R4RIN – MCQs, Mock Tests | Economics Economics Bank System MCQS

Profit and loss-sharing is an element of this system:

1. Islamic
2. Capitalistic
3. Socialistic
4. None of these

✅ Correct Answer: 1

Cash cannot be obtained from bank against:

1. Cross cheque
2. Order cheque
3. Bearer cheque
4. Traveller cheque

✅ Correct Answer: 1

Commercial banks accept deposits and provide:

1. Money
2. Cheque
3. Loans
4. Bill of exchange

✅ Correct Answer: 3

The banks can give loans:

1. Unlimited
2. Equal to deposits
3. Less than deposits
4. More than deposits

✅ Correct Answer: 4

Banks discount it and advance loans:

1. Draft
2. Bill of exchange
3. Pay order
4. Good

✅ Correct Answer: 2

Banks prepare their balance sheet:

1. Weekly
2. Monthly
3. Quarterly
4. Annually

✅ Correct Answer: 1

Balance sheet of a bank has two parts:

1. Supply and demand for deposits
2. Supply and demand of advances
3. Assets and liabilities
4. Cash reserves and loans

✅ Correct Answer: 3

When banks prepare their balance sheets they show the money lent in:

1. Liabilities
2. Assets
3. Both assets and liabilities
4. None of these

✅ Correct Answer: 2

The power of a bank to create credit is affected by:

1. The cash reserve requirement
2. The amount of cash available
3. The number of branches of a bank
4. Both (a) & (b)

✅ Correct Answer: 4

Demand deposits are:

1. Bank notes
2. Money (they can be used to make payments)
3. Considered as near money
4. Legal money

✅ Correct Answer: 2

An asset is liquid when it is:

1. Being traded frequently
2. Earning a good rate of return
3. Is money or easily converted into money
4. All of the above

✅ Correct Answer: 3

A bank has Rs. 5 million in cash. The minimum reserve ratio is 20%. What is maximum potential increase in total deposits:

1. 0
2. 5 m
3. 10 m
4. 25 m

✅ Correct Answer: 4

The following is not a bank liability:

1. Demand deposit
2. Time deposit
3. Saving deposit
4. Loans

✅ Correct Answer: 4

When a commercial bank creates credit it immediately raises:

1. Its assets
2. Its liabilities
3. Money supply
4. (a) and (b) of above

✅ Correct Answer: 4

Which is the source of interest for a bank:

1. Advances
2. Bills discounted
3. Investments
4. All of the above

✅ Correct Answer: 4

Commercial banks are able to create money by:

1. Printing money
2. Making loans
3. Moral suasion
4. Selling government bonds

✅ Correct Answer: 2

Which is a function of a commercial bank:

1. Acting as a govt. banker
2. Fixing the exchange rate
3. Issuing bank notes
4. Making loans

✅ Correct Answer: 4

When a commercial bank creates credit its immediate effect is that it raises:

1. The exchange rate
2. The interest rate
3. The money supply
4. The real national income

✅ Correct Answer: 3

Total number of bank branches in Pakistan is:

1. More than 5000 but less than 10000
2. More than 10000 but less than 15000
3. More than 15000 but less than 20000
4. More than 20000 but less than 25000

✅ Correct Answer: 1

Demand deposits mean:

1. Saving account
2. Profit loss account
3. Chequeable deposits
4. Time deposits

✅ Correct Answer: 3

Which is considered liability by a bank:

1. Loans
2. Bank s building and equipment
3. Time deposit
4. Securities

✅ Correct Answer: 3

Demand deposits are money because:

1. They are backed by gold
2. They are assets of banks
3. They can be used to make payments
4. All of the above

✅ Correct Answer: 3

Credit money is created by:

1. Central bank
2. Commercial bank
3. Government
4. All of the above

✅ Correct Answer: 2

Credit money is created by:

1. Exchange bank
2. Commercial bank
3. Finance companies
4. None of these

✅ Correct Answer: 2

Select the correct statement:

1. Credit money is better than legal money
2. Legal money is better than credit money
3. Both legal money and credit money are equally useful
4. All money is evi

✅ Correct Answer: 3

Select the correct statement:

1. Central bank creates legal money
2. Commercial bank create paper money
3. Finance companies create fake money
4. None of the above is true

✅ Correct Answer: 1

Select the correct statement:

1. Central bank creates convertible money
2. Commercial bank create convertible money
3. Govt. creates paper money
4. None of the above is true

✅ Correct Answer: 4

Which type of cheque is more safe for transfer of money

1. Bearer cheque
2. Traveller cheque
3. Order cheque
4. Cross cheque

✅ Correct Answer: 4

Which type of cheque is least safe for transfer of money:

1. Bearer cheque
2. Traveller cheque
3. Order cheque
4. Cross cheque

✅ Correct Answer: 1

If a person is more interested to earn income he should deposit his money in:

1. Demand deposit
2. Time deposit
3. Saving account
4. Profit-loss account

✅ Correct Answer: 2

If a person is interested that his amount should be readily available as soon as he needs he should deposit his money in:

1. Demand deposit
2. Time deposit
3. Saving account
4. Profit-loss account

✅ Correct Answer: 1

Which type of card is not issued by commercial banks:

1. Credit card
2. Debit card
3. ATM card
4. Green card

✅ Correct Answer: 4

Which type of card is not issued by central banks:

1. Credit card
2. Debit card
3. ATM card
4. None is issued y it

✅ Correct Answer: 4

Market rate of interest is:

1. Always higher than discount rate
2. Always lower than discount rate
3. Both are equal
4. May be higher or lower than discount rate

✅ Correct Answer: 1

Most important source of income of commercial banks is:

1. Interest charged on loans
2. Profit erned on investments
3. Income from collecting utility bills
4. Income from reserves at central bank

✅ Correct Answer: 1

Select the true statement:

1. The central bank charges high interest rate on loans to commercial banks
2. The central bank does not charge interest on loans to banks
3. The central bank does not advance loans to commercial banks
4. None is true

✅ Correct Answer: 4

If you borrow from a bank the amount which the bank charges is called:

1. Bank rate
2. Discount rate
3. Interest rate
4. Borrowing rate

✅ Correct Answer: 3

The rate charged by a central bank on loans is called:

1. Market rate
2. Discount rate
3. Lending rate
4. Tax rate

✅ Correct Answer: 2

Changes in discount rate are brought about by State Bank to:

1. Control inflation
2. Increase investment activity
3. Increase earnings of the bank
4. (a) and (b) of above

✅ Correct Answer: 4

Short term loans can be obtained in:

1. Stock market
2. Money market
3. Capital market
4. All the markets

✅ Correct Answer: 2

Long term loans can be obtained in:

1. Stock market
2. Money market
3. Capital market
4. Exchange market

✅ Correct Answer: 3

Functions of commercial bank are:

1. Issue currency create deposit money and provide loans
2. Accept deposit create deposit money and provide loans
3. Accept deposit provide loans export goods
4. Accept deposit provide loans and control foreign exchange

✅ Correct Answer: 2

This is a difficulty of barter:

1. Lack of double coincidence of wants
2. Difficulty to use larger scale in production
3. Lack of divisibility of many goods
4. All of the above

✅ Correct Answer: 4

Velocity of circulation of money means:

1. Total demand for money
2. Total supply of money
3. The average number of times a unit of money changes hands
4. Annual increase in currency notes

✅ Correct Answer: 3

Nationalisation of banks ws done in:

1. 1974
2. 1976
3. 1978
4. 1980

✅ Correct Answer: 1

National Bank of Pakistan is:

1. Industrial bank
2. Commercial bank
3. Central bank
4. Investment bank

✅ Correct Answer: 2

Total number of branches of Pakistani banks is approximately:

1. 3000
2. 9000
3. 15000
4. 21500

✅ Correct Answer: 2

National Bank of Pakistan was established in:

1. 1949
2. 1959
3. 1969
4. 1970

✅ Correct Answer: 1

The bank established for loans to very small enterprises is called:

1. Micro Finance Bank
2. Modarba Bank
3. SME Bank
4. First Mini Bank

✅ Correct Answer: 1

Pakistan has a banking system:

1. Developed
2. Underdeveloped
3. Very unorganised
4. (a) and (c) of above

✅ Correct Answer: 1

Commercial banks in Pakistan are supervised by:

1. State Bank
2. National Bank
3. Finance Minister
4. World Bank

✅ Correct Answer: 1

National Bank is a:

1. Public sector bank
2. Private bank
3. Micro finance bank
4. Specialised bank

✅ Correct Answer: 1

First Women bank is:

1. Private bank
2. Govt. Bank
3. Non-Scheduled Bank
4. Investment Bank

✅ Correct Answer: 2

Bank rate in Pakistan is:

1. 3%
2. 13%
3. 23%
4. 33%

✅ Correct Answer: 2

State Bank was established in:

1. 1948
2. 1950
3. 1952
4. 1954

✅ Correct Answer: 1

10-rupee note is issued by:

1. National Bank
2. State Bank
3. Govt. of Pakistan
4. Governor State Bank

✅ Correct Answer: 2

Acting as lender of last resort a central bank lends to:

1. Money markets
2. Stock exchange
3. Commercial banks
4. Does not lend

✅ Correct Answer: 3

Which statement is true of the relationship between bond prices and bond yields?

1. They vary inversely
2. They tool vary directly
3. They are not related
4. They are related in long run and not in the short run

✅ Correct Answer: 1

Which is the most widely used of monetary policy:

1. Clearing house
2. Open-market operations
3. Discount rate
4. Issuing of notes

✅ Correct Answer: 2

When the State Bank wants to decrease money supply in the country it:

1. Buys govt. securities in stock market
2. Sells govt. securities
3. Lowers discount rate
4. (b) and (c) of above

✅ Correct Answer: 4