Part I: Write "True" if the statement is correct and "false" if incorrect (1pt)1. Debtor- creditor relationship is a primary relationship that exists between banker and customer.2. A commercial bank is the apex of the banking system.3. The multiple expansions of deposits are called credit creation.4. Central bank is the bankers to the general public.5. The disequilibrium of aggregate demand and supply merely cause inflation.Part II: Choose the correct answer among the give alternatives (2pt)1. One of the following is not the agency services of the commercial bank:A. Accepting standing instruction from customersB. Income tax consultancyC. Collection of credit instrumentsD. RemittancesE. None of the above2. Which of the following instrument are elements of secondary reserves?A. Bank loans ?? C. Long term commercial papersB. Governments bonds ?? D. Treasury bill E. All of the above3. Which one of the following is true about the central bank?A. Is it's the banker's bankB. Has the monopoly to issue a moneyC. Non-profit institutionsD. None of the above4. Which of the following factor is not the demand side cause of inflation?A. High money supply C. Artificial scarcitiesB. Credit- Induced inflation. D. Payment of public debt E. All of the above5. Among the following, which one is the function of the central bank?A. Supervising commercial banksB. Inspecting accounts of all banksC. Issuing license to newly established banksD. All of the aboveE. None of the above.6. Identify the necessary precaution that needs to be taken by the banker while paying for a cheque.A. Precaution regarding crossingB. Precaution regarding DateC. Precaution regarding Drawer's signatureD. Precaution regarding Availability of sufficient fundE. All of the above7. Which one of the following is not the part of the financial system?A. National bank of Ethiopia ???C. Commercial banksB. Bond??????D. Insurance certificates E. None8. A Sustained rise in the general level of prices brought about by high rate of expansions in aggregate money supply isA. Deflation C. HoardingB. Inflation D. Dishoarding9. If deficit in the budget is financed by money creator that is printing money ends in inflation through:A. Money supply riseB. Increasing the aggregate demandC. Leading to price increaseD. All of the above10. The first bank in Ethiopian is:A. Commercial Bank of Ethiopia C. Zemen bankB. Wegagen Bank D. Development bank of Ethiopia11. One of the following is not the functions of a commercial bank?A. Accept deposits C. Provide agency servicesB. Grant loans D. Note issue12. One is a Central bank of the country in an Ethiopia context:A. Commercial bank of Ethiopia C. Wegagen bank B. Dashen Bank D. Development BankE. National bank of Ethiopia13. To constitute a person as a customer A. There must be a single transaction of any nature B. There must be some sort of an account C. There must be frequency of transactions D. There must be dealing of a banking nature14. Demand deposits mean A. Deposits withdraw able on demand by the depositor B. Current deposits C. Fixed deposits D. Short deposits E. None15. Commercial banks influence money supply through A. Printing of one rupee notes B. Augmentation of savings and time deposits C. Provision of high denomination notes D. Creation of demand deposits16. Which of the following is true about deflation?A. Increases unemployment rate C. Debtors enjoy B. Reduce national income D. Creditors suffers E. all of the above17. One of the following is not true about inflation:A. B. Process of persistently rising price levelC. It is a cyclical movement of price levelD. It is also a monetary phenomenonE. It is a long-term operating dynamic process. 18. When an occurrence of an inflation rate is doubled or tripled digit of price rise above 20 percent per annumA. B. Creeping inflationC. Hyper inflationD. Running inflationE. Walking inflation 19. Which of the following is false about the effect of inflation?A. Creditors are benefited during inflationary periodB. The retired class suffers during inflationary periodC. Workers are adversely affected during inflationD. Debtors are benefited during inflation20. The government policy with reference to the reduction of public expenditure and taxation in order to control inflation is:A. Monetary policy C. Fiscal policyB. Public policy D. Economic policy

1 May/2019 Part I: Write "True" if the statement is correct and "false" if incorrect (lot) 1. Debtor- creditor relationship is a primary relationship that exists between banker and customer. A commercial bank is the apex of the banking system. 3. The multiple expansions of deposits are called credit creation. 4. Central bank is the bankers to the general public. 5. The disequilibrium of aggregate demand and supply merely cause inflation. Part II: Choose the correct answer among the give alternatives (2pt 1. One of the following is not the agency services of the commercial bank: A. Accepting standing instruction from customers B. Income tax consultancy C. Collection of credit instruments D. Remittances E. None of the above 2. Which of the following instrument are elements of secondary reserves? A. Bank loans C. Long term commercial papers B. Governments bonds D. Treasury bill E. All of the above 3. Which one of the following is true about the central bank? A. Is it's the banker's bank B. Has the monopoly to issue a money C. Non-profit institutions D. None of the above 4. Which of the following factor is not the demand side cause of inflation? A. High money supply C. Artificial scarcityes B. Credit- Induced inflation. D. Payment of public debt E. All of the above 5. Among the following, which one is the function of the central bank? A. Supervising commercial banks B. Inspecting accounts of all banks C. Issuing license to newly established banks D. All of the above E. None of the above. 6. Identify the necessary precaution that needs to be taken by the banker while paying for a cheque. A. Precaution regarding crossing B. Precaution regarding Date C. Precaution regarding Drawer's signature D. Precaution regarding Availability of sufficient fund E. All of the above 7. Which one of the following is not the part of the financial system? A. National bank of Ethiopia C. Commercial banks B. Bond D. Insurance certificates E. None 8. A Sustained rise in the general level of prices brought about by high rate of expansions in aggregate money supply is 2 A. Deflation B. Inflation C. Hoarding D. Dishoarding 9. If deficit in the budget is financed by money creator that is printing money ends in inflation through: A. Money supply rise B. Increasing the aggregate demand C. Leading to price increase D. All of the above 10. The first bank in Ethiopian is: A. Commercial Bank of Ethiopia C. Zemen bank B. Wegagen Bank D. Development bank of Ethiopia 11. One of the following is not the functions of a commercial bank? A. Accept deposits C. Provide agency services B. Grant loans D. Note issue 12.One is a Central bank of the country in an Ethiopia context: A. Commercial bank of Ethiopia C. Wegagen bank B. Dashen Bank D. Development Bank E. National bank of Ethiopia 13. To constitute a person as a customer A. There must be a single transaction of any nature B. There must be some sort of an account C. There must be frequency of transactions D. There must be dealing of a banking nature 14. Demand deposits mean A. Deposits withdraw able on demand by the depositor B. Current deposits C. Fixed deposits D. Short deposits E. None 15. Commercial banks influence money supply through A. Printing of one rupee notes B. Augmentation of savings and time deposits C. Provision of high denomination notes D. Creation of demand deposits 16. Which of the following is true about deflation? A. Increases unemployment rate C. Debtors enjoy B. Reduce national income D. Creditors suffers E. all of the above 17. One of the following is not true about inflation: A. Process of persistently rising price C. It is also a monetary phenomenon level D.It is a long-term operating dynamic B. It is a cyclical movement of price process. level 18. When an occurrence of an inflation rate is doubled or tripled digit of price rise above 20 percent per annum A. Creeping inflation C. Running inflation B. Hyper inflation D. Walking inflation 19. Which of the following is false about the effect of inflation? A. Creditors are benefited during inflationary period B. The retired class suffers during inflationary period 3 C. Workers are adversely affected during inflation D. Debtors are benefited during inflation 20. The government policy with reference to the reduction of public expenditure and taxation in order to control inflation is: A. Monetary policy C. Fiscal policy B. Public policy D. Economic policy Part III: Discussion (5ptal 1. Explain the role of NBE in financial system