1.

Discount rate of State Bank of Pakistan is:

More than 5% but not

A. Less than 5% B.
more than 15%

More than 15% but not

C. D. More than 25%
more than 25%

2. State Bank was established in:

A. 1948 B. 1950

C. 1952 D. 1954

3. 10-rupees note is issued by:

A. National Bank B. State Bank

C. Govt. of Pakistan D. Governor State Bank

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

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

C. They are not related D. run and not in the short
run
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

7. When the State Bank wants to decrease money supply in the country, it:

Buys govt. securities in

A. B. Sells govt. securities
stock market

C. Lowers discount rate D. (b) and (c) of above

8. Monetary policy consists of:

Changing total money

A. Decreasing taxes B.
supply

C. Checking commercial banks D. Printing of money

9. State Bank of Pakistan has departments:

Issue and banking Issue and research

A. B.
department departments

Banking and research Issue, research and

C. D.
department banking department

10. Central bank's rate of landing to commercial banks is called:

A. Interest rate B. Discount rate

C. Money rate D. Control rate

11. When a central bank wants to increase money supply in circulation:

A. Purchases govt. securities B. Lowers bank rate

Directs banks to advance

C. D. (a) and (b) of above
more loans

12. State Bank of Pakistan is run by:

A. Board of directors B. Board of governors

C. Board of managers D. Board of bankers

13. Credit money is controlled by:

A. Government B. Commercial banks

C. Central bank D. Markets

14. Every country establishes central bank to:

Supervise commercial
A. Issue notes B.
banks

C. Give loans to businessmen D. (a) and (b) of above

15. It is NOT an instrument of monetary policy:

A. Bank rate B. Open market operations

Issue notes
C. Change in reserve ratio D.

16. It creates credit:

A. Central bank B. Commercial banks

 C. Government D. Stock exchange

17. Which is a monetary measure to increase employment

Increase in govt.
A. B. Reduce govt. expenditure
expenditure

C. Increase in interest rate D. Reducing interest rate

18. In order to reduce consumer borrowing this is raised:

A. Commercial bank deposits B. Government spending

C. Interest rate D. The exchange rate

19. Which organisation controls the banking system in most countries?

A. Central bank B. Commercial banks

C. Investment Bank D. World Bank

20. Treasury bill is used for

A. Getting short term loans B. Getting long term loans

Treasry bill is not credit Treasury bill is a govt. tax

C. D.
instrument bill

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

22. Open market operations is:

Buying and selling bills of Buying and selling govt.

A. B.
exchange securities

Buying and selling shares

C.
of companies

23. Monetary policy has the objective:

Decrease unemployment
A. B. Decrease tax rate
rate

C. Decrease inflation rate D. All of the above

24. Every country establishes central bank to:

To prepare government
A. Issue currency B.
budget

To extablish commercial
C. D. All of the above
banks

25. It is a monetary employment:

Increase in govt.
A. B. Increase govt. saving
expenditure

C. Increase in interest rate D. Reducing interest rate

26. In order to reduce consumer borrowing:

 Bank deposits are Incomes of govt.
A. B.
increased employees are reduced

Interest rate is Foreign exchange rate is

C. D.
increased reduced

27. Which organistion controls the banking system:

A. Central bank B. Provincial bank

C. Investment Bank D. World Bank

28. The money called legal tender includes:

Currency notes and credit Currency notes and bank

A. B.
cards deposits

Currency notes and

C. Currency notes and cheque D.
coins

29. Open market operations refer to:

Buying and selling of Buying and selling govt.

A. B.
foreign currencies securities

Buying and selling shares Buying and selling of goods

C. D.
in stock market in free market

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

31. State Bank policy of regulating interest rate is called:

A. Banking policy B. Monetary policy

C. Fiscal policy D. Commercial policy

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

A. Islamic B. Capitalistic

C. Socialistic D. None of these

33. Cash cannot be obtained from bank against:

A. Cross cheque B. Order cheque

C. Bearer cheque D. Traveller cheque

34. Commercial banks accept deposits and provide:

A. Money B. Cheque

C. Loans D. Bill of exchange

4. The banks can give loans:

A. Unlimited B. Equal to deposits

C. Less than deposits D. More than deposits

 Banks discount it and advance loans:

A. Draft B. Bill of exchange

C. Pay order D. Good

6. Banks prepare their balance sheet:

A. Weekly B. Monthly

C. Quarterly D. Annually

7. Balance sheet of a bank has two parts:

Supply and demand for Supply and demand of

A. B.
deposits advances

C. Assets and liabilities D. Cash reserves and loans

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

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

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

The number of branches of a

C. D. Both (a) & (b)
bank
10. Demand deposits are:

Money (they can be used to

A. Bank notes B.
make payments)

C. Considered as near money D. Legal money

11. An asset is liquid when it is:

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

Is money or easily
C. D. All of the above
converted into money

2. 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

13. The following is not a bank liability:

A. Demand deposit B. Time deposit

C. Saving deposit D. Loans

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

5. Which is the source of interest for a bank:

A. Advances B. Bills discounted

C. Investments D. All of the above

Commercial banks are able to create money by:

A. Printing money B. Making loans

C. Moral suasion D. Selling government bonds

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

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

Total number of bank branches in Pakistan is:

More than 5000 but less than More than 10,000 but less than
A. B.
10,000 15,000

More than 15,000 but less than More than 20,000 but less than
C. D.
20,000 25,000
 Demand deposits mean:

A. Saving account B. Profit loss account

C. Chequeable deposits D. Time deposits

Which is considered liability by a bank:

A. Loans B. Bank's building and equipment

C. Time deposit D. Securities

Demand deposits are money because:

A. They are backed by gold B. They are assets of banks

They can be used to make

C. D. All of the above
payments

Credit money is created by:

A. Central bank B. Commercial bank

C. Government D. All of the above

Credit money is created by:

A. Exchange bank B. Commercial bank

C. Finance companies D. None of these

Which type of cheque is more safe for transfer of money

A. Bearer cheque B. Traveller cheque

C. Order cheque D. Cross cheque

Which type of cheque is least safe for transfer of money:

A. Bearer cheque B. Traveller cheque

C. Order cheque D. Cross cheque

If a person is more interested to earn income, he should deposit his money in:

A. Demand deposit B. Time deposit

C. Saving account D. Profit-loss account

Which type of card is not issued by commercial banks:

A. Credit card B. Debit card

C. ATM card D. Green card

Market rate of interest is:

Always higher than discount

A. B. Always lower than discount rate
rate

May be higher or lower than

C. Both are equal D.
discount rate

Most important source of income of commercial banks is:

A. Interest charged on loans B. Profit erned on investments

Income from reserves at central

C. Income from collecting utility bills D.
bank

The rate charged by a central bank on loans is called:

A. Market rate B. Discount rate

C. Lending rate D. Tax rate

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

Short term loans can be obtained in:

A. Stock market B. Money market

C. Capital market D. All the markets

Long term loans can be obtained in:

A. Stock market B. Money market

C. Capital market D. Exchange market

Functions of commercial bank are:

Issue currency, create deposit Accept deposit, create deposit

A. B.
money and provide loans money and provide loans

Accept deposit, provide loans, Accept deposit, provide loans and

C. D.
export goods control foreign exchange

Nationalisation of banks ws done in:

A. 1974 B. 1976

C. 1978 D. 1980

National Bank of Pakistan is:

A. Industrial bank B. Commercial bank

C. Central bank D. Investment bank

Total number of branches of Pakistani banks is approximately:

A. 3000 B. 9000

C. 15000 D. 21500
. National Bank of Pakistan was established in:

A. 1949 B. 1959

C. 1969 D. 1970

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

Pakistan has a banking system:

A. Developed B. Underdeveloped

C. Very unorganised D. (a) and (c) of above

Commercial banks in Pakistan are supervised by:

A. State Bank B. National Bank

C. Finance Minister D. World Bank

National Bank is a:

A. Public sector bank B. Private bank

C. Micro finance bank D. Specialised bank

First Women bank is:

A. Private bank B. Govt. Bank

C. Non-Scheduled Bank D. Investment Bank

Bank rate in Pakistan is:

A. 3% B. 13%

C. 23% D. 33%

State Bank was established in:

A. 1948 B. 1950

C. 1952 D. 1954

10-rupee note is issued by:

A. National Bank B. State Bank

C. Govt. of Pakistan D. Governor State Bank

In order to reduce consumer borrowing this is raised:

A. Commercial bank deposits B. Government spending

C. Interest rate D. The exchange rate