, Lala Harkishan Lal, and Dyal Singh Majithia.
99. Which of the following is a type of bank account that can be operated jointly by two or more individuals?
(a) Savings account
(b) Current account
(c) Fixed deposit account
(d) Joint account Answer: (d)
Explanation - Joint account is a type of bank account that can be operated jointly by two or more individuals.
The account holders can make transactions and operate the account jointly, and the account can be held as
either “either or survivor” or “both or survivor.”
100. Which of the following is a type of banking service that allows customers to access their bank account
information and make transactions through their mobile phone?
(a) Internet banking
(b) Mobile banking
(c) ATM banking
(d) Phone banking
Answer: (b) Mobile banking
Explanation - Mobile banking is a type of banking service that allows customers to access their bank account
information and make transactions through their mobile phone. Customers can use their smart phones or
tablets to check account balances, transfer funds, pay bills, and more.
101. Assertion (A): Sustained current account surplus encourages the government to liberalize imports and capital
movements.
Reason (R): The current account and balance of payments positions of a country can significantly influence
its economic policies.
In the light of the above statements, choose the correct answer from the options given below:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A)
(b) Both (A) and (R) are true but (R) is NOT the correct explanation of (A)

19
 (c) (A) is true but (R) is false
(d) (A) is false but (R) is true
Answer: (b)
Explanation - The balance of payments (BOP) is the record of all international financial transactions made by
the residents of a country. There are three main categories of the BOP: the current account, the capital
account, and the financial account.
102. Which of the following constitutes Foreign Direct Investment?
(a) A speculator trying to make a profit by buying company shares on a foreign stock exchange
(b) Indian energy company buying territory abroad where it expects to find oil reserve
(c) A tourist purchasing foreign currency to spend on a holiday abroad
(d) A company signing an agreement with a wholesaler to distribute its products in foreign markets Answer:
(b)
Explanation - Foreign Direct Investment (FDI): When a country makes a manufacturing or business
investment in another country, either by buying a company there or expanding its operations there is known
as Foreign direct investment.
103. Currency depreciation in the Indian Rupee in recent times has largely been attributed to:
(a) Declining domestic savings
(b) Increasing FDI flows
(c) Portfolio outflows
(d) Higher currency circulate
(e) Higher imports and debt servicing
Choose the correct answer from the options given below: a)
A, B and C only
b) B, C and D only
c) A and D only
d) C and E only
Answer: (d)
Explanation - In a floating rate system, the exchange value of a nation's currency in relation to other
currencies is referred to as currency depreciation. Based on trade imports and exports for a certain nation.
104. Arrange the following steps in the process of GDR Issues:
(a) Registration with prescribed authority
(b) Appointment and vesting of shares with the custodian
(c) Approval of the regulatory authorities
(d) Listing of GDR
(E) GDR allotment
Choose the correct answer from the options given below:
a) (C), (A), (B), (E), (D)
b) (A), (B), (C), (D), (E)
c) (A). (C), (B), (E), (D)
d) (B), (A), (C), (D), (E)
Answer: (c)
105. A theory of exchange rate whereby a unit of any given currency should be able to buy the same quantity
of goods in all countries is called as:
(a) Purchasing power parity theory
(b) The Fisher Effect
(c) The Mint Parity Theory
(d) Interest rate parity theory

