Q.1 What is the primary purpose of the International Monetary Fund (IMF)?
To provide long-term development loans to countries
To promote international monetary cooperation and financial stability
To regulate international trade tariffs
To oversee global environmental policies
Explanation - The IMF was established to promote international monetary cooperation, ensure financial stability, facilitate international trade, and reduce poverty around the world.
Correct answer is: To promote international monetary cooperation and financial stability
Q.2 Which of the following is NOT a key function of the World Bank?
Providing financial and technical assistance to developing countries
Funding infrastructure projects
Providing short-term loans to stabilize currency
Supporting poverty reduction initiatives
Explanation - Short-term currency stabilization is primarily the role of the IMF, whereas the World Bank focuses on long-term development projects and poverty alleviation.
Correct answer is: Providing short-term loans to stabilize currency
Q.3 When were the IMF and the World Bank established?
1944 at the Bretton Woods Conference
1919 after World War I
1960 during the UN General Assembly
1955 at the Bandung Conference
Explanation - Both the IMF and the World Bank were established in 1944 during the Bretton Woods Conference to help stabilize the global economy post-World War II.
Correct answer is: 1944 at the Bretton Woods Conference
Q.4 Which of the following is the largest shareholder in the IMF?
India
United States
China
Germany
Explanation - The United States is the largest shareholder of the IMF, giving it significant voting power in decisions.
Correct answer is: United States
Q.5 The World Bank consists of two major institutions. They are:
International Bank for Reconstruction and Development (IBRD) and International Finance Corporation (IFC)
IMF and IBRD
World Trade Organization and IBRD
International Development Association and IMF
Explanation - The World Bank Group has five institutions, but the two main ones are IBRD and IFC, focusing on lending to governments and private sector development, respectively.
Correct answer is: International Bank for Reconstruction and Development (IBRD) and International Finance Corporation (IFC)
Q.6 Which institution primarily provides concessional loans and grants to the poorest countries?
IMF
IBRD
International Development Association (IDA)
World Trade Organization
Explanation - IDA is part of the World Bank Group and provides low or zero-interest loans and grants to the world's poorest countries.
Correct answer is: International Development Association (IDA)
Q.7 Which of the following is a major source of funding for the IMF?
Member countries' quotas
Corporate donations
Global taxes
Revenue from World Bank projects
Explanation - IMF's funds mainly come from its member countries' financial contributions, called quotas, which also determine voting power.
Correct answer is: Member countries' quotas
Q.8 Special Drawing Rights (SDRs) are associated with which institution?
World Bank
IMF
Asian Development Bank
European Central Bank
Explanation - SDRs are an international reserve asset created by the IMF to supplement member countries' official reserves and provide liquidity.
Correct answer is: IMF
Q.9 Which of the following countries is NOT a member of the IMF?
North Korea
India
Germany
Brazil
Explanation - North Korea is not a member of the IMF due to political isolation, while most other countries are members.
Correct answer is: North Korea
Q.10 What is the main difference between the IMF and the World Bank?
IMF deals with trade policies, World Bank with defense
IMF focuses on short-term financial stability, World Bank on long-term development
IMF provides grants, World Bank provides military aid
IMF governs global law, World Bank governs environment
Explanation - The IMF helps countries facing balance-of-payments problems, while the World Bank funds long-term development projects like infrastructure and education.
Correct answer is: IMF focuses on short-term financial stability, World Bank on long-term development
Q.11 Which governing body is the highest decision-making authority of the IMF?
IMF Executive Board
IMF Board of Governors
IMF Managing Director
World Bank Board of Governors
Explanation - The IMF Board of Governors, consisting of one governor from each member country (usually finance ministers or central bank governors), is the highest decision-making body.
Correct answer is: IMF Board of Governors
Q.12 Which institution launched the Heavily Indebted Poor Countries (HIPC) Initiative?
IMF
World Bank
Both IMF and World Bank
United Nations
Explanation - The HIPC Initiative was launched jointly by the IMF and World Bank to reduce the debt burden of the world's poorest countries.
Correct answer is: Both IMF and World Bank
Q.13 The current headquarters of the IMF and World Bank are located in which city?
