Economics (12)
Q1. The word 'bank' is derived from which word and what does it originally mean?
- A. Italian word Banco, meaning 'bench of money stall'
- B. French word Banca, meaning 'wealth accumulation'
- C. Latin word Banko, meaning 'storehouse for money'
- D. Greek word Bancus, meaning 'money for exchange'
Answer: Italian word Banco, meaning 'bench of money stall'
Q2. What is the best definition of a banking system?
- A. A network of financial institutions that accept deposits from individuals and businesses
- B. Institutions that provide credit and loans to promote investment and economic growth
- C. Organizations that facilitate financial transactions and manage the payment system
- D. All of the above
Answer: All of the above
Q3. Which of the following are roles of the banking system in the economy?
- A. Monetize the economy and creation of jobs
- B. Promotion of trade and capital formation
- C. Managing the money supply and ensuring financial stability
- D. All of the above
Answer: All of the above
Q4. How does the banking system contribute to economic growth?
- A. By providing education
- B. By granting loans and facilitating investments
- C. By reducing the money supply
- D. By regulating taxes
Answer: By granting loans and facilitating investments
Q5. Which of the following is not a function of the banking system in an economy?
- A. Money supply regulation
- B. Advancing loan and accepting deposit
- C. Managing foreign exchange reserves
- D. Offering insurance services
Answer: Offering insurance services
Q6. Which of the following are functions of a Central Bank?
- A. Regulating the money supply and controlling inflation
- B. Acting as the lender of last resort to commercial banks
- C. Issuing currency, custodian of gold and foreign exchange reserves
- D. Guardian bank and advisor of government
- E. All of the above
Answer: All of the above
Q7. Which of the following are primary functions of commercial banks?
- A. Accepting deposits from the public
- B. Providing loans and credit to individuals and businesses
- C. Facilitating financial transactions and payment services
- D. All of the above
Answer: All of the above
Q8. What are the secondary functions of commercial banks?
- A. Issuing credit instruments and facilitate foreign exchange
- B. Providing safe deposit lockers
- C. Facilitating receive and payment of credit instrument
- D. All of the above
Answer: All of the above
Q9. Which of the following is not classified as a type of banking and financial institution?
- A. Central Bank as banking authority
- B. Commercial banks as A class
- C. Microfinance institutions as D class
- D. Development banks as B class
- E. Cooperative Banks as E class
Answer: Cooperative Banks as E class
Q10. Which of the following best defines a commercial bank?
- A. A financial institution that primarily manages national monetary policy and issues currency
- B. A financial institution that accepts deposits, provides loans, and offers various financial services to individuals and businesses
- C. A financial institution that focuses on long-term infrastructure and development projects
- D. A financial institution that provides microloans to low-income individuals and small businesses
Answer: A financial institution that accepts deposits, provides loans, and offers various financial services to individuals and businesses
Q11. Currently, how many commercial banks are there in Nepal which are established under the Banking Act in Nepal?
- A. 20
- B. 17
- C. 57
- D. 25
Answer: 20
Q12. According to the BAFIA 2073, how many types of institutions are listed and what are their numbers?
- A. 4 types: 20 commercial banks, 17 development banks, 17 finance companies, and 57 microfinance companies
- B. 3 types: 20 commercial banks, 17 development banks, and 57 microfinance companies
- C. 5 types: 20 commercial banks, 17 development banks, 17 finance companies, 57 microfinance companies, and 10 insurance companies
- D. 2 types: 20 commercial banks and 17 development banks
Answer: 4 types: 20 commercial banks, 17 development banks, 17 finance companies, and 57 microfinance companies
Q13. What is the best definition of central bank?
- A. A bank that primarily provides loans to businesses and individuals
- B. An apex financial institution that manages a country’s monetary policy, regulates banks, and issues currency
- C. A commercial bank that deals with international trade
- D. A bank that specializes in investment and asset management
Answer: An apex financial institution that manages a country’s monetary policy, regulates banks, and issues currency
Q14. The money market primarily deals with:
- A. Short-term credit instruments borrowing and lending
- B. Long-term credit instruments
- C. Stock trading
- D. Real estate transactions
Answer: Short-term credit instruments borrowing and lending
Q15. The capital market is concerned with:
- A. Short-term loans
- B. Long-term investments such as stocks and bonds
- C. Currency exchange
- D. Bank deposits
Answer: Long-term investments such as stocks and bonds
Q16. Which of the following is not a part of the capital market?
