Money, Banking and Monetary Policy - Macroeconomics - Economics Previous Year Questions

1

2021 · Economics · Macroeconomics · Money, Banking and Monetary Policy

Humanities & Social Sciences-Economics (XH-C1) 2021

The basic tenets of ‘Monetarism’ are

A

acceptance of the ‘quantity theory’ approach to macroeconomic analysis

B

a strict rule based monetary policy

C

a monetary approach to the balance-of-payments and exchange-rate theory

D

an active stabilization policy through expansionary monetary/fiscal policies

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2

2021 · Economics · Macroeconomics · Money, Banking and Monetary Policy

Humanities & Social Sciences-Economics (XH-C1) 2021

Consider the following Table.

Month	Currency in Circulation	Cash with Banks	Currency with the Public	Other Deposits with the RBI	Bankers’ Deposits with the RBI	Demand Deposits	Time Deposits
April	2523	98	2425	40	457	1582	12988
May	2611	98	2513	42	468	1565	13112
June	2661	94	2567	39	484	1573	13141

(All values are in Rupees Thousand Crore)
Based on the given data, the average Broad Money Multiplier for the period April - June is ____________ (round off to three decimal places).

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3

2021 · Economics · Macroeconomics · Money, Banking and Monetary Policy

Humanities & Social Sciences-Economics (XH-C1) 2021

Let the rate of inflation in an economy be 4.2%, the growth rate of velocity of money be 2% and, the growth rate of real GDP be 6%. According to Milton Friedman's 'k' percent rule, the rate of growth of money supply for maintaining stable prices will be __________ (round off to one decimal place).

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4

2022 · Economics · Macroeconomics · Money, Banking and Monetary Policy

Humanities & Social Sciences-Economics (XH-C1) 2022

Which of the following variables are pushed upwards by ‘Seigniorage’?

A

Money supply

B

Inflation

C

Tax rate

D

Interest rate

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5

2023 · Economics · Macroeconomics · Money, Banking and Monetary Policy

Humanities & Social Sciences-Economics (XH-C1) 2023

According to the Working Group on Money Supply: Analytics and Methodology of Compilation (1998) constituted by the Reserve Bank of India (RBI), which of the following is NOT a component of the new monetary aggregate NM1 ?

A

Currency with the public

B

Demand deposits with the banking system

C

Short-term time deposits of residents

D

‘Other’ deposits with the RBI

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6

2023 · Economics · Macroeconomics · Money, Banking and Monetary Policy

Humanities & Social Sciences-Economics (XH-C1) 2023

Suppose Amar borrows Rs. 1000 from Ujala. After one year, Ujala wants Rs. 1100 back from Amar. The yield to maturity in percent (%) on this borrowing is ______ (round off to one decimal place).

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7

2024 · Economics · Macroeconomics · Money, Banking and Monetary Policy

Humanities & Social Sciences-Economics (XH-C1) 2024

In the Keynesian system, the speculative demand for money arises because of

A

uncertainty of future interest rates

B

uncertainty regarding bond prices and associated capital gains

C

unexpected out-of-pocket expenditure

D

the gap that emerges between income and sudden eventual expenditure

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8

2025 · Economics · Macroeconomics · Money, Banking and Monetary Policy

Humanities & Social Sciences-Economics (XH-C1) 2025

Which one of the following is part of the unconventional monetary policy?

A

Repo rate

B

Quantitative easing

C

Fractional banking

D

Reverse Repo rate

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9

2026 · Economics · Macroeconomics · Money, Banking and Monetary Policy

Humanities & Social Sciences - Economics (XH-C1) 2026

High powered money belongs to the

A

asset side of the central bank’s balance sheet

B

liability side of the central bank’s balance sheet

C

asset side of the commercial bank’s balance sheet

D

liability side of the commercial bank’s balance sheet

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10

2026 · Economics · Macroeconomics · Money, Banking and Monetary Policy

Humanities & Social Sciences - Economics (XH-C1) 2026

According to the theory of Keynesian Liquidity Preference, demand for money

A

is only for transaction purposes

B

does not depend on the interest rate

C

depends on income and interest rate

D

is only for precautionary purposes

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11

2026 · Economics · Macroeconomics · Money, Banking and Monetary Policy

Humanities & Social Sciences - Economics (XH-C1) 2026

When the currency-deposit ratio is 0, and the reserve-deposit ratio is 0.5, then the value of the money multiplier is ________ (in integer)

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12

2026 · Economics · Macroeconomics · Money, Banking and Monetary Policy

Humanities & Social Sciences - Economics (XH-C1) 2026

The money demand function is \(\frac{M}{P} = 800 + 0.3Y - 2000i\), where, M is nominal money supply, P is the aggregate price level, Y is the real GDP, and i is the nominal interest rate. Suppose that Y = 2000, and i = 0.20. The velocity of money is _____ (in integer)

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