Bank System MCQs

Current interest rate is 7.
5% and Discount Rate is 6% of SBP
Total External Debts of Pakistan $95.7bn (Billions) or 33.6pc of GDP
Total debt and liabilities Rs29.8tr

SBP Policy Rate. 8.5% p.a..
SBP Overnight Reverse Repo (Ceiling) Rate. 9.0% p.a..
1 Profit and loss-sharing is an element of this system:
A. Islamic B. Capitalistic
C. Socialistic D. None of these
Answer & Explanation
Answer: Option A
Explanation:
View Answer Workspace Report Discuss in Forum
2. Cash cannot be obtained from bank against:
A. Cross cheque B. Order cheque
C. Bearer cheque D. Traveller cheque
Answer: Option A
Explanation:
3. Commercial banks accept deposits and provide:
A. Money B. Cheque
C. Loans D. Bill of exchange
Answer: Option C
Explanation:
4. The banks can give loans:
A. Unlimited B. Equal to deposits
C. Less than deposits D. More than deposits
Answer: Option D
Explanation:
5. Banks discount it and advance loans:
A. Draft B. Bill of exchange
C. Pay order D. Good
Answer: Option B
Explanation:
6. Banks prepare their balance sheet:
A. Weekly B. Monthly
C. Quarterly D. Annually
Answer: Option A
Explanation:
7. Balance sheet of a bank has two parts:

A. Supply and demand for deposits B. Supply and demand of advances
C. Assets and liabilities D. Cash reserves and loans
Answer: Option C
Explanation:
8. When banks prepare their balance sheets, they show the money lent in:
A. Liabilities B. Assets
C. Both assets and liabilities D. None of these
Answer: Option B
Explanation:
9. The power of a bank to create credit is affected by:
A. The cash reserve requirement B. The amount of cash available
C. The number of branches of a bank D. Both (a) & (b)
Answer: Option D
Explanation:
10. Demand deposits are:
Money (they can be used to make

A. Bank notes B.
payments)
C. Considered as near money D. Legal money

Answer: Option B
Explanation:
11. An asset is liquid when it is:
A. Being traded frequently B. Earning a good rate of return
Is money or easily converted into

C. D. All of the above
money
Answer: Option C
Explanation:
12. A bank has Rs. 5 million in cash. The minimum reserve ratio is 20%. What is maximum potential
increase in total deposits:
A. 0 B. 5m
C. 10 m D. 25 m
Answer: Option D
Explanation:
13. The following is not a bank liability:
A. Demand deposit B. Time deposit
C. Saving deposit D. Loans
Answer: Option D
Explanation:

14. When a commercial bank creates credit, it immediately raises:
A. Its assets B. Its liabilities
C. Money supply D. (a) and (b) of above
Answer: Option D
Explanation:
15. Which is the source of interest for a bank:
A. Advances B. Bills discounted
C. Investments D. All of the above
Answer: Option D
Explanation:
16. Commercial banks are able to create money by:
A. Printing money B. Making loans
C. Moral suasion D. Selling government bonds
Answer: Option B
Explanation:
17. Which is a function of a commercial bank:
A. Acting as a govt. banker B. Fixing the exchange rate
C. Issuing bank notes D. Making loans

Answer: Option D
Explanation:
18. 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
Answer: Option C
Explanation:
19. Total number of bank branches in Pakistan is:
A. More than 5000 but less than 10,000 B. More than 10,000 but less than 15,000
C. More than 15,000 but less than 20,000 D. More than 20,000 but less than 25,000
Answer: Option A
Explanation:
20. Demand deposits mean:
A. Saving account B. Profit loss account
C. Chequeable deposits D. Time deposits
Answer: Option C
Explanation:
21. Which is considered liability by a bank:
A. Loans B. Bank's building and equipment

C. Time deposit D. Securities
Answer: Option C
Explanation:
22. Demand deposits are money because:
A. They are backed by gold B. They are assets of banks
C. They can be used to make payments D. All of the above
Answer: Option C
Explanation:
23. Credit money is created by:
A. Central bank B. Commercial bank
C. Government D. All of the above
Answer: Option B
Explanation:
24. Credit money is created by:
A. Exchange bank B. Commercial bank
C. Finance companies D. None of these
Answer: Option B
Explanation:
25. Select the correct statement:
Credit money is better than legal Legal money is better than credit
A. B.
money money
Both legal money and credit money are