- A. Government bonds
- B. Monetary Policy
- C. Corporate stocks
- D. Commercial paper
Answer: Commercial paper
Q17. Which of the following credit instruments are traded in the money market?
- A. Treasury bills and commercial papers
- B. Shares, bonds and debenture
- C. Real estate and commodity
- D. None of the above
Answer: Treasury bills and commercial papers
Q18. What is the best definition of monetary policy?
- A. The process by which the government determines tax rates and public spending
- B. An economic policy adopted by central bank of a country to manage the money supply and interest rates to achieve economic objectives
- C. The regulation of financial markets to ensure fair trading practices
- D. The procedure for issuing and regulating government bonds and securities
Answer: An economic policy adopted by central bank of a country to manage the money supply and interest rates to achieve economic objectives
Q19. An expansionary monetary policy aims to:
- A. Reduce the money supply
- B. Increase the money supply and stimulate economic activity
- C. Increase interest rates
- D. Control inflation
Answer: Increase the money supply and stimulate economic activity
Q20. A contractionary monetary policy is used to:
- A. Encourage investment
- B. Lower inflation by reducing the money supply
- C. Increase employment
- D. Lower interest rates
Answer: Lower inflation by reducing the money supply
Q21. Which of the following tools are used in monetary policy?
- A. Bank rates
- B. Government spending
- C. Trade tariffs
- D. Tax rates
Answer: Bank rates
Q22. Open market operations involve:
- A. Issuing new stocks
- B. Buying and selling government securities
- C. Regulating bank reserves
- D. Printing money
Answer: Buying and selling government securities
Q23. What happens to the interest rates in an expansionary monetary policy?
- A. Increase
- B. Decrease
- C. Remain constant
- D. Fluctuate unpredictably
Answer: Decrease
Q24. A key objective of contractionary monetary policy is:
- A. Reducing inflation and money supply
- B. Encouraging business expansion
- C. Lowering interest rates
- D. Promoting exports
Answer: Reducing inflation and money supply
1. Basic Concept: Scarcity and Choice
Scarcity in economics refers to:
A. Shortage of money only
B. Unlimited human wants with limited resources
C. Lack of natural resources only
D. Poverty of people
Answer:
B. Unlimited human wants with limited resources
2. Basic Concept: Opportunity Cost
Opportunity cost is best defined as:
A. Total cost of production
B. Money cost only
C. Value of the next best alternative foregone
D. Accounting cost
Answer:
C. Value of the next best alternative foregone
3. Revenue and Cost
Marginal cost is the cost of:
A. Producing the first unit
B. Total output
C. Producing one additional unit of output
D. Fixed inputs
Answer:
C. Producing one additional unit of output
4. Revenue Concept
When marginal revenue is zero, total revenue is:
A. Increasing
B. Decreasing
C. Maximum
D. Constant
Answer:
C. Maximum
5. Price and Output Determination
In perfect competition, price is determined by:
A. Individual firm
B. Government
C. Interaction of market demand and supply
D. Cost of production only
Answer:
C. Interaction of market demand and supply
6. Factor Pricing
Rent is the reward for the use of:
A. Labour
B. Capital
C. Entrepreneurship
D. Land
Answer:
D. Land
7. Government Finance
A tax whose burden cannot be shifted to others is called:
A. Indirect tax
B. Progressive tax
C. Direct tax
D. Proportional tax
Answer:
C. Direct tax
8. International Trade
The main basis of international trade according to comparative cost theory is:
A. Absolute advantage
B. Comparative advantage
C. Trade barriers
D. Exchange rate
Answer:
B. Comparative advantage
9. Statistics
Primary data are those data which are:
A. Published by government
B. Collected by others
C. Collected for the first time by the investigator
D. Taken from newspapers
Answer:
C. Collected for the first time by the investigator
10. Poverty and Unemployment
Unemployment that arises due to seasonal nature of work is called:
A. Structural unemployment
B. Disguised unemployment
C. Cyclical unemployment
D. Seasonal unemployment
Answer:
D. Seasonal unemployment
11. Index Number
The main difference between Laspeyres and Paasche’s index number lies in the use of:
A. Base year prices only
B. Current year prices only
C. Different weights of quantities (Laspeyres uses base-year quantities as weights, while Paasche uses current-year quantities.)
D. Same prices and quantities
Answer:
C. Different weights of quantities (Laspeyres uses base-year quantities as weights, while Paasche uses current-year quantities.)