Money and Banking MCQ Quiz - Objective Question with Answer for Money and Banking - Download Free PDF

The correct answer is CPI.

Key Points

• CPI stands for Consumer Price Index.
• The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
• It is most widely used to calculate inflation and to adjust income and cost of living increases for individuals, businesses, and government agencies.
• The CPI is calculated by the Bureau of Labor Statistics (BLS) and is released monthly.
• The market basket of goods and services used in the CPI includes food, housing, clothing, transportation, medical care, recreation, education, and communication.
• The CPI is often used as a benchmark for measuring price changes in the economy and is also used to adjust Social Security benefits and tax brackets.
• There are different CPI measures, including the CPI-U (for all urban consumers), the CPI-W (for urban wage earners and clerical workers), and the CPI-E (for the elderly).
• Changes in the CPI can affect interest rates, investment returns, and purchasing power.
• Formula for calculating CPI :
  • CPI = (Cost of market basket in given time / Cost of market in base time) x 100

Additional Information

•  WPI (Wholesale Price Index):
  - Measures the changes in the prices of goods at the wholesale level
  - Used to track inflation and deflation trends in some economies
  - Includes various commodity groups such as food, fuel, and manufactured goods
  - Provides an indication of the overall price movement in the economy
• National Income:
  - Total income earned by a country's residents and businesses in a given period
  - Includes income from wages, profits, and taxes
  - Used to measure a country's economic performance and standard of living
  - Calculated using various methods such as GDP, GNP, and NNP
• Per Capita Income:
  - Average income earned per person in a country
  - Calculated by dividing the total national income by the population
  - Used to measure the average standard of living in a country
  - Helps in comparing the economic well-being of different countries

The correct answer is Stagflation.

Key Points

• Stagflation: When the economy is slow with a high inflation rate and unemployment it results in Stagflation.
  • The impact would be far greater when rising inflation is accompanied by a stagnant output (having no outflow of money).
  • Stagflation can also be alternatively defined as a period of inflation combined with a decline in the gross domestic product (GDP).​​

• In the mid-1970s, due to the oil price shock, many economies went into stagflation.
• For instance, in the wake of falling aggregate output, the immediate policy response from the government/central bank would be to follow.
• ​However, when the economy is also dealing with rising price levels, a policy mix of loose monetary and fiscal policy could further push prices upwards.

Additional Information

• Reflation: Reflation is a fiscal or monetary policy designed to expand output, stimulate spending, and curb the effects of deflation, which usually occurs after a period of economic uncertainty or a recession.
  • It is an attempt to bring back inflation in the economy.
• Deflation: It is the general decline of the price level of goods and services.
• Recession: A recession is a significant decline in activity across the economy lasting longer than 2 or 3 months.

The correct answer is RBI.

Important Points

• RBI is the acronym of the Reserve Bank of India.
• Reserve Bank of India issues currency notes in India.
• Reserve Bank of India issues all currency notes above one rupee.

Additional Information

• The Reserve Bank of India Act was passed in the year 1934.
  • It was established on 1^st April 1935.
  • It was set up on the recommendation of the Hilton Young Commission
  • Reserve Bank of India was nationalized on 1^st January 1949.
  • It is well known as "bankers bank" in India.
• PNB stands for Punjab National Bank.
• SBI stands for State Bank of India.

The correct answer is Custom duties.

Important Points

• The tax imposed on the import and export of commodities is called Custom duties.
• This is a form of foreign trade control and a policy that taxes foreign goods to encourage or protect domestic industry.
• Tariffs may be set (a constant sum per unit of imported goods or a percentage of the price) or variable (the amount varies by price). Import taxation means that consumers are less likely to purchase them because they are more costly.
• An excise tax is an indirect tax on the sale of a particular good or service charged by the Government.
• A VAT (Value-added tax) is a consumption tax that is imposed on a product whenever a value is added at each stage of the supply chain, from production to point of sale.
• Goods and Services Tax(GST) is an Indirect tax on the purchase of goods and services used in India.

The correct answer is Ellora Caves.

Key Points

• In April 2019, RBI issued new Rs. 20 currency notes in the Mahatma Gandhi (New) series. 
• The new Rs 20 notes have the signature of the Reserve Bank's Governor.
• The base colour of the new note is Greenish Yellow.
• The new (Rs 20) denomination has the motif of Ellora Caves on the reverse side of the note.
• The dimension of the banknote will be 63 mm x 129 mm.

Additional Information

The correct answer is Sanchi Stupa.

Key Points 

• Rs 200 note
  • The motif of the new denomination Rs. 200 is Sanchi Stupa on the reverse and its colour is Bright Yellow.
  • The dimension of the banknote is 66 mm*146 mm.
  • It is released on 25 August 2017.
  • The obverse design is of Mahatma Gandhi.
• The Reserve Bank of India has the sole authority to issue banknotes in India except for the one-rupee note which is released by the Ministry of Finance.
• The Government of India is the issuing authority of coins and supplies coins to the Reserve Bank on demand.
• Along with new 200 Rs. note Rs. 2000, 500, 200, 100, 50, 20,10 banknotes were also released.