C. D. All money is evil
equally useful
Answer: Option C
Explanation:
A. Central bank creates legal money B. Commercial bank create paper money
C. Finance companies create fake money D. None of the above is true
Answer: Option A
Explanation:
Commercial bank create convertible

A. Central bank creates convertible money B.
money
C. Govt. creates paper money D. None of the above is true
Answer: Option D
Explanation:

28. Which type of cheque is more safe for transfer of money
A. Bearer cheque B. Traveller cheque
C. Order cheque D. Cross cheque
Answer: Option D
Explanation:
29. Which type of cheque is least safe for transfer of money:
A. Bearer cheque B. Traveller cheque
C. Order cheque D. Cross cheque
Answer: Option A
Explanation:
30. If a person is more interested to earn income, he should deposit his money in:
C. Saving account D. Profit-loss account
Answer: Option B
Explanation:
31. If a person is interested that his amount should be readily available as soon as he needs he should
deposit his money in:
C. Saving account D. Profit-loss account

Answer: Option A
Explanation:
32. Which type of card is not issued by commercial banks:
A. Credit card B. Debit card
C. ATM card D. Green card
Answer: Option D
Explanation:
33. Which type of card is not issued by central banks:
A. Credit card B. Debit card
C. ATM card D. None is issued y it
Answer: Option D
Explanation:
34. Market rate of interest is:
A. Always higher than discount rate B. Always lower than discount rate
May be higher or lower than discount

C. Both are equal D.
rate
Answer: Option A
Explanation:

35. Most important source of income of commercial banks is:
A. Interest charged on loans B. Profit erned on investments
C. Income from collecting utility bills D. Income from reserves at central bank
Answer: Option A
Explanation:
36. Select the true statement:
The central bank charges high interest The central bank does not charge
A. B.
rate on loans to commercial banks interest on loans to banks
The central bank does not advance

C. D. None is true
loans to commercial banks
Answer: Option D
Explanation:
37. If you borrow from a bank the amount which the bank charges is called:
A. Bank rate B. Discount rate
C. Interest rate D. Borrowing rate
Answer: Option C
Explanation:
38. The rate charged by a central bank on loans is called:
A. Market rate B. Discount rate
C. Lending rate D. Tax rate

Answer: Option B
Explanation:
39. Changes in discount rate are brought about by State Bank to:
A. Control inflation B. Increase investment activity
C. Increase earnings of the bank D. (a) and (b) of above
Answer: Option D
Explanation:
40. Short term loans can be obtained in:
A. Stock market B. Money market
C. Capital market D. All the markets
Answer: Option B
Explanation:
41. Long term loans can be obtained in:
A. Stock market B. Money market
C. Capital market D. Exchange market
Answer: Option C
Explanation:
42. Functions of commercial bank are:
Issue currency, create deposit money Accept deposit, create deposit money
A. B.
and provide loans and provide loans
Accept deposit, provide loans, export Accept deposit, provide loans and
C. D.
goods control foreign exchange
Answer: Option B
Explanation:
43. This is a difficulty of barter:
Difficulty to use larger scale in

A. Lack of double coincidence of wants B.
production
C. Lack of divisibility of many goods D. All of the above
Answer: Option D
Explanation:
44. Velocity of circulation of money means:
A. Total demand for money B. Total supply of money
The average number of times a unit of

C. D. Annual increase in currency notes
money changes hands
Answer: Option C
Explanation:
45. Nationalisation of banks ws done in:

A. 1974 B. 1976
C. 1978 D. 1980
Answer: Option A
Explanation:
46. National Bank of Pakistan is:
A. Industrial bank B. Commercial bank
C. Central bank D. Investment bank
Answer: Option B
Explanation:
47. Total number of branches of Pakistani banks is approximately:
A. 3000 B. 9000
C. 15000 D. 21500
Answer: Option B
Explanation:
48. National Bank of Pakistan was established in:
A. 1949 B. 1959
C. 1969 D. 1970

