About this quiz
20 questions covering every section of the note.
This Lok Sewa practice set has 20 multiple-choice questions (Subject: Banking and Finance · For: Kharidar, Nayab Subba, Section Officer · Level: Easy). Take the quiz above first; after that, use the study list below to revise every question with its correct answer and a short explanation.
Study list: all 20 questions with answers and explanations
Direct exchange of goods for goods is called:
- A) Barter ✔
- B) Trade credit
- C) Banking
- D) Hire purchase
Why: Barter is the direct exchange of goods for goods, without money, as was done before money was invented.
The main problem of barter is lack of:
- A) Double coincidence of wants ✔
- B) Banks
- C) Factories
- D) Roads
Why: Barter needs a double coincidence of wants: each person must want exactly what the other has. This is rarely the case.
Which is a primary function of money?
- A) Store of value
- B) Medium of exchange ✔
- C) Standard of deferred payment
- D) Transfer of value
Why: Medium of exchange is the main primary function of money: it is accepted in payment for goods and services.
Measure of value is a(n):
- A) Primary function ✔
- B) Secondary function
- C) Contingent function
- D) Not a function
Why: Measure of value (unit of account) is a primary function: the prices of all goods are expressed in money.
Store of value is a:
- A) Primary function
- B) Secondary function ✔
- C) Fiscal function
- D) Banking function only
Why: Store of value is a secondary function: money lets people save purchasing power for the future.
Expressing future loan payments in money is the function of:
- A) Standard of deferred payment ✔
- B) Medium of exchange
- C) Measure of value
- D) Legal tender
Why: Standard of deferred payment means future payments, such as loan repayments, are fixed in money terms.
Money that has value because the government declares it legal is:
- A) Commodity money
- B) Fiat money ✔
- C) Metallic money
- D) Barter
Why: Fiat money has value because the government declares it legal tender, not because of the material it is made of. Paper rupees are fiat money.
Cheques and bank deposits are examples of:
- A) Credit / bank money ✔
- B) Commodity money
- C) Metallic money
- D) Barter goods
Why: Cheques and bank deposits are credit or bank money created by banks, which people use for payments.
Money that must be accepted by law is called:
- A) Legal tender ✔
- B) Near money
- C) Plastic money
- D) Token money
Why: Legal tender is money that must be accepted in payment by law. In Nepal, NRB-issued notes and coins are legal tender.
"Bad money drives good money out of circulation" is:
- A) Say's law
- B) Gresham's law ✔
- C) Law of demand
- D) Engel's law
Why: Gresham's law says bad (debased) money drives good money out of circulation, because people keep the good money and spend the bad.
Gresham's law is named after:
- A) Thomas Gresham ✔
- B) Adam Smith
- C) J. M. Keynes
- D) Alfred Marshall
Why: The law is named after Sir Thomas Gresham, a 16th-century English financier.
When inflation rises, the value of money:
- A) Rises
- B) Falls ✔
- C) Stays the same
- D) Doubles
Why: Inflation means prices rise, so each rupee buys less. The value of money falls.
The value of money is measured by its:
- A) Weight
- B) Purchasing power ✔
- C) Colour
- D) Size
Why: The value of money is its purchasing power: the amount of goods and services one unit can buy.
Silver coins of the Malla period were called:
- A) Mohar ✔
- B) Dam
- C) Paisa
- D) Taka
Why: The silver coins of the Malla period were called mohar.
Which Malla king is known for early silver coins?
- A) Mahendra Malla ✔
- B) Jayasthiti Malla
- C) Yaksha Malla
- D) Pratap Malla
Why: Mahendra Malla of Kantipur is known for issuing early silver mohar coins in the 16th century.
Who has the sole authority to issue Nepali currency?
- A) Ministry of Finance
- B) Nepal Rastra Bank ✔
- C) Nepal Bank Limited
- D) Department of Mines
Why: Under the Nepal Rastra Bank Act, 2058, only Nepal Rastra Bank may issue Nepali banknotes and coins.
The highest denomination banknote in Nepal is:
- A) Rs 500
- B) Rs 1,000 ✔
- C) Rs 5,000
- D) Rs 10,000
Why: The highest banknote in circulation in Nepal is Rs 1,000.
Cryptocurrency transactions in Nepal are:
- A) Legal and encouraged
- B) Illegal ✔
- C) Allowed only for banks
- D) Taxed at 13%
Why: Nepal Rastra Bank has declared cryptocurrency transactions and mining illegal in Nepal.
Debit cards and mobile wallets are examples of:
- A) Plastic and digital money ✔
- B) Commodity money
- C) Metallic money
- D) Barter
Why: Debit cards, credit cards and mobile wallets are plastic and digital money: they move bank balances without cash.
How many paisa make one Nepali rupee?
- A) 50
- B) 100 ✔
- C) 1000
- D) 10
Why: One Nepali rupee is divided into 100 paisa.