Additional Information 

The correct answer is fluorescent blue. Key Points

• The Rs. 50 banknote of the Mahatma Gandhi (New) series has a base color of fluorescent blue.
• It is part of the new series of Indian currency notes introduced by the Reserve Bank of India (RBI).
• The color fluorescent blue is chosen to enhance the security features of the banknote and make it more difficult to counterfeit.
• The reverse of the new 50 rupee banknote in the Mahatma Gandhi (New) series has a motif of the Hampi with Chariot.
• Hampi is an ancient city located in the state of Karnataka, India. It is a UNESCO World Heritage Site and was once the capital of the Vijayanagara Empire.

Important PointsOther notes of Indian Currency-

The correct answer is FII.

Key Points

• Foreign Institutional Investor (FII) is known as Hot money.
• FII is an investor or investment body that is present outside the country.
• Hot Money refers to funds that are controlled by investors who actively seek short-term returns.

Additional Information 

• Foreign direct investment (FDI): 
  • FDI is an investment in the form of controlling ownership in a business in one country by an entity based in another country. 
• ​American Depositary Receipts (ADR): 
  • ADRs are a type of stock that allows US people to invest in non-US corporations and receive dividends in US dollars.
• Global Depositary Receipts (GDR): 
  • GDRs are like ADRs except for the fact that it is listed on an exchange outside the United States and help the issuer raise funds simultaneously in different markets like Luxembourg or London.

• The question asks about Language Panel and NOT the whole note.

Key Points

• Contemporary Currency notes have 15 languages on the panel which appears on the reverse of the note.
• Source - https://www.rbi.org.in/scripts/ic_languagepanel.aspx
• Languages included on the panel are Assamese, Bengali, Gujarati, Kannada, Kashmiri, Konkani, Malayalam, Marathi, Nepali, Odia, Punjabi, Sanskrit, Tamil, Telugu, and Urdu.
• The Reserve Bank has the sole authority to issue banknotes in India.
• Reserve Bank, like other central banks the world over, changes the design of banknotes from time to time.
• The Reserve Bank has introduced banknotes in the Mahatma Gandhi Series since 1996 and has so far issued notes in the denominations of Rs.5, Rs.10, Rs.20, Rs.50, Rs.100, Rs.500 and Rs.2000 in this series.
• Source - Here

The correct answer is disguised unemployment.

Important Points

• The type of unemployment in the agricultural sector of India where more people are employed than required is known as disguised unemployment.
  • It is a common form of unemployment in rural areas.
  • Disguised unemployment will occur when more people are engaged in a job than required.
  • A study conducted in the late 1950s reported that one-third of agriculture workers in India as disguisedly unemployed
• Unemployment is the situation where a person is searching for a job but not able to get one.

Additional Information

• Seasonal unemployment is the unemployment that occurs during a certain season of the year.
  • Unemployment of the farmers during non-crop season is an example of seasonal unemployment.
• Structural unemployment is unemployment that arises due to the change in the structure of the economy.

The correct answer is Mangalayan.

Key Points

• India witnessed the second major monetary reform in November 2016 when it withdrew the legal tender status of ₹ 500 and ₹ 1,000 denominations of banknotes of the Mahatma Gandhi Series.
• It was issued by the Reserve Bank of India on November 8, 2016.
• The new banknotes were introduced in the Mahatma Gandhi (New) Series, highlighting the cultural heritage and scientific achievements of the country.
• Distinct colours were used for the different denominations and size was reduced.
• Two new denominations viz. ₹ 2000 on November 08, 2016, and ₹ 200 on August 23, 2017, were introduced in the Mahatma Gandhi (New) Series.
• Rupees Two Thousand Size: 66 x 166 mm
• Motifs: Mangalayam

Additional Information

The correct answer is Union Budget 2021-22.

Key Points

• On 1 February 2021, Finance Minister Nirmala Sitharaman presented the first paperless budget. This was done due to the ongoing COVID-19 pandemic in India.
• The Union Budget 2021 was presented in a digital format for the first time to promote the Government of India's (GoI) Digital India flagship programme.

Additional Information

• The Union Budget of India also referred to as the Annual Financial Statement in Article 112 of the Constitution of India, is the annual budget of the Republic of India.
• The Government presents it on the first day of February so that it could be materialized before the beginning of the new financial year in April.
• Until 2016 it was presented on the last working day of February by the Finance Minister in Parliament.
• The budget division of the department of economic affairs (DEA) in the finance ministry is the nodal body responsible for producing the budget.
• It is presented by means of the Finance Bill and the Appropriation bill has to be passed by Lok Sabha before it can come into effect on 1 April, the start of India's financial year.
• Since 1947, there have been a total of 73 annual budgets, 14 interim budgets, and four special budgets, or mini-budgets.

The correct answer is 30.

Key Points

• SENSEX(SENSitve indEX) is a free-float market-weighted stock market index of 30 well-established and financially sound companies listed on the Bombay Stock Exchange.
• It was introduced by the Bombay stock exchange on 1 January 1986.
• The index is widely reported in both domestic and international markets through print as well as electronic media.
• The index was initially calculated based on the "Full Market Capitalization" methodology but was shifted to the free-float methodology with effect from September 1, 2003.
• The SENSEX is the benchmark index with wide acceptance among individual investors, institutional investors, foreign investors and fund managers.
• The objectives of S&P BSE SENSEX-
  • To measure Market Movements
  • Benchmark for Funds Performance
  • For Index Based Derivatives Products
• Blue Chip companies refer to equity shares of companies with larger market capitalisation. These companies have entrenched market operations running for many years.