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Economics multiple choice questions

GCSE and O level

Banks and Stock Exchanges

Multiple Choice Questions and Answers

MCQ Questions:

1. What does a commercial bank not provide?
A) cash
B) bonds
C) loans
D) mortgage

2. 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

3. 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

4. What is a function of a commercial bank?
A) acting as the lender of last resort
B) deciding what is legal tender
C) determining monetary policy
D) providing overdrafts

5. A person wishes to buy shares 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) A share in a high-tech electronics company
D) A share in a supermarket chain

6. 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

7. In most countries, which organization controls the banking system?
A) central bank
B) commercial bank
C) investment bank
D) World Bank

8. 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

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

10. Which is a major function of a commercial bank?
A) acting as the lender of last resort
B) collecting direct and indirect taxes
C) issuing banknotes and coins
D) lending money to its customers

11. Which function is performed by both commercial banks and central banks?
A) acting as bankers to the government
B) advising the government on monetary policy
C) dealing in foreign exchange
D) fixing the main interest rate

12. 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 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, jewelry, and antiques
B) a house in a desirable part of town
C) a part ownership in a racehorse
D) a portfolio of government bonds

13. When will a central bank act as a 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

14. Which statement about financial matters is correct?
A) Commercial banks’ main activity 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


Answer: B (bonds)
Answer: D (setting the government’s budget)
Answer: D (shares are bought and sold)
Answer: D (providing overdrafts)
Answer: D (A share in a supermarket chain)
Answer: B (Commercial banks settle debts by clearing customers’ cheques)
Answer: A (central bank)
Answer: B (interest rates fall)
Answer: A (cash)
Answer: D (lending money to its customers)
Answer: C (dealing in foreign exchange)
Answer: C (a part ownership in a racehorse)
Answer: A (when a commercial bank faces a liquidity crisis)
Answer: C (Stock exchanges trade mainly in second-hand stocks and shares)

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