This quiz works best with JavaScript enabled. Home > Cbse > Class 12 > Commerce > Economics Macro Economics > Class 12 Economics (Macro Economics) Chapter 3 Money And Banking – Quiz 10 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 10 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Aggregate monetary resources in supply of money is A) M3. B) M2. C) M1. D) M4. Show Answer Correct Answer: A) M3. 2. The primary function of Commercial Bank is? A) ACCEPTING DEPOSITS. B) GIVING LOAN. C) CREATING CREDIT. D) ALL OF THESE. Show Answer Correct Answer: D) ALL OF THESE. 3. Penny is an artist, and John is a carpenter. Penny agrees to paint a portrait of John's family in exchange for a handmade table created by John. How do Penny and John pay for their goods in their transaction? A) Using a store of value. B) Through bartering. C) With currency. D) Through credit. Show Answer Correct Answer: B) Through bartering. 4. To increase the money supply in the economy ..... A) RBI should increase bank rate or repo rate. B) RBI should decrease repo rate. C) RBI should increase margin requirement. D) All of the above. Show Answer Correct Answer: B) RBI should decrease repo rate. 5. Subsidies are an example of: A) Revenue expenditure. B) Capital expenditure. C) Plan expenditure. D) None of them. Show Answer Correct Answer: A) Revenue expenditure. 6. If the total deposit created by commercial banks is Rs 20000 cr and LRR is 20%, then amount of initial deposit will be A) Rs 2000 cr. B) Rs 14000 cr. C) Rs 4000 cr. D) Rs 3000 cr. Show Answer Correct Answer: C) Rs 4000 cr. 7. Full form of ATM is A) Automation Telephone Machine. B) Automated Telepathy Machine. C) Automated Teller Machine. D) Automatic Television Machine. Show Answer Correct Answer: C) Automated Teller Machine. 8. Which of the following is NOT a role of money? A) Durable and portable. B) Perishable and heavy. C) Commonly accepted. D) Acts as an intermediary. Show Answer Correct Answer: B) Perishable and heavy. 9. Money supply includes A) All deposits in banks. B) Only time deposits. C) Only demand deposits. D) Currency with bank. Show Answer Correct Answer: C) Only demand deposits. 10. Please complete the ..... form and return it to the branch manager. A) Annexed. B) Inserted. C) Added. D) Enclosed. Show Answer Correct Answer: D) Enclosed. 11. Money acts as a store of value only if: A) Price level is unstable. B) Value of money is stable. C) It is perishable. D) It is in barter form. Show Answer Correct Answer: B) Value of money is stable. 12. The problem of moral hazard in case of debt contracts can be avoided with A) Pledging of collaterals against debts. B) Ensuring desirable activities by the borrower. C) Providing information periodically with respect to accounting and income reports. D) All of the above. Show Answer Correct Answer: D) All of the above. 13. Why is using coins as money easier than using gold bars? A) Coins are more portable. B) Coins are more durable. C) Coins are more uniform. D) Coins are more limited in supply. Show Answer Correct Answer: A) Coins are more portable. 14. If you have lost your card, you should ..... it to the bank. A) Report. B) Return. C) Inform. D) Tell. Show Answer Correct Answer: A) Report. 15. Money which has a lower metallic value than its face value like 5 cents, 10 cents, 20 cents and 50 cents is ..... A) Fiat money. B) Token money. C) Commodity money. D) Legal tender. Show Answer Correct Answer: B) Token money. 16. Financial institutions that accept deposits and make loans are called A) Exchanges. B) Banks. C) Over the counter Markets. D) None of the above. Show Answer Correct Answer: B) Banks. 17. What does CRR refer to in the banking system? A) Credit Rating Requirement. B) Currency Redemption Rate. C) Cash Reserve Ratio. D) Central Reserve Requirement. Show Answer Correct Answer: C) Cash Reserve Ratio. 18. What are the tools used by the RBI for credit control? A) Liquidity Adjustment Facility. B) Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), Repo Rate, Reverse Repo Rate, Open Market Operations (OMO). C) Interest Rate Swap. D) Bank Rate. Show Answer Correct Answer: B) Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), Repo Rate, Reverse Repo Rate, Open Market Operations (OMO). 19. Which of the following statements about the bank rate is true? A) Bank rate is different from interest rate. B) Bank rate is the discount rate provided by the central bank of a country. C) Bank rate is defined as the rate at which the central bank of a country gives credit to the commercial banks. D) All of the above. Show Answer Correct Answer: D) All of the above. 20. What is a function of a central bank? A) Deciding on the amount of government expenditure. B) Raising taxes. C) Controlling the money supply. D) Issuing shares. Show Answer Correct Answer: C) Controlling the money supply. 21. Reducing risk through the purchase of assets whose returns do not always move together is A) Intermediation. B) Discounting. C) Diversification. D) None of the above. Show Answer Correct Answer: C) Diversification. 