2nd Year Principles of Banking Chapter 4 TestCentral Bank

Q1. Multiple choice questions (Attempt all · 10 × 1 = 10)

1. To reduce circulation of currency within a country, central bank:

   1. Increase interest rate

   2. Decrease interest rate

   3. Buy securities

   4. Decreases margin requirement

2. In Pakistan, currecy notes are issued by:

   1. Commercial bank

   2. Central bank

   3. Industrial bank

   4. National saving centre

3. It is called the bank of banks:

   1. Bank of Punjab

   2. National bank

   3. Muslim commercial bank

   4. Central bank

4. The governor of central bank is chosen by:

   1. Pubic

   2. Shareholders

   3. Government

   4. Minister of state

5. Responsible for economic stability of a country is:

   1. Commercial bank

   2. Central bank

   3. Agricultural bank

   4. Industrial bank

6. What is the purpose of monetary policy:

   1. To control banking system

   2. To control supply of money

   3. To control foreign exchange

   4. To control stock market

7. Which function is not performed by Central bank:

   1. Credit creating

   2. Advancing loans

   3. Lender of last resort

   4. Bank of the public

8. Modern central banking system started in:

   1. 18^th Century

   2. 19^th Century

   3. 20^th Century

   4. None of the above

9. Central bank provides the following facility to scheduled banks.

   1. Feast

   2. Godown

   3. Clearing house

   4. None of the above

10. Important functions of a central bank:

    1. To issue currency notes

    2. To provide banking facilities to government

    3. To advise commercial banks

    4. All the above