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CUET UG Unit 1A: Basic Economic Concepts and Production Systems — practice questions

Explore 24 free Unit 1A: Basic Economic Concepts and Production Systems questions in CUET UG Economics. Open each question or exercise to read its content, reference answers and available explanation.

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Unit 1A: Basic Economic Concepts and Production Systems questions and exercises with answers

Showing questions 1–24 of 24.

The first and foremost function of money is to act as:Read the answer and worked solution →Barter exchange is difficult because it requires:Read the answer and worked solution →The central bank of India, established in 1935, is the:Read the answer and worked solution →The Cash Reserve Ratio (CRR) is:Read the answer and worked solution →High-powered money, or reserve money, is issued by:Read the answer and worked solution →Money serving as a 'unit of account' means that:Read the answer and worked solution →The money multiplier is given by:Read the answer and worked solution →If the Cash Reserve Ratio is 20%, the value of the money multiplier is:Read the answer and worked solution →With a CRR of 20%, an initial deposit of ₹100 can expand total deposits in the system to:Read the answer and worked solution →Other things equal, when the rate of interest rises, the demand for money:Read the answer and worked solution →A bank's 'spread' refers to the:Read the answer and worked solution →The reserves of a commercial bank are held:Read the answer and worked solution →A general rise in the price level causes the purchasing power of money to:Read the answer and worked solution →With a CRR of 20% and a fresh deposit of ₹100, the amount the bank can initially lend is:Read the answer and worked solution →With a CRR of 10% and an initial deposit of ₹200, the maximum total deposits the banking system can create is:Read the answer and worked solution →If the central bank raises the Cash Reserve Ratio, credit creation by commercial banks will:Read the answer and worked solution →The Statutory Liquidity Ratio (SLR) refers to reserves that banks must keep:Read the answer and worked solution →In the goldsmith (Lala) story, money created 'out of thin air' illustrates:Read the answer and worked solution →On a bank's balance sheet, total assets are made up of:Read the answer and worked solution →A Cash Reserve Ratio of 25% corresponds to a money multiplier of:Read the answer and worked solution →When the central bank acts as 'a bank to the banking system', it is performing the function of:Read the answer and worked solution →For money to perform its store-of-value function well, it is necessary that:Read the answer and worked solution →To increase the money supply, the RBI is most likely to:Read the answer and worked solution →Which of the following can act as a store of value but lacks the universal acceptability of money?Read the answer and worked solution →

Worked practice questions

The first and foremost function of money is to act as:

  1. a unit of account
  2. a standard of deferred payment
  3. a store of value
  4. a medium of exchange
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Correct answer: D. a medium of exchange

Money's principal role is as a medium of exchange, removing the need for a double coincidence of wants in barter.

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Barter exchange is difficult because it requires:

  1. a common currency
  2. a central bank
  3. high rates of interest
  4. a double coincidence of wants
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Correct answer: D. a double coincidence of wants

Barter needs each party to want exactly what the other offers — a 'double coincidence of wants' — which is rare and costly to find.

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The central bank of India, established in 1935, is the:

  1. NABARD
  2. State Bank of India
  3. Reserve Bank of India
  4. Securities and Exchange Board of India
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Correct answer: C. Reserve Bank of India

India's central bank is the Reserve Bank of India, set up in 1935 SBI is a commercial bank.

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More Economics topics

Money and BankingIntroduction to MicroeconomicsUnit 2A1: Measuring Economic Output and Real GDPUnit 2A: Demand, Supply and Market EquilibriumUnit 2B: Economic Indicators: Inflation & UnemploymentUnit 4: Financial Sector: Money & Banking SystemUnit 4: Imperfect Competition & Market StructuresUnit 5: Factor Markets & Resource Allocation