22. What is the term for the ratio of a bank's reserves to its total deposits? A) Deposit multiplier. B) Reserve requirement. C) Cash ratio. D) Statutory liquidity ratio. Show Answer Correct Answer: B) Reserve requirement. 23. An essential function for banks is creating money by A) Storing all of the deposits. B) Loaning a portion of deposits. C) Loaning all of the deposits. D) None of the above. Show Answer Correct Answer: B) Loaning a portion of deposits. 24. Which type of money is used as a legal tender and recognized by law? A) Barter money. B) Commodity money. C) Fiat money. D) Crypto money. Show Answer Correct Answer: C) Fiat money. 25. The part of initial deposits to be kept with commercial banks as liquid A) CRR. B) SLR. C) Margin. D) Repo rate. Show Answer Correct Answer: B) SLR. 26. Greenbacks and United States notes were issued to A) Raise money to finance the Civil War. B) Stabilize the monetary supply. C) Change the monetary standard. D) Pay interest on the federal debt. Show Answer Correct Answer: A) Raise money to finance the Civil War. 27. What is the primary factor that gives Fiat Money its value in a modern economy? A) Its convertibility into an equivalent amount of precious metal. B) The cost of the materials and labor required to print or mint it. C) The government's declaration that it is legal tender and public confidence in its acceptance. D) The international exchange rate set by the World Bank. Show Answer Correct Answer: C) The government's declaration that it is legal tender and public confidence in its acceptance. 28. The concept of global economy has come into existence due to A) Store of value. B) Transfer of value. C) Measure of value. D) None of these. Show Answer Correct Answer: B) Transfer of value. 29. What is the name of our nation's central bank? A) The Federal Reserve. B) Bank of America. C) The National Bank of the United States. D) The United States National Bank. Show Answer Correct Answer: A) The Federal Reserve. 30. Which of the following component of M1 measure of money supply? A) Post office savings by public. B) Time deposits in commercial banks. C) Demand deposits. D) All of these. Show Answer Correct Answer: C) Demand deposits. 31. Checks are not money because they A) Are not guaranteed by banks. B) Are not issued by the government. C) Can bounce when there are not enough funds to cash them. D) Are just instruments to transfer money between banks. E) Are not always accepted when trying to purchase goods or services. Show Answer Correct Answer: D) Are just instruments to transfer money between banks. 32. An account that allows quick access to funds for transactions A) Checking account. B) Overdraft account. C) Investment account. D) Loan. Show Answer Correct Answer: A) Checking account. 33. Electronic transfer of money in terms of credit/debit entries of the account holders in the banks is called A) E-business. B) E-marketing. C) E-banking. D) E-money. Show Answer Correct Answer: D) E-money. 34. Which of the following is NOT a characteristic of money as described in the learning material? A) Perishable. B) Portable. C) Stable. D) Divisible. Show Answer Correct Answer: A) Perishable. 35. In the process of creation of credit banks create A) Time deposits. B) Demand deposits. C) CRR. D) SLR. Show Answer Correct Answer: B) Demand deposits. 36. Which of these is NOT a way to pay for things? A) Paper money. B) Debit card. C) Credit card. D) Shells. Show Answer Correct Answer: D) Shells. 37. How many Federal Reserve Districts are there? A) 20. B) 9. C) 12. D) 6. Show Answer Correct Answer: C) 12. 38. Which of these conditions is needed for a financial institution to become a bank? A) Accepting deposits. B) Advancing loans. C) Both above mentioned. D) None of these. Show Answer Correct Answer: C) Both above mentioned. 39. With electronic banking, A) Information security laws permit customers to see their statements but not to print them. B) Direct deposits of paychecks are not covered by FDIC insurance. C) Customers can have recurring bills paid through the bank's bill paying service. D) Debit cards are unnecessary. Show Answer Correct Answer: C) Customers can have recurring bills paid through the bank's bill paying service. 40. Which of the following are how the Fed Measures Money A) Currency. B) M1 and M2. C) DDA's. D) Dollars. Show Answer Correct Answer: B) M1 and M2. 41. Which type of money has intrinsic value? A) Digital currency. B) Commodity money. C) Fiat money. D) Representative money. Show Answer Correct Answer: B) Commodity money. 42. What is the main aim of a commercial bank A) To make a profit. B) To act as banker to the government. C) To issue bank notes. D) To manage the national debt. Show Answer Correct Answer: A) To make a profit. 43. How many pennies make 5 cents? A) 2 pennies. B) 3 pennies. C) 4 pennies. D) 5 pennies. Show Answer Correct Answer: A) 2 pennies. 