Answer: Option A
Explanation:
49. The bank established for loans to very small enterprises is called:
A. Micro Finance Bank B. Modarba Bank
C. SME Bank D. First Mini Bank
Answer: Option A
Explanation:
50. Pakistan has a banking system:
A. Developed B. Underdeveloped
C. Very unorganised D. (a) and (c) of above
Answer: Option A
Explanation:
51. Commercial banks in Pakistan are supervised by:
A. State Bank B. National Bank
C. Finance Minister D. World Bank
Answer: Option A
Explanation:
52. National Bank is a:
A. Public sector bank B. Private bank
C. Micro finance bank D. Specialised bank
Answer: Option A
Explanation:
53. First Women bank is:
A. Private bank B. Govt. Bank
C. Non-Scheduled Bank D. Investment Bank
Answer: Option B
Explanation:
54. Bank rate in Pakistan is:
A. 3% B. 13%
C. 23% D. 33%
Answer: Option B
Explanation:
55. State Bank was established in:
A. 1948 B. 1950
C. 1952 D. 1954

Answer: Option A
Explanation:
56. 10-rupee note is issued by:
A. National Bank B. State Bank
C. Govt. of Pakistan D. Governor State Bank
Answer: Option B
Explanation:
57. Acting as lender of last resort, a central bank lends to:
A. Money markets B. Stock exchange
C. Commercial banks D. Does not lend
Answer: Option C
Explanation:
58. Which statement is true of the relationship between bond prices and bond yields?
A. They vary inversely B. They tool vary directly
They are related in long run and not in

C. They are not related D.
the short run
Answer: Option A
Explanation:

59. Which is the most widely used of monetary policy:
A. Clearing house B. Open-market operations
C. Discount rate D. Issuing of notes
Answer: Option B
Explanation:
60. When the State Bank wants to decrease money supply in the country, it:
A. Buys govt. securities in stock market B. Sells govt. securities
C. Lowers discount rate D. (b) and (c) of above
Answer: Option D
Explanation:
61. Monetary policy consists of:
A. Decreasing taxes B. Changing total money supply
C. Checking commercial banks D. Printing of money
Answer: Option B
Explanation:
62. State Bank of Pakistan has departments:
A. Issue and banking department B. Issue and research department
Issue, research and banking

C. Banking and research department D.
department

Answer: Option D
Explanation:
63. Central bank's rate of lending to commercial banks is called
A. Interest rate B. Discount rate
C. Money rate D. Control rate
Answer: Option B
Explanation:
64. When a central bank wants to increase money supply in circulation:
A. Purchases govt. securities B. Lowers bank rate
C. Directs banks to advance more loans D. (a) and (b) of above
Answer: Option D
Explanation:
65. State Bank of Pakistan is run by:
A. Board of directors B. Board of governors
C. Board of managers D. Board of bankers
Answer: Option A
Explanation:

66. Credit money is controlled by:
A. Government B. Commercial banks
C. Central bank D. Markets
Answer: Option C
Explanation:
67. Every country establishes central bank to:
A. Issue notes B. Supervise commercial banks
C. Give loans to business D. (a) and (b) of above
Answer: Option D
Explanation:
68. It is NOT an instrument of monetary policy:
A. Bank rate B. Open market operations
C. Change in reserve ratio D. Issue notes
Answer: Option D
Explanation:
69. It creates credit:
A. Central bank B. Commercial bank
C. Government D. Stock exchange

Answer: Option B
Explanation:
70. 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
Answer: Option D
Explanation:
71. In order to reduce consumer borrowing this is raised:
A. Commercial bank deposits B. Government spending
C. Interest rate D. The exchange rate
Answer: Option C
Explanation:
72. Treasury bill is used for:
A. Getting short term loans B. Getting long germ loans
C. Treasury bill is not credit instrument D. Treasury bill is a govt. tax bill
Answer: Option A
Explanation:
73. Out of the following the only recognised legal tender is:

A. Cheque B. Bank notes
C. Draft D. Credit card
Answer: Option B
Explanation:
74. Open Market Operation is:
A. Buying and selling bills of exchange B. Buying and selling govt. securities
C. Buying and selling shares of companies D. Buying and selling foreign exchange
Answer: Option B
Explanation:
SBP
1. Discount rate of State Bank of Pakistan is:
A. Less than 5% B. More than 5% but not more than 15%
C. More than 15% but not more than 25% D. More than 25%
Answer: Option B
Explanation:
2. State Bank was established in:

A. 1948 B. 1950
C. 1952 D. 1954
Answer: Option A
Explanation:
3. 10-rupees note is issued by:
A. National Bank B. State Bank
C. Govt. of Pakistan D. Governor State Bank
Answer: Option B
Explanation:
4. Acting as lender of last resort, a central bank lends to:
A. Money markets B. Stock exchange
C. Commercial banks D. Does not lend
Answer: Option C
Explanation:
5. Which statement is true of the relationship between bond prices and bond yields?
A. They vary inversely B. They vary directly
They are related in long run and not in

C. They are not related D.
the short run

Answer: Option A
Explanation:
6. Which is the most widely used tool of monetary policy:
A. Clearing house B. Open-market operations
C. Discount rate D. Issuing of notes
Answer: Option B
Explanation:
7. When the State Bank wants to decrease money supply in the country, it:
A. Buys govt. securities in stock market B. Sells govt. securities
C. Lowers discount rate D. (b) and (c) of above
Answer: Option B
Explanation:
8. Monetary policy consists of:
A. Decreasing taxes B. Changing total money supply
C. Checking commercial banks D. Printing of money
Answer: Option B
Explanation:

9. State Bank of Pakistan has departments:
A. Issue and banking department B. Issue and research departments
Issue, research and banking

C. Banking and research department D.
department
Answer: Option D
Explanation:
10. Central bank's rate of landing to commercial banks is called:
A. Interest rate B. Discount rate
C. Money rate D. Control rate
Answer: Option B
Explanation:
11. When a central bank wants to increase money supply in circulation:
A. Purchases govt. securities B. Lowers bank rate
C. Directs banks to advance more loans D. (a) and (b) of above
Answer: Option D
Explanation:
12. State Bank of Pakistan is run by:
A. Board of directors B. Board of governors
C. Board of managers D. Board of bankers

Answer: Option A
Explanation:
13. Credit money is controlled by:
A. Government B. Commercial banks
C. Central bank D. Markets
Answer: Option C
Explanation:
A. Issue notes B. Supervise commercial banks
C. Give loans to businessmen D. (a) and (b) of above
Answer: Option D
Explanation:
15. It is NOT an instrument of monetary policy:
A. Bank rate B. Open market operations
C. Change in reserve ratio D. Issue notes
Answer: Option D
Explanation:

16. It creates credit:
A. Central bank B. Commercial banks
C. Government D. Stock exchange
Answer: Option B
Explanation:
17. Which is a monetary measure to increase employment
A. Increase in govt. expenditure B. Reduce govt. expenditure
Answer: Option D
Explanation:
18. In order to reduce consumer borrowing this is raised:
A. Commercial bank deposits B. Government spending
C. Interest rate D. The exchange rate
Answer: Option C
Explanation:
19. Which organisation controls the banking system in most countries?
A. Central bank B. Commercial banks
C. Investment Bank D. World Bank

Answer: Option A
Explanation:
20. Treasury bill is used for
A. Getting short term loans B. Getting long term loans
C. Treasry bill is not credit instrument D. Treasury bill is a govt. tax bill
Answer: Option A
Explanation:
21. Out of the following the only recognised legal tender is:
A. Cheque B. Bank notes and coins
C. Bank notes and cheques D. Credit card
Answer: Option B
Explanation:
22. Open market operations is:
A. Buying and selling bills of exchange B. Buying and selling govt. securities
C. Buying and selling shares of companies D. Buying and selling foreign exchange
Answer: Option B
Explanation:
23. Monetary policy has the objective:

A. Decrease unemployment rate B. Decrease tax rate
C. Decrease inflation rate D. All of the above
Answer: Option C
Explanation:
A. Issue currency B. To prepare government budget
C. To extablish commercial banks D. All of the above
Answer: Option A
Explanation:
25. It is a monetary employment:
A. Increase in govt. expenditure B. Increase govt. saving
Answer: Option D
Explanation:
26. In order to reduce consumer borrowing:
Incomes of govt. employees are

A. Bank deposits are increased B.
reduced
C. Interest rate is increased D. Foreign exchange rate is reduced

Answer: Option C
Explanation:
27. Which organistion controls the banking system:
A. Central bank B. Provincial bank
C. Investment Bank D. World Bank
Answer: Option A
Explanation:
28. The money called legal tender includes:
A. Currency notes and credit cards B. Currency notes and bank deposits
C. Currency notes and cheque D. Currency notes and coins
Answer: Option D
Explanation:
29. Open market operations refer to:
A. Buying and selling of foreign currencies B. Buying and selling govt. securities
Buying and selling shares in stock Buying and selling of goods in free
C. D.
market market
Answer: Option B
Explanation:

30. If SLR (statutaory liquidity ratio) is 20% and a bank gets a new deposit of 10 million, the total
increase in its deposits can rise up to:
A. 20 millions B. 50 millions
C. 100 million D. 200 million
Answer: Option B
Explanation:
State Bank policy of regulating interest rate is called:
A. Banking policy B. Monetary policy
C. Fiscal policy D. Commercial policy
Answer: Option B
Explanation:

Bank System MCQs

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Bank System MCQs

Uploaded by

Copyright:

Available Formats

Current interest rate is 7.

5% and Discount Rate is 6% of SBP

Total External Debts of Pakistan $95.7bn (Billions) or 33.6pc of GDP

Total debt and liabilities Rs29.8tr

SBP Overnight Reverse Repo (Ceiling) Rate. 9.0% p.a..

1 Profit and loss-sharing is an element of this system:

C. Socialistic D. None of these

Answer & Explanation

View Answer Workspace Report Discuss in Forum

2. Cash cannot be obtained from bank against:

A. Cross cheque B. Order cheque

C. Bearer cheque D. Traveller cheque

Answer & Explanation

View Answer Workspace Report Discuss in Forum

3. Commercial banks accept deposits and provide:

C. Loans D. Bill of exchange

Answer & Explanation

View Answer Workspace Report Discuss in Forum

4. The banks can give loans:

A. Unlimited B. Equal to deposits

C. Less than deposits D. More than deposits

Answer & Explanation

View Answer Workspace Report Discuss in Forum

5. Banks discount it and advance loans:

A. Draft B. Bill of exchange

C. Pay order D. Good

Answer & Explanation

View Answer Workspace Report Discuss in Forum

6. Banks prepare their balance sheet:

Answer & Explanation

View Answer Workspace Report Discuss in Forum

7. Balance sheet of a bank has two parts:

C. Assets and liabilities D. Cash reserves and loans

Answer & Explanation

View Answer Workspace Report Discuss in Forum

C. Both assets and liabilities D. None of these

Answer & Explanation

View Answer Workspace Report Discuss in Forum

9. The power of a bank to create credit is affected by:

A. The cash reserve requirement B. The amount of cash available

C. The number of branches of a bank D. Both (a) & (b)

Answer & Explanation

View Answer Workspace Report Discuss in Forum

10. Demand deposits are:

Money (they can be used to make

C. Considered as near money D. Legal money

Answer & Explanation

View Answer Workspace Report Discuss in Forum

11. An asset is liquid when it is:

A. Being traded frequently B. Earning a good rate of return

Is money or easily converted into

Answer & Explanation

View Answer Workspace Report Discuss in Forum

Answer & Explanation

View Answer Workspace Report Discuss in Forum

13. The following is not a bank liability:

A. Demand deposit B. Time deposit

C. Saving deposit D. Loans

Answer & Explanation

View Answer Workspace Report Discuss in Forum

A. Its assets B. Its liabilities

C. Money supply D. (a) and (b) of above

Answer & Explanation

View Answer Workspace Report Discuss in Forum