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Fundamentals of Business Economics MCQs for CMA Foundation
Chapter-wise Fundamentals of Business Economics MCQs with answers and explanations. Try the sample questions below, then practise a set of 10 with instant right/wrong.
Practise 10 Eco & Mgmt MCQsSample Fundamentals of Business Economics MCQs with answers
Q1 · Money and Banking
If the cash reserve ratio (CRR) is 10% and banks hold no excess reserves, a fresh primary deposit of ₹5,000 can lead to a maximum total deposit creation of:
- (a) ₹500
- (b) ₹5,000
- (c) ₹50,000
- (d) ₹55,000
Show answer ↓
Answer: (c) ₹50,000
(c) is correct: credit multiplier = 1/CRR = 1/0.10 = 10, so total deposits = 5,000 × 10 = ₹50,000. ₹55,000 wrongly adds the initial deposit again.
Q2 · Money and Banking
A farmer wants to exchange wheat for shoes, but the shoemaker wants rice, not wheat. This difficulty of barter is called:
- (a) Lack of a common measure of value
- (b) Lack of double coincidence of wants
- (c) Indivisibility of goods
- (d) Lack of a store of value
Show answer ↓
Answer: (b) Lack of double coincidence of wants
(b) is correct: barter needs each party to want what the other offers. Lack of a common measure of value relates to fixing exchange ratios, not to matching wants.
Q3 · Money and Banking
When a person keeps savings in the form of money to spend next year, money is performing its function as a:
- (a) Medium of exchange
- (b) Measure of value
- (c) Store of value
- (d) Unit of account
Show answer ↓
Answer: (c) Store of value
(c) is correct: holding money to carry purchasing power into the future is the store of value function. Medium of exchange relates to buying and selling now.
Q4 · Money and Banking
The rate at which the RBI lends short-term funds to commercial banks against government securities is the:
- (a) Reverse repo rate
- (b) Repo rate
- (c) Bank rate
- (d) Call money rate
Show answer ↓
Answer: (b) Repo rate
(b) is correct: repo is RBI's short-term lending to banks against securities. Reverse repo is the rate at which RBI absorbs funds from banks.
Q5 · Money and Banking
Which of the following is a primary function of a commercial bank?
- (a) Accepting deposits
- (b) Collecting cheques for customers
- (c) Providing lockers
- (d) Issuing currency notes
Show answer ↓
Answer: (a) Accepting deposits
(a) is correct: accepting deposits and lending are primary functions. Collecting cheques and lockers are secondary (agency/utility) functions, and note issue belongs to the RBI.
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