Q1. [1] straightforward exam-ready
[mcq] Ramesh needs to pay Rs 20,000 to his supplier but does not want to carry cash. He writes an instruction to his bank to transfer the amount from his account. Which instrument does Ramesh use for this purpose?
(A) Promissory note
(B) Cheque
(C) Barter token
(D) Credit card
- A Currency notes
- B Cheques drawn on demand deposits
- C Coins issued by the government
- D Loans from moneylenders
Generated by claude-sonnet-4-6 · 2026-06-26 13:22 · grounding rag
Model Answer
(B) Cheque
Ramesh uses a cheque — a written instruction to his bank to transfer money from his account to the supplier, avoiding the need to carry cash.
Source: Money and Credit, Chapter 3
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Explanation
- The question describes the classic definition of a cheque: a written order to the bank to pay a specified amount from the account holder's demand deposit.
- The options in the MCQ body (A–D) are the ones that matter; the four alternatives listed below the question belong to a different question and should be ignored.
- Remember: cheques are drawn on demand deposits held with banks — a key fact examiners test.