Economics Page-5

41) When a commercial bank creates credit, its immediate effect is that it raises
(A) The exchange rate
(B) The interest rate
(C) The money supply
(D) The real national income

42) When aggregate supply exceeds aggregate demand
(A) Business inventory accumulates
(B) Unemployment exists
(C) Price of consumer goods rise
(D) People save more than they intended to save

43) 'Coal' is considered as a
(A) Consumer good
(B) Consumer durable
(C) Social good
(D) Capital single use good

44) Which is the most widely used tool of monetary policy?
(A) Clearing house
(B) Open-market operations
(C) Discount rate
(D) Issuing of notes

45) The theory of purchasing power party holds that the exchange rate between the two currencies tends to be in the ratio of their respective
(A) Domestic purchasing
(B) National incomes
(C) Values of exports
(D) Values of imports

46) Central bank's rate of lending to commercial banks is called
(A) Interest rate
(B) Discount rate
(C) Money rate
(D) Control rate

47) When a central bank wants to increase money supply in circulation, it
(A) Purchase govt securities
(B) Lowers bank rate
(C) Directs banks to advance more loans
(D) A and B

48) Every country establishes central bank to
(A) Issue notes
(B) Supervise commercial banks
(C) Give loans to businessmen
(D) A and B

49) Which is a monetary measure to increase employment?
(A) Increase in govt expenditure
(B) Reduce govt expenditure
(C) Increase in interest rate
(D) Reducing interest rate

50) Treasury bill is used for?
(A) Getting short term loans
(B) Getting long term loans
(C) Treasury bill is not credit instrument
(D) Treasury bill is a govt tax bill

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