Finance: Money & Credit MCQ Quiz
This 'Finance: Money & Credit MCQ Quiz' explores fundamental financial concepts, focusing on the barter system, the role of money, and the issuance of currency in India. It assesses understanding of economic systems like capitalism, enhancing learners' comprehension of money and credit mechanisms.
- 1.
The exchange of goods for goods is known as:
- A.
Banker of option
- B.
Bills of exchange
- C.
Barter system
- D.
Currency
Correct Answer
C. Barter systemExplanation
The exchange of goods for goods is known as the barter system. In this system, there is no involvement of currency or money. Instead, people directly trade their goods or services with each other. This system was prevalent in ancient times when there was no standardized currency. However, it is not commonly used today as the use of currency has become widespread.Rate this question:
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- 2.
The problem with the barter system is:
- A.
Double coincidence of wants.
- B.
A good transport system
- C.
Advertising
- D.
Communication
Correct Answer
A. Double coincidence of wants.Explanation
The problem with the barter system is the double coincidence of wants. This means that for a trade to occur, both parties involved must have something that the other party wants and vice versa. This can be difficult to achieve as it requires a perfect match of wants and needs between two individuals. Without this double coincidence, it becomes challenging to facilitate exchanges and can hinder the efficiency of the barter system.Rate this question:
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- 3.
What a person desires to sell is exactly what the other wishes to buy ---
- A.
Terms of credit.
- B.
Double coincidence of wants
- C.
Selling
- D.
Trade
Correct Answer
B. Double coincidence of wantsExplanation
The phrase "What a person desires to sell is exactly what the other wishes to buy" refers to the concept of double coincidence of wants. This means that in a barter system, for a trade to occur, there must be a mutual agreement where both parties have goods or services that the other wants. It highlights the difficulty of finding a direct match between what one person wants to sell and what the other person wants to buy, emphasizing the importance of a double coincidence for a successful trade.Rate this question:
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- 4.
Money acts as:
- A.
Medium of exchange
- B.
Medium of information
- C.
Medium of trade.
- D.
None
Correct Answer
A. Medium of exchangeExplanation
Money acts as a medium of exchange because it is used to facilitate the buying and selling of goods and services. It serves as a common unit of value that allows individuals to trade with one another, eliminating the need for bartering or direct exchange of goods. Money acts as a universally accepted medium that enables transactions to take place efficiently and effectively.Rate this question:
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- 5.
In India, currency is issued by:
- A.
RBI on behalf of the central government
- B.
By the President of India.
- C.
By the Finance minister
- D.
None
Correct Answer
A. RBI on behalf of the central governmentExplanation
Currency in India is issued by the Reserve Bank of India (RBI) on behalf of the central government. The RBI is the country's central banking institution and is responsible for the issue and supply of the Indian rupee. As the central bank, the RBI acts as the custodian of the currency and ensures its stability and integrity. The central government, represented by the Ministry of Finance, has the authority to determine the denominations and design of the currency, while the actual printing and distribution are carried out by the RBI.Rate this question:
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- 6.
Capitalism is an economic system where businesses are privately owned and run by people rather than the government.
- A.
Yes
- B.
No
Correct Answer
A. YesExplanation
The given statement accurately describes capitalism as an economic system where businesses are privately owned and operated by individuals rather than being controlled by the government. This system promotes free market competition and individual economic freedom, allowing individuals to make their own decisions regarding production, distribution, and consumption of goods and services. Therefore, the answer "Yes" is correct as it aligns with the definition of capitalism provided in the statement.Rate this question:
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- 7.
Who introduced the idea of free-market:
- A.
Adam Smith, 1776
- B.
Karl Marx, 1850
- C.
J.P. Morgan, 1890
- D.
Amartya Sen, 1970
Correct Answer
A. Adam Smith, 1776Explanation
Adam Smith is the correct answer because he is widely regarded as the father of modern economics and the proponent of the idea of free-market. In his book "The Wealth of Nations" published in 1776, Smith advocated for a laissez-faire economic system where individuals and businesses are free to operate without government interference. He argued that this would lead to economic growth, efficiency, and overall societal welfare. Smith's ideas have had a significant influence on economic theory and policy, making him the most appropriate choice for introducing the idea of free-market.Rate this question:
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Current Version
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Mar 21, 2023Quiz Edited by
ProProfs Editorial Team -
Dec 09, 2020Quiz Created by
Catherine Halcomb
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