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 11 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 11 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which types of goods has to be financed by the government? A) Consumer. B) Merit. C) Capital. D) Public. Show Answer Correct Answer: D) Public. 2. The function of money that allows the measurement of the relative value of goods and services is called: A) Measure of wealth. B) Store of value. C) Unit of account. D) Medium of exchange. Show Answer Correct Answer: C) Unit of account. 3. Which of the statements gives an accurate picture of the effect of the increase in the repo rate? A) The money supply in the country will decrease. B) The money supply in the country will increase. C) The money supply in the country will increase initially and then decrease. D) There is no effect on the money supply in the country. Show Answer Correct Answer: A) The money supply in the country will decrease. 4. Which of the following is not true for fiscal deficit? A fiscal deficit: A) Represents the borrowings of the government. B) Is the difference between total expenditure and total receipts of the government. C) Is the difference between total expenditure and total receipts other than borrowings. D) Increase future liability of the government. Show Answer Correct Answer: B) Is the difference between total expenditure and total receipts of the government. 5. If an expense can be cut from your budget to save money, it is considered a ..... A) Want. B) Savings. C) Income. D) Need. Show Answer Correct Answer: A) Want. 6. To be successful medium of exchange, money must be all of the following EXCEPT A) Portable. B) Easily available. C) Easily divisible. D) Durable. Show Answer Correct Answer: B) Easily available. 7. Anything that is used to determine value during the exchange of goods and services. A) Barter System. B) Store of Value. C) Unit of Account. D) Medium of Exchange. Show Answer Correct Answer: D) Medium of Exchange. 8. Exposure to sunlight helps a person improve his health because A) The infrared light kills bacteria in the body. B) Resistance power increases. C) The pigment cells in the skin get stimulated and produce a healthy tan. D) The ultraviolet rays convert skin oil into Vitamin D. Show Answer Correct Answer: D) The ultraviolet rays convert skin oil into Vitamin D. 9. ..... are a paper currency issued by the FED A) Specie. B) Disney bucks. C) Federal Reserve Notes. D) Shilling. Show Answer Correct Answer: C) Federal Reserve Notes. 10. Which of the following is not concerned with banking organisation A) Bank rate. B) Fiscal deficit. C) Credit creation. D) Cash reserve ratio. Show Answer Correct Answer: B) Fiscal deficit. 11. Recovery of loan is: A) Revenue receipt. B) Revenue expenditure. C) Capital receipt. D) Capital expenditure. Show Answer Correct Answer: C) Capital receipt. 12. How do central banks influence the economy? A) By printing more money to increase inflation. B) By controlling the stock market directly. C) By imposing strict regulations on all businesses. D) Central banks influence the economy by adjusting interest rates, conducting open market operations, and regulating financial institutions. Show Answer Correