A deficit disequilibrium in the balance of payments can be corrected through:
1.Devaluation
2. Monetary squeeze
3.Exchange controls and import quotas
4.All of the above
At a very low rate of interest the interest-elasticity of the speculative demand for money becomes:
1.Low
2.High
3.Very high
4.Infinite
Dynamic factors in the realm of international trade theory relate to changes in:
1.Income
2. Factor endowments
3.Technical knowledge and methods of production
4.All of the above
Identify Pigou s cash balances equation:
1. M = Ky + K A
2.M = KPO
3.M = KR/P
4.M = PKT
If the elasticity of foreign demand for the country s exports is unity the supply curve of foreign exchange will be:
1.Backward bending
2.Vertical
3.Positively sloping from left to rigt
4.Horizontal
If the increase in exports exceeds the increase in imports and other things remain the same then the level of income will:
1.Rise
2.Remain the same
3.Fall
4.Move in an uncertain manner
In a bimetallic standard:
1.Two metals (usually gold and silver) are simultaneously monetized and their monetary values are fixed as legal tender
2.Both gold and silver coins circulate as unlimited legal tender
3.Coinage as well as exports and imports of both the metals are free
4.All of the above
Of the following concepts of term of trade which one was introduced by F.W. Taussig?
1. Income terms of trade
2.Commodity terms of trade
3.Real cost terms of trade
4.Double fact oral terms of trade
On which of the following is the law of comparative costs based?
1. Labour theory of value
2.Opportunity cost theory
3.Law of diminishing returns
4. Both (a) and (b)
One of the following is an instrument of qualitative credit control. Identify it:
1.Credit rationing
2.Bank rate
3.Open-market operations
4.Minimum statutory cash reserves ratio
Stagflation refers to a situation which is characterised by:
1.Deflation and rising unemployment
2. Inflation and deflation
3.Sustained price-rise and rising unemployment
4.Stagnant employment and deflation
The degree of elasticity in respect of speculative demand for money under the liquidity trap conditions is:
1.Zero
2.One
3.Greater than one
4.Infinite
The devaluation of currency by a country is designed to lead to:
1.Expansion of the export trade
2.Contraction of import trade
3.Promotion of import substitution
4.All of these
The multiple exchange rates were first employed by:
1.Brazil
2.Ecuador
3.Germany
4.Peru
Under the flexible exchange rate system the exchange rate is determined by:
1.The central bank of the country
2.The forces of demand and supply in the foreign exchange market
3.The price of gold
4.The purchasing power of currencies
Which of the following according to Milton Friedman is not a key determinant of the demand for money?
1.Aggregate wealth
2.Precautionary motive
3.Relative rates of return obtainable on different forms of assets
4.Physical non-human capital goods and human capital or wealth
Which of the following is not a liability of commercial banks?
1.Demand deposits
2.Time deposits
3.Advances from the central bank
4.Security holdings
Which of the following is not an instrument of monetary policy?
1.Taxation
2.Bank rate
3.Open-market operations
4.Credit rationing
Which of the following statements is not correct?
1.Devaluation can have only temporary effects and it may provoke other countries to retaliate
2.Many countries of Europe resorted to exchange clearing agreements during the 1930s
3.The balance of payments of a country is a balance sheet showing the country s foreign assets and liabilities at any given period of time
4.The concept of single factoral terms of trade was developed by Jacob Viner.
Who is generally regarded as the founder of the Modern Quantity Theory of Money?
1.J.M.Keynes
2.Milton Friedman
3. M.L.Bursten
4.Don Patinkin
A retail price index is a good measure of changes in:
1.Consumers cost of living
2.General purchasing power of money
3.Average standard of living
4.Patterns of consumer expenditure
According to the classical approach the demand for money primarily depends upon:
1.Rate of interest
2.Economic transactions
3.Speculative activity
4.Precautionary motive
Arrange the following assets of a bank in the ascending order of income (i.e. in the descending order of liquidity): I-Bills II-Loans III-In-vestments in Government and other approved securities
1. I II III
2.I III II
3.II I III
4.III II I
As compared to the classical theory which function of money was stressed more in the Keynesian theory?
1.Unit of account
2.Medium of exchange
3.Standard of deferred payments
4.Store of value
Bad money drives good money out of circulation. With whole name is this law associated?
1. J.M.Keynes
2.Thomas Gresham
3.L.E.Mises
4.R.G.Hawtrey
Commercial banks have always to face a conflict between:
1.Sharcholders and depositors
2.Central bank and themselves
3.Liquidity and profitability
4.Demand deposits and time deposits
During the period of hyper-inflation there takes place astronomical rise in prices and as a result money becomes almost worthless. Such a situation was witnessed in Germany in 1923 and in China in:
1.1947
2.1949
3.1951
4.1953
Identify the country which first employed credit rationing as an instrument of credit control:
1.Germany
2.UK
3.USA
4.France
In which capacity does a person stand to gain from deflation?
1.As a pensioner
2.As a debtor
3.As an entrepreneur
4.As an equity-holder
In which country was the instrument of minimum legal cash reserves ratio for banks first introduced?
1.USA
2.UK
3.Germany
4.Japan
Open market operations refer to the buying and selling of:
1.Commercial bills
2.Foreign exchange
3.Gold
4.Government securities
The branch banking system is currently in vogue in most countries of the world. Identify the country where it first developed:
1.South Africa
2.UK
3.Canada
4.Australia
The first explanation of stagflation was offered originally in 1931 by:
1.Friedrich A.von Hayek
2.J-M. Keynes
3.Bent Hansen
4.Milton Friedman
The market for very short term loans is known as:
1.Capital market
2.Money market
3.Stock market
4.Discount market
The spot and forward markets in foreign exchange are linked to each other through:
1.Interest arbitrage
2.Hedging
3.Speculation
4.All of the above
Which among the following is not an assumption of the classical - territory of comparative cost advantage?
1.Labour is the only factor of production
2.Production takes place under diminishing returns
3.There are no tariffs
4.Prices are determined by their real labour costs of production
Which one of the following approaches to the definition of money gives the widest possible view of money?
1.Central bank approach
2.Conventional approach
3.Chicago approach
4.Gurley Shaw approach
Which one of the following will reduce the capacity of commercial banks to lend?
1.Sales of securities in the open market by the central bank
2.Reduction in the discount rate
3.Reduction of the required cash reserves ratio
4.Purchase of securities by the Central bank in the open market
According to the Heckscher-Ohlin theory of international trade the most important cause of differences in relative commodity pries and trade between nations is the differences in:
1.Consumer tastes and preferences
2.Factor endowments
3.Knowledge and technology
4.Demand conditions
Adam Smith s views on world trade can be best understood if one considers them as a reaction to:
1.The mercantilist approach to trade
2.Ricardo s views on trade
3.The labour theory of value
4.None of the above
Bank rate refer to the interest rate at which:
1.Commercial banks receive deposits from the public
2. Central bank gives loans to commercial banks
3.Government loans are floated
4.Commercial banks grant loans to their customers
By which year had the gold standard virtually disappeared from the world as an international monetary system?
1.1933
2.1936
3.1939
4.1945
Cost-push inflation is caused by:
1.Increase in the quantity of money
2.In-crease in investment
3.Creation of credit money
4.Increase in the prices of inputs
Developing countries usually complain of:
1.Detoriation in their terms of trade
2.Serious hurdles in the way of export promotion
3.Uncertainty and inadequacy of reign aid
4.All of the above
During which decade of the nineteenth century did most European countries adopt the gold standard?
1.Sixties
2.Seventies
3.Eighties
4.Nineties
Fiat money refers to:
1.Credit money
2.Legal money
3.Full bodied money
4.International money
Identify the country which was the first to adopt the gold standard:
1.UK
2.France
3.Germany
4.USA
If there is a significant decrease in the demand for loans banks will be forced to:
1.Sell securities to the public
2.Adjust their protfolios
3.Resort to creating credit
4.Increase liquidity
In the Fisher s equation of exchange MV = PT what does T denote?
1.Period of time
2.Volume of trade
3. Total money wealth
4.Trend value of general price level
In which capacity does a person stand to gain from deflation?
1. As a pensioner
2.As a debtor
3.As an entrepreneur
4. As an equity-holder
Money has been defined as that by delivery of which debt contracts and price contracts are discharged and in the the shape of which general purchasing power is held . Whole definition is this?
1.G. Crowther
2.D.H.Robertson
3.J.M.Keynes
4.George N.Halm
Selective credit control devices are used by the central bank of a country to:
1.Regulate the volume of aggregate bank credit in the economy
2.Regulate credit-creation on the part of some selected banks
3.Control the flow of aggregate bank credit to different productive activities in the economy
4.Selectively allocate credit among banks
Since when has the Reserve Bank of India been successfully operating the instrument of selective credit control in this country?
1.1939
2.1951
3.1956
4.1961
The terms of trade refer to:
1.Comparative advantage of one country over another in the production of a particular commodity
2.Bilateral trade agreements
3.Rates of exchange between two currencies
4.Ratio of the index of export prices to the index of import prices.
The best example of representative full-bodied money is found in the gold certificates which circulated in the U.S.A. before being withdrawn from circulation in:
1.1925
2.1927
3.1929
4.1933
The cash transactions approach to the quantity theory of money is usually associated with the name of:
1.Alfred Marshall
2.Irving Fisher
3.J.M.Keynes
4.D.H.Robertson
The china banking system a variant of the group banking system developed around the mid-nineteenth century and reaching the apex of popularity in the present century. In which country did it develop?
1.USA
2.UK
3.Germany
4.Italy
The elasticity of demand for foreign exchange for financing capital outflow is:
1.Zero
2.Greater than zero
3.One
4.Less than infinity
The foreign exchange market performs the function of:
1.Transfer of purchasing power
2.Provisions of credit for financing foreign trade
3.Furnishing facilities for hedging foreign exchange risks
4.All of the above
The immediate effect of credit-creation by banks is:
1.Rise in prices
2. Increase in money supply
3. Increase in real national income
4.Reduction of poverty
The limited legal-tender money stands for the component of money which:
1. Is issued in a limited amount
2.Is legal tender for payment upto a certain maximum amount
3. Is legal tender in specified areas
4.Is to be used in specific transactions
The liquidity trap condition occurs at a:
1.Low rate of interest
2.Very low rate of interest
3.High rate of interest
4.Very high rate of interest
The main function of legal cash reserve requirements is to:
1.Ensure safely of deposits
2.Influence the demand deposit-creating power of commercial banks
3.Regulate the inter-sect oral flow of money supply
4.Keep a portion of deposits liquid
The Quantity Theory of Money establishes the relationship between quantity of money in an economy and the level of:
1.Employment
2.National income
3.Prices
4.Savings
The reduction or elimination of inflation is known as:
1.Disinflation
2.Deflation
3.Creeping inflation
4.Stagflation
The relationship between the market rate of interest and the market price of a bond is:
1.Inverse
2.Direct
3.Positive and proportionate
4.Uncertain
Under the unit banking system each individual bank is a separate entity having its own independent management and board of directors. Which country is generally regarded as the home of the unit banking system?
1.USA
2.Germany
3.France
4.Japan
What does the modern theory of international trade predict regarding difference in factor prices between nations on account of trade? The difference:
1.Increases
2.Diminishes
3.Remains the same
4.Either diminishes or increases
What proportion of international trade is based on absolute differences in costs of production? .
1.All
2.Substantial
3.Very little
4.Nil
What would be the impact on the country s balance of payments position when in the context of inflationary pressures recourse is taken to expenditure reducing policies?
1.Highly unfavourable
2.Unfavourable
3.Favourable
4.Neutral
When did the UK finally abandon the gold standard?
1.1925
2.1929
3.1931
4.1936
When the commodity value of money and its value as money are equal it is called:
1.Token money
2.Full-bodied money
3.Quasi-money
4.Fiat money
Which is not a function of the central bank of a country?
1.Lender of the last resort
2.Controller of credit
3.Custodian of nation s foreign exchange reserves
4.Supervisor of nation s fiscal policy
Which of the following is an instrument of quantitative credit control?
1.Credit rationing
2.Prescribing margin requirements
3.Variable reserve ratio
4.Consumer credit regulation
Which of the following is not a function of a commercial bank?
1.Accepting public deposits
2.Granting loans and advances
3.Undertaking agency functions
4.Banker to the Government
Which of the following is not a part of the un-organised Indian money market?
1.Indigenous bankers
2.Co-operative credit societies
3.Chit funds
4.Money lenders
Which of the following is not an item on the assets side of the balance sheet of a commercial bank?
1.Investments
2.Money at call and short notice
3.Reserves
4.Advances
Which of the following items in the balance of payments is invisible?
1.Government expenditure abroad
2.Foreign investment
3.Foreign travel
4.Goods exported
Which of the following measures is helpful in controlling inflation?
1.Raising the bank rate
2.Price control and rationing of essential goods
3.Reduction of government expenditure
4.All of the above
Which of the following was not favoured by the mercantilists?
1.Accomulation of gold by the country
2.Free trade
3.Export promotion
4.Import restriction
Which one of the following is an example of quasi-money or near-money?
1.Bills of exchange
2.Cheque
3.Bank notes
4.Coins
Who introduced the concept of the real balance effect?
1.A.C.Pigou
2.Alfred Marshall
3.J.M.Keynes
4.Milton Friedman