JAIIB Exam 2025 – IE&IFS Important Questions MCQs Quiz-14

30/01/2025

Table of Contents

JAIIB Exam 2025 IE&IFS Important Questions MCQs Quiz-14

JAIIB Exam Quiz 2025: The JAIIB exam is scheduled for 2025 by IIBF. Here, we are providing JAIIB IE&IFS MCQ-based quizzes on a regular basis. You can attempt the quizzes regularly to prepare for the upcoming JAIIB exam. The quizzes will be provided module-wise and unit-wise. You can attempt the JAIIB IE&IFS quizzes from the links below and improve your preparation by practicing regularly. These quizzes will help you boost your score in the JAIIB exam and guide you to clear the exam on your first attempt.

Q.1 Which of the following best describes the four primary functions of money?
A. Medium of exchange, Measure of value, Store of value, Standard for deferred payments
B. Barter system, Measure of wealth, Store of goods, Standard for trade
C. Medium of communication, Unit of barter, Store of wealth, Standard for trade
D. Medium of exchange, Unit of labor, Store of investment, Standard for immediate

Q.2. Which of the following components are included in the definition of Narrow Money (M1) in India?
A. Currency with the public, Demand deposits with banks, and Time deposits with banks
B. Currency with the public, Demand deposits with banks, and ‘Other’ deposits with the RBI
C. Currency with the public, Fixed deposits, and Savings deposits
D. Currency with the public, Call money market funds, and Treasury bonds

Q 3 Which of the following correctly represents Broad Money (M3) in India?
A. M1 + Time Deposits with the Banking System
B. M1 + Treasury Bonds + Foreign Exchange Reserves
C. M1 + Call Money Market Funds + Demand Deposits
D. M1 + Savings Deposits Only

Q.4 Which of the following correctly represents Reserve Money (M₀) in India?
A. Currency in circulation + Bankers’ Deposits with the RBI + ‘Other’ Deposits with the RBI
B. Currency in circulation + Demand Deposits with Banks + Time Deposits with Banks
C. M1 + Time Deposits with Banks
D. Currency in circulation + Government Bonds + Foreign Exchange Reserve

Q.5 Which of the following correctly represents the sources of Broad Money (M3) in India?
A. Net bank credit to the government + Bank credit to the commercial sector + Net foreign exchange assets of the banking sector + Government’s currency liabilities to the public – Net non-monetary liabilities of the banking sector
B. Net bank credit to the government + Bank deposits + Call money market funds – Net non-monetary liabilities
C. M1 + Bank deposits + Net foreign exchange reserves – Government bonds
D. Net bank credit to the government + Savings deposits + Foreign exchange reserves + Government borrowings

Q.6 Which of the following is not a key determinant of the money multiplier as proposed by Milton Friedman and Anna Schwartz (1963)?
A) Currency to deposit ratio
B) Required reserves to total deposits
C) Excess reserves maintained by banks with the central bank
D) Interest rates set by the central bank

Q.7 The money multiplier is the link between the ‘broad money’ (M3) and the ‘reserve money’ (M0). Which of the following factors is most likely to directly influence the money multiplier?
A) The level of government spending
B) The reserve requirement ratio set by the central bank
C) The exchange rate between the domestic and foreign currencies
D) The interest rate on government bonds

Q.8 The velocity of money is the frequency with which one unit of currency is used to purchase domestically produced goods and services in a specific time period. Which of the following would most likely result in an increase in the velocity of money?
A) A decrease in consumer confidence
B) An increase in the money supply
C) A rise in interest rates
D) A decrease in transaction costs and an increase in consumer spending

Q.9 The velocity of money can be expressed as the ratio of nominal GDP to the money supply. Which of the following
factors is most likely to cause a decrease in the velocity of money?
A) An increase in consumer spending
B) A reduction in the money supply
C) An increase in the price level (inflation)
D) A decrease in the demand for money due to lower interest rates

Q.10 Inflation has both positive and negative effects on the economy. Which of the following statements best represents one of the negative effects of inflation?
A) Inflation can encourage investment by increasing the real value of money.
B) High inflation can lead to shortages of goods as consumers may begin hoarding in anticipation of rising prices.
C) Inflation can help reduce the real level of debt, benefiting borrowers.
D) Inflation typically encourages savings by making future consumption more attractive

Q.11 Demand-pull inflation occurs when there is an increase in aggregate demand for goods and services, causing a rise in general prices. Which of the following is most likely to trigger demand-pull inflation?
A) A decrease in consumer spending
B) A reduction in the money supply
C) An increase in government spending or investment
D) A decrease in wages across the economy

Q.12 Cost-push inflation occurs when the cost of production for key goods and services rises, leading to higher prices. Which of the following is a key characteristic of cost-push inflation?
A) A decrease in consumer demand causes prices to rise due to increased production capacity.
B) An increase in the cost of essential raw materials, such as rubber, leads to higher prices for goods like tyres.
C) A reduction in the money supply increases production costs, causing inflation.
D) Increased consumer spending leads to higher costs for businesses, raising wages and production costs.

Q.13 Which of the following statement is wrong?
a. Base year of CPI is 2011-12
b. Base year of WPI is 2017-18
c. The CPI reflects the change in the level of prices of a basket of goods & services purchased/ consumed by the households.
d. WPI reflects supply & Demand in Industry, Manufacturing & Construction sectors.

Q.14 The GDP deflator is a measure of inflation that reflects the level of prices of all new, domestically produced, final goods and services in an economy. Which of the following
characteristics distinguishes the GDP deflator from other price indices?
A. It is based on a fixed basket of goods and services.
B. It only includes goods and services purchased by households.
C. It is not based on a fixed basket of goods and services, but on current production.
D. It is used to measure the unemployment rate in an economy

Q.15 The GDP deflator is calculated as the ratio of Nominal GDP to Real GDP, multiplied by 100. Which of the following statements best describes the GDP deflator?
A) It measures the overall price level in an economy by comparing the total output to the value of output at constant prices.
B) It measures the total production of an economy, adjusted for inflation, without considering changes in prices.
C) It is used to calculate the unemployment rate in an economy by assessing the cost of living.
D) It compares the value of imports to the value of exports in an economy

Answer:

Q1: A
Q2: B
Q3: A
Q4: A
Q5: A
Q6: D
Q7: B
Q8: D
Q9: B
Q10: B
Q11: C
Q12: B
Q13: B
Q14: C
Q15: A

For Detailed solution with an explanation watch below video