CAIIB 2020 Advanced Bank Management Mock Tests Set 2

The most effective fiscal policy program to help reduce demand-pull inflation would be to


Options are :

  • Decrease the rate of growth of the money supply.
  • Increase both taxes and government spending.
  • Decrease taxes and increase government spending.
  • Increase taxes and decrease government spending. (Correct)

Answer :Increase taxes and decrease government spending.

CAIIB 2020 Retail Banking Mock Tests Set 18

Which of the following will result in a movement along the demand curve of a given product?


Options are :

  • A change in the cost of producing the product.
  • A change in the price of the product. (Correct)
  • A change in price of a substitute product.
  • None of the above

Answer :A change in the price of the product.

Venkat Ltd. manufactures steel plates. Iron ore is an important component of raw material used for manufacturing steel plates. If the price of iron ore decreases, the supply curve for steel plates will:


Options are :

  • Shift to the left.
  • Shift to the right. (Correct)
  • Move upward.
  • Move downward.

Answer :Shift to the right.

The rate of unemployment caused by changes in the composition of unemployment opportunities over time is referred to as the


Options are :

  • Frictional unemployment rate.
  • Cyclical unemployment rate.
  • Structural unemployment rate. (Correct)
  • Full-employment unemployment rate.

Answer :Structural unemployment rate.

CAIIB 2020 Bank Financial Management Mock Tests Set 1

Equilibrium relates to which of these


Options are :

  • Market condition which oscillates
  • Market state of falling price;
  • Market condition of rising price
  • Market conditions which once achieved tend to persist (Correct)

Answer :Market conditions which once achieved tend to persist

Which phase of the business cycles also known as the crisis?:


Options are :

  • Boom
  • Depression
  • Recovery
  • Recession (Correct)

Answer :Recession

Market equilibrium of a commodity is determined by


Options are :

  • Balancing of demand and supply position (Correct)
  • Aggregate demand
  • Aggregate supply
  • Government intervention

Answer :Balancing of demand and supply position

CAIIB 2020 Advanced Bank Management Mock Tests Set 14

Underemployment of both men and materials is a characteristic of which phase?:


Options are :

  • Depression (Correct)
  • Boom
  • Recovery
  • Recession

Answer :Depression

Cetris Paribus means


Options are :

  • Holding demand constant
  • Holding supply constant
  • Price being constant;
  • Other things being constant (Correct)

Answer :Other things being constant

Economies often experience inflation but seldom experience long period of deflation. Which of the following is true about a deflationary economy?


Options are :

  • Companies are hesitant to make investments. (Correct)
  • The lower prices encourage consumers to make major purchases.
  • Interest rates tend to be high.
  • Actual GDP is above potential GDP.

Answer :Companies are hesitant to make investments.

CAIIB 2020 Advanced Bank Management Mock Tests Set 8

Which type of economic market structure is characterized by a few large sellers of a product or service, engaging primarily in nonprice competition?


Options are :

  • Monopoly.
  • Oligopoly. (Correct)
  • Perfect competition.
  • Monopolistic competition

Answer :Oligopoly.

The curve that represents combination of income and the real interest rate at which planned expenditure equals income is most likely the:


Options are :

  • LM curve.
  • IS curve. (Correct)
  • Aggregate demand curve.
  • Aggregate supply curve.

Answer :IS curve.

Which type of economic market structure is composed of a large number of sellers, each producing an identical product, and with no significant barriers to entry and exit?


Options are :

  • Monopoly.
  • Oligopoly.
  • Perfect competition (Correct)
  • Monopolistic competition

Answer :Perfect competition

CAIIB 2020 Bank Financial Management Mock Tests Set 6

The curve that represents combinations of income and the interest rate at which the demand for real money balances equals supply is most likely the:


Options are :

  • IS curve.
  • LM curve. (Correct)
  • Aggregate demand curve
  • Aggregate supply curve.

Answer :LM curve.

A market with many independent firms, low barriers to entry, and product differentiation is best classified as


Options are :

  • A monopoly.
  • A natural monopoly.
  • Monopolistic competition. (Correct)
  • An oligopoly

Answer :Monopolistic competition.

Which of the following best describes the relationship depicted by the IS curve?


Options are :

  • When interest rates are high, investments rise and therefore income must rise as well.
  • When interest rates are high, investments fall and therefore income must fall as well. (Correct)
  • Interest rates have no impact on the investment and income.
  • Interest rates have equal impact on the investment and income.

Answer :When interest rates are high, investments fall and therefore income must fall as well.

CAIIB 2020 Retail Banking Mock Tests Set 8

Which of the following is not a key assumption of perfect competition?


Options are :

  • Firms sell a homogeneous product.
  • Customers are indifferent about which firm they buy from.
  • The level of a firm’s output is small relative to the industry’s total output.
  • Each firm can price its product above the industry price. (Correct)

Answer :Each firm can price its product above the industry price.