20
 Answer: (a)
Explanation - Purchasing-power parity is a theory of exchange rates whereby a unit of any given currency
should be able to buy the same quantity of goods in all countries.
106. In which year did the companies IBM and Coca Cola shut down their operations for not being able to
comply with the Foreign Exchange Regulation Act that mandated foreign investors cannot own over 40%
in Indian enterprises?
(a) 1964
(b) 1981
(c) 1956
(d) 1977
Answer: (d)
Explanation - In 1977, the companies IBM and Coca Cola shut down their operations for not being able to
comply with the Foreign Exchange Regulation Act that mandated foreign investors cannot own over 40% in
Indian enterprises.
107. The practice of delaying receipts from the foreign currency designated receivables whose currencies are
likely to appreciate and delaying foreign currency designated payables whose currencies are likely to
depreciate is known as:
(a) Leading
(b) Netting
(c) Lagging
(d) Risk hedging
Answer: (c)
Explanation - Leads and lags in international business usually refer to the deliberate acceleration or
delaying of payments due in a foreign currency in order to take advantage of an expected change in
currency exchange rates.
108. Currency swap is a method of
(a) hedging against foreign exchange risk
(b) speculating in foreign exchange
(c) leverage instrument used by cooperative banks
(d) mode of payment in international trade
Answer: (a)
Explanation - A currency swap is an agreement in which two parties exchange the principal amount of a loan
and the interest in one currency for the principal and interest in another currency.
109. Which of the following narratives describe Fisher (Irving) effect?
(a) Nominal interest rate is equal to a real interest rate plus an expected inflation rate (b)
Real interest rate is equal to nominal interest rate minus expected rate of inflation
(c) Exchange rate differential between two currencies is explained by interest - inflation rate differential (d)
Exchange rate differential between two currencies is explained by comparative cost advantage and
purchasing power parity
Choose the most appropriate answer from the options given below:
(a) A, B and C only
(b) A and B only
(c) C and D only
(d) B, C and D only
Answer: (a)
Explanation: Natural Hedging is the balancing by adding assets that have a negative correlation. A company
can also go for a natural hedge by using its normal operating procedures. For instance, incurring expenses in
the same currency in which the company generates revenues. This lowers exchange rate risk.

21
110. When foreign currency assets and liabilities match in terms of amount of exposure and timing of
maturities, it is described as:
(a) Financial hedge
(b) Natural hedge
(c) Perfect hedge
(d) Netting
Answer: (b)
111. According to the FDI policy of India, in which of the following areas 100% FDI is not allowed in equity by
automatic route in India?
(a) Construction development projects
(b) Industrial Park
(c) Maintenance and repair organization
(d) Private Security Agencies
Answer: (d)
Explanation - Foreign investment in the Private Security Agencies Sector is permitted only up to 49% and
requires ‘Government Approval’ as per the extant FDI policy.
112. When was FDI introduced in India?
(a) 1991
(b) 1996
(c) 2001
(d) 2005
Answer: (a)
Explanation - The 1991 Industrial Policy recognized Foreign Direct Investment (F.D.I.) for higher investment
and acquisition of new technologies in high-priority industries
113. The difference between the value of exports and value of imports of goods of a country in a given period
of time is known as (a) Balance of trade
(b) Capital account
(c) Current account
(d) Balance of payment
Answer: (c)
Explanation - It is the difference between the value of a country's exports and the value of a country's
imports for a given period. It is the largest component of a country's balance of payments(BOP).
114. Identify the correct sequence of steps involved in the process of Foreign Direct Investment (FDI). (a)
Evaluating potential risks and challenges in the target country.
(b) Identifying target countries for investment.
(c) Conducting due diligence on potential investment opportunities.
(d) Executing the investment and establishing operations.
(e) Assessing potential returns and benefits of the investment.
Choose the correct answer from the options given below: a)
B-E-A-C-D
b) B - A - E - C - D
c) E - B - A - C - D
d) A - B - C - D – E
Answer: (b)
Explanation - This is the first step in FDI. Here, a company decides the potential countries where it can invest
based on various factors such as market size, growth prospects, economic stability, etc.
115. Balance of payments of a country includes
(a) trade of goods and services

22
 (b) capital receipts and payments
(c) saving and investment
(d) Both (a) and (b)
Answer : (d) Both (a) and (b)
Explanation -The current account records exports and imports in goods and services and transfer payments.
International purchases and sales of assets such as money, stocks, bonds, etc.
116. ______ is the nodal department for formulation of the policy on Foreign Direct Investment (FDI). (a)
RBI
(b) NABARD
(c) Department for Promotion of Industry and Internal Trade
(d) SEBI
Answer: (c)
Explanation - department for Promotion of Industry and Internal Trade is the nodal department for the
formulation of the policy on Foreign Direct Investment (FDI).
117. The first woman to feature on a US Dollar note
(a) Ayn Rand
(b) Martha Washington
(c) Billie Jean King
(d) Jackie Kennedy Onassis
Answer: (b)
Explanation - The U.S. dollar was first designated as the world's currency in the 1944 Bretton Woods
Agreement, and it is the most powerful currency in the world.
118. Which of the following is concerned with trade unions?
(a) GNDU (b) BHU
(c) INTUC
(d) LDC
Answer: (c)
Explanation: INTUC (Indian National Trade Union Congress) is the Indian National Congress trade union
wing. Formed on 3 May 1947, it is affiliated with the International Confederation of Trade Unions.
119. What is the current share of Crude and Petroleum products in total imports of India at present?
(a) above 70%
(b) 52 - 56% (c) 6 - 21%
(d) 27 - 33%
Answer: (b)
Explanation - As per the recent economic survey data, the share of Crude and Petroleum products in total
imports of India at present is 52.7%.
120. With reference to the Indian economy, consider the following statements:
1. An increase in Nominal Effective Exchange Rate (NEER) indicates the appreciation of rupee. 2.
An increase in the Real Effective Exchange Rate (REER) indicates an improvement in trade
competitiveness.
3. An increasing trend in domestic inflation relative inflation in other countries is likely to cause an increasing
divergence between NEER and REER.
Which of the above statements are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3 only

23
 Answer: (c)
Explanation - It is an unadjusted weighted average rate at which one country's currency exchanges for a
basket of multiple foreign currencies. The nominal exchange rate is the amount of domestic currency
needed to purchase foreign currency.
121. FDI stands for:
(a) Federal Department of Investment
(b) Forest Development Index
(c) Federal Department of Investigation
(d) Foreign Direct Investment
Answer: (d)
Explanation - It is an investment made by a firm or individual in one country into business interests located
in another country. However, FID's are distinguished from portfolio investments in which an investor merely
purchases equities of foreign- based companies.
122. Which of the following constitutes India's major import item?
(a) Jute and Textile
(b) Tea
(c) Gems and Jewellery
(d) Crude oil
Answer: (d)
Explanation - India produces just 20% crude oil of its demand and rests 80% is imported from abroad. Crude
oil and other related products account for around 22% total import of India.
123. Which of the following is NOT a Trade Barrier?
(a) Subsidies
(b) Embargo
(c) Export Security
(d) Tariff Barriers
Answer: (c)
Explanation - It is a measure used by the government for the protection of producers or consumers of a
particular. It is not a trade barrier.
124. Which of the following constitutes Foreign Direct Investment?
(a) A speculator trying to make a profit by buying company shares on a foreign stock exchange
(b) Indian energy company buying territory abroad where it expects to find oil reserve
(c) A tourist purchasing foreign currency to spend on a holiday abroad
(d) A company signing an agreement with a wholesaler to distribute its products in foreign markets Answer:
(b)
Explanation - Foreign Direct Investment (FDI): When a country makes a manufacturing or business
investment in another country, either by buying a company there or expanding its operations there is known
as foreign direct investment.
125. Which of the following statements is correct?
(a) If asset of an integral foreign operation is carried at cost, cost and depreciation of tangible fixed assets is
translated at average exchange rate.
(b) If asset of an integral foreign operation is carried at cost, cost and depreciation of tangible fixed assets is
translated at closing exchange rate.
(c) If asset of an integral foreign operation is carried at cost, cost and depreciation of tangible fixed assets is
translated at opening exchange rate.
(d) If asset of an integral foreign operation is carried at cost, cost and depreciation of tangible fixed assets is
translated at exchange rate at the date of purchase of asset.

24
Answer: (d) If asset of an integral foreign operation is carried at cost, cost and depreciation of tangible
fixed assets is translated at exchange rate at the date of purchase of asset.
Explanation - AS 11 The Effects of Changes in Foreign Exchange Rates Businesses might be involved in
foreign exchange-related transactions in a couple of ways.

25