44. Which of the following is a step that the central bank will take to encourage greater investment in the economy? A) It will look to increase the cash reserve ratio. B) It will look to increase the bank rate. C) It will look to reduce the cash reserve ratio. D) It will look to sell the government securities in the open market. Show Answer Correct Answer: C) It will look to reduce the cash reserve ratio. 45. Aria, Maya, and Rohan are discussing the importance of creating a personal budget. According to them, why is it important? A) So they can overspend and accumulate debt. B) So they can have no control over their finances. C) To track their income and expenses, prioritize spending, and save money. D) To ignore their financial goals and aspirations. Show Answer Correct Answer: C) To track their income and expenses, prioritize spending, and save money. 46. Functions of Money:Money serves as a ..... , which means that it is the ruler by which other values are measured. A) Medium of exchange. B) Store of value. C) Unit of account. D) Standard of deferred payment. Show Answer Correct Answer: C) Unit of account. 47. What characteristic of money ensures it can be easily divided into smaller units for transactions? A) Durability. B) Portability. C) Acceptability. D) Divisibility. Show Answer Correct Answer: D) Divisibility. 48. What is the basic function of a commercial bank? A) Accepting deposits and granting loans. B) Issuing currency notes. C) Providing insurance services. D) Selling securities. Show Answer Correct Answer: A) Accepting deposits and granting loans. 49. Which of the following does not come under quantitative methods of monetary policy? A) Repo rate. B) Moral suasion. C) Cash reserve ratio. D) Open market operations. Show Answer Correct Answer: B) Moral suasion. 50. An institution that receives, lends, borrow, exchange, issues and safeguards money. A) Money Supply. B) Gold Standard. C) National Bank. D) Bank. Show Answer Correct Answer: D) Bank. 51. How do banks ensure the safety of deposits? A) Banks charge fees to ensure deposit safety. B) Deposits are kept in physical vaults only. C) Banks invest deposits in high-risk stocks. D) Banks ensure the safety of deposits by using deposit insurance, regulatory compliance, risk management, and secure technologies. Show Answer Correct Answer: D) Banks ensure the safety of deposits by using deposit insurance, regulatory compliance, risk management, and secure technologies. 52. ..... is a U.S. government institution that provides insurance on depositor's accounts A) Congress. B) Department of the Interior. C) FDIC. D) Department of Homeland Security. Show Answer Correct Answer: C) FDIC. 53. Bank notes, coins, credit card, checks are examples of ..... A) Currency. B) Non physical money. C) Commodity money. D) Token money. Show Answer Correct Answer: D) Token money. 54. In a recession, the Fed would likely A) Increase the supply of money in the economy. B) Decrease the supply of the money in the economy. C) All the above. D) None of the above. Show Answer Correct Answer: A) Increase the supply of money in the economy. 55. Money paid to a person or business for goods or services A) Income. B) Savings. C) All the above. D) None of the above. Show Answer Correct Answer: A) Income. 56. If you sell something and choose not to spend the money earned right away, the money is acting as a A) Unit of Account. B) Store of Value. C) Medium of Exchange. D) Demand Deposit. Show Answer Correct Answer: B) Store of Value. 57. What are the implications of changes in the bank rate? A) Changes in the bank rate solely influence government spending. B) Changes in the bank rate affect interest rates, consumer spending, investment, and overall economic growth. C) Changes in the bank rate have no impact on inflation. D) Changes in the bank rate only affect foreign exchange rates. Show Answer Correct Answer: B) Changes in the bank rate affect interest rates, consumer spending, investment, and overall economic growth. 58. What possess general acceptability? A) Bank draft. B) Bank draft. C) Bill of exchange. D) Cheque. Show Answer Correct Answer: A) Bank draft. 59. Any initial deposit made by the people from their own resource is called A) Primary deposit. B) Term deposit. C) Secondary deposit. D) Time deposit. Show Answer Correct Answer: A) Primary deposit. 60. Local banks in the 1800s that printed too much money were called A) National banks. B) Wildcat banks. C) Central banks. D) Treasuries. Show Answer Correct Answer: B) Wildcat banks. ← PreviousNext →Related QuizzesCommerce QuizzesClass 12 QuizzesClass 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 1Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 2Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 3Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 4Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 5Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 6Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 7Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books