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Economics multiple choice questions

GCSE and O level

Banks and Stock Exchanges

Multiple Choice Questions and Answers

What does a commercial bank not provide?

A cash
B bonds
C loans
D mortgage (J18/P1/ Q8]

Answer is B

Bonds are issued by governments and corporations when they want to raise money.

What is not normally a function of the central bank of a country?

A acting as lender of last resort
B issuing notes and coins
C operating the government’s monetary policy
D setting the government’s budget{N19/P1/Q9]

Answer is D

A central bank is an independent national authority that conducts monetary policy, regulates banks, and provides financial services, including economic research. Its goals are to stabilize the nation's currency, keep unemployment low, and prevent inflation. It does not set the government's budget.

A stock exchange is a market in which

A a system of barter operates
B the interest rate is fixed
C the value of the exchange rate is determined
D shares are bought and sold [N10/P1/Q14]

Answer is D

A stock exchange is a place where people buy and sell stocks and shares.

What is a function of a commercial bank?

A acting as the lender of last
B resort deciding what is a legal tender
C determining monetary policy
D providing overdrafts [J10/P1/Q6)}

Answer is D

4 A person wishes to buy shares in order to make a long-term profit, but wants as little risk of short-term loss as possible Which type of share is most likely to meet these wishes?

A A share in a coffee growing company
B A share in a fashion house
C Ashare in a high-tech electronics company
D Ashare in a supermarket chain (J11/P1/Q12]

Answer is D

Which statement about a country’s banks is correct?

A Commercial banks hold the financial accounts of the government
B Commercial banks settle debts by clearing customers’ cheques
C The central bank sets the government’s tax and spending policies
D The central bank supplies foreign currency to members of the public {[J11/P1/Q13]

Answer is B

In most countries, which organisation controls the banking system?

A central bank
B commercial bank
C investment bank
D World Bank[N11/P1/Q14}

Answer is A

Share prices on the stock market are most likely to rise if

A employment falls
B interest rates fall
C interest rates rise
D tax rates rise (N11/P1/Q15}

Answer is B

The ways of making and receiving payments continue to develop As well as cash, debit cards and credit cards, mobile (cell) phones are now being used to make payments provides no information to sellers about their customers?
A cash
B debit cards
C credit cards
D mobile (cell) phones


Answer is A

Which is a major function of a com- mercial bank?
A acting as the lender of last resort
B collecting direct and indirect taxes
C issuing bank notes and coins
D lending money to its customers (J12/P1/Q16]

Answer is D

Which function is performed by both commercial banks and central banks?
A acting as bankers to the government
B advising the government on mon- etary policy
C. Dealing in forignexchnage
D. fixing the main interest rate (N12/P1/Q15]
Answer is C

A businesswoman seeks a 10-year loan from a bank She has listed her four most valuable possessions which could be offered to the bank in order to obtain the loan Which item would the bank be least likely to accept as security for the loan?

A a collection of gold coins, jewellery and antiques
B a house in a desirable part of
C a part ownership in a race horse
D a portfolio of government bonds[J15/P1/Q9]

Answer is C

When will a central bank act as lender of last resort to a commercial bank?

A when a commercial bank faces a liquidity crisis
B when a commercial bank fails to make a profit
C when a commercial bank needs to raise share capital
D when a commercial bank reduces its lending rates [J16/P1/Q9}

Answer is A

Which statement about financial matters is correct?

A Commercial banks’ main actiy- ity is the finance of international trade
B Paper banknotes possess all the desirable properties needed to act as money
C Stock exchanges trade mainly in second-hand stocks and shares,
D The central bank acts as the lender of last resort to companies facing bankruptcy [J17/P1/Q8}

Answer is C

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