New York
Washington D.C.
Geneva
London
Explanation - Both the IMF and the World Bank are headquartered in Washington D.C., USA.
Correct answer is: Washington D.C.
Q.14 Who appoints the Managing Director of the IMF?
IMF Executive Board
IMF Board of Governors
United Nations Secretary-General
World Bank President
Explanation - The IMF Managing Director is appointed by the Executive Board and is responsible for day-to-day operations of the Fund.
Correct answer is: IMF Executive Board
Q.15 Which of the following is a key criterion for receiving World Bank assistance?
Membership in the IMF
Project's contribution to economic development and poverty reduction
Adoption of a specific currency
Military alliances
Explanation - The World Bank evaluates projects based on their potential to promote sustainable economic development and reduce poverty.
Correct answer is: Project's contribution to economic development and poverty reduction
Q.16 Which of the following statements about IMF conditionality is TRUE?
It requires countries to implement policy reforms as a condition for receiving financial support
It obliges countries to change their political system
It mandates military cooperation with the US
It enforces global tax policies
Explanation - IMF conditionality ensures that countries adopt economic policies that will stabilize their economies and enable repayment of IMF loans.
Correct answer is: It requires countries to implement policy reforms as a condition for receiving financial support
Q.17 Which of the following World Bank arms provides funding to private sector companies?
IBRD
IFC
IDA
IMF
Explanation - The International Finance Corporation (IFC) is the World Bank Group institution that finances private sector projects in developing countries.
Correct answer is: IFC
Q.18 Quota subscriptions of IMF members determine which of the following?
Voting power and financial contribution
Military assistance eligibility
Membership in the UN
Allocation of global trade quotas
Explanation - A member country's quota subscription determines its financial contribution, voting power, and access to IMF resources.
Correct answer is: Voting power and financial contribution
Q.19 Which currency is used as the basis for IMF Special Drawing Rights (SDRs)?
US Dollar
A basket of major currencies
Euro only
Gold
Explanation - SDRs are based on a weighted basket of major international currencies including the US Dollar, Euro, Japanese Yen, British Pound, and Chinese Yuan.
Correct answer is: A basket of major currencies
Q.20 Which of the following is true about World Bank voting?
Voting power depends on the member's capital subscriptions
All members have equal voting rights
Only developed countries vote
Voting is based on UN membership
Explanation - In the World Bank, members’ voting power is proportional to their capital subscriptions, meaning wealthier countries have more influence.
Correct answer is: Voting power depends on the member's capital subscriptions
Q.21 Which of the following is a key difference between IDA and IBRD?
IDA lends to the poorest countries on concessional terms, IBRD to middle-income countries at market rates
IBRD provides grants only, IDA provides loans
IDA is a part of IMF, IBRD is World Bank
IBRD focuses on environmental issues, IDA on defense
Explanation - IDA focuses on the poorest countries with low-interest or interest-free loans, whereas IBRD provides loans to middle-income and creditworthy low-income countries.
Correct answer is: IDA lends to the poorest countries on concessional terms, IBRD to middle-income countries at market rates
Q.22 Which program of the IMF aims to help countries facing short-term balance of payments problems?
Extended Fund Facility
HIPC Initiative
IDA Credit
IFC Investment Program
Explanation - The Extended Fund Facility provides medium- to long-term financial assistance to countries facing serious balance of payments problems.
Correct answer is: Extended Fund Facility
Q.23 Which of the following statements is correct about the governance of the World Bank?
Governed by a Board of Governors representing member countries
Governed solely by the US
Governed by IMF managing director
Governed by the UN General Assembly
Explanation - The World Bank is governed by a Board of Governors, typically finance ministers or central bank governors from each member country.
Correct answer is: Governed by a Board of Governors representing member countries
Q.24 Which of the following initiatives is specifically associated with debt relief for developing countries?
HIPC Initiative
SDR allocation
Structural Adjustment Program
IMF quota review
Explanation - The Heavily Indebted Poor Countries (HIPC) Initiative provides debt relief to reduce the debt burden of the poorest countries.
Correct answer is: HIPC Initiative