Which of the following issue relates to micro-economics


Options are :

  • Impact of crude price hike on inflation
  • Impact of change in bank rate on bank saving and investment
  • Impact of Information technology on economic growth
  • Impact of shortage of wheat production on wheat prices (Correct)

Answer :Impact of shortage of wheat production on wheat prices

Which of the following statements concerning the relationship of the quantity demanded or supplied with price is (are) correct? (1) The quantity supplied varies inversely with price. (2) The quantity demanded varies directly with price.


Options are :

  • (1) only
  • (2) only
  • Both (1) and (2)
  • Neither (1) nor (2) (Correct)

Answer :Neither (1) nor (2)

CAIIB 2020 Retail Banking Mock Tests Set 13

Which of the following best describes the relationship depicted by the LM curve?


Options are :

  • When income increases, the demand for money increases and therefore interest rate must increase as well. (Correct)
  • When income increases, the demand for money decreases and therefore interest rate must decrease as well.
  • Income has no impact on the demand for money and interest rates.
  • Income has equal impact on the demand for money and interest rates.

Answer :When income increases, the demand for money increases and therefore interest rate must increase as well.

According to economic theory, which of the following statements is correct?


Options are :

  • A price in excess of the equilibrium price would lead to a shortage of supply.
  • A price in excess of the equilibrium price would lead to an excess of demand.
  • An equilibrium price can be disrupted by a rightward or leftward shift of the supply or demand curve. (Correct)
  • An equilibrium price is the price at which all consumers are able to buy as much as they want

Answer :An equilibrium price can be disrupted by a rightward or leftward shift of the supply or demand curve.

A decrease in the price level would most likely shift the:


Options are :

  • IS curve.
  • LM curve. (Correct)
  • Aggregate demand curve.
  • Aggregate supply curve.

Answer :LM curve.

CAIIB 2020 Retail Banking Mock Tests Set 7

Which of the following best describes the cause effect chain of an easy money policy?


Options are :

  • A decrease in the money supply will lower the interest rate, increase investment spending, and increase aggregate demand and GDP.
  • A decrease in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP.
  • An increase in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP.
  • An increase in the money supply will lower the interest rate, increase investment spending, and increase aggregate demand (Correct)

Answer :An increase in the money supply will lower the interest rate, increase investment spending, and increase aggregate demand

Nominal GDP is


Options are :

  • The total value of goods and services net of exports
  • The total value of goods and services produced during periods of low unemployment
  • The total value of goods and services measured at current prices (Correct)
  • The total value of goods and services produced at full employment.

Answer :The total value of goods and services measured at current prices

Price elasticity of demand is most accurately defined as the change in:


Options are :

  • Quantity demanded in response to a change in income.
  • Market price in response to a change in the quantity demanded.
  • Quantity demanded in response to a change in market price. (Correct)
  • Quantity demanded in response to a change in sales

Answer :Quantity demanded in response to a change in market price.

CAIIB 2020 Retail Banking Mock Tests Set 17

GDP at factor cost exceeds GDP at market price


Options are :

  • When the factor income from abroad is negative ;
  • When depreciation on fixed capital exceeds income in investment;
  • When direct tax exceeds indirect tax ;
  • When subsidies exceed indirect taxes. (Correct)

Answer :When subsidies exceed indirect taxes.

The difference between Gross National Product (GNP) and Gross Domestic Product GDP) is


Options are :

  • Excess of subsidies over indirect taxes
  • Depreciation
  • Net foreign income from abroad (Correct)
  • Excess of indirect taxes over subsidies

Answer :Net foreign income from abroad

If the economy were encountering a severe recession, proper monetary and fiscal policies would call for:


Options are :

  • selling government securities, raising the reserve ratio, lowering the discount rate, and a budgetary surplus.
  • buying government securities, reducing the reserve ratio, reducing the discount rate, and a budgetary deficit. (Correct)
  • buying government securities, raising the reserve ratio, raising the discount rate, and a budgetary surplus.
  • buying government securities, reducing the reserve ratio, raising the discount rate, and a budgetary deficit

Answer :buying government securities, reducing the reserve ratio, reducing the discount rate, and a budgetary deficit.

CAIIB 2020 Bank Financial Management Mock Tests Set 12

Which of the following statements is true about ‘Inflation?’:


Options are :

  • A rise in the general level of prices
  • Leads to fall in purchasing power
  • Both (1) and (2) (Correct)
  • None of the above

Answer :Both (1) and (2)

Which of the following statements about supply curves is least accurate? The:


Options are :

  • Supply curve for the market is typically more elastic over the short run than the long run. (Correct)
  • Long­run supply curve for decreasing cost industries slopes downward to the right.
  • Long­run supply curve for constant cost industries is horizontal.
  • Supply curve for the market is typically less elastic over the short run than the long run.

Answer :Supply curve for the market is typically more elastic over the short run than the long run.

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