Monetary Economics

JKPSC Assistant Professor (Economics) · Economics · 48 practice questions with answers and explanations: 5 Easy, 43 Medium, 0 Hard.

Sample questions

Sample Easy question 1

Open market operations are the:

  1. Auctions of gold
  2. Setting of tax rates
  3. Buying and selling of government securities by the central bank
  4. Issue of banknotes
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Answer: C. It adjusts liquidity.

Sample Easy question 2

The monetary policy committee (MPC) in India has how many members?

  1. Six
  2. Nine
  3. Three
  4. Twelve
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Answer: A. Three from the RBI and three external members.

Sample Easy question 3

Inflation targeting in India is set at:

  1. 10%
  2. 2%
  3. 6% fixed
  4. 4% with a band of ±2%
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Answer: D. The target applies to CPI inflation.

Sample Medium question 4

High-powered money consists of:

  1. Only deposits
  2. Only loans
  3. Only gold
  4. Currency and bank reserves with the central bank
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Answer: D. It is the monetary base.

Sample Medium question 5

The money multiplier is:

  1. c − r
  2. r/c
  3. 1/(c + r(1 − c)) in terms of currency and reserve ratios
  4. c + r
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Answer: C. c is the currency deposit ratio.

Sample Medium question 6

The central bank's functions include:

  1. Selling shares
  2. Retail trading
  3. Issue of currency and lender of last resort
  4. Making loans to the public
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Answer: C. It acts as banker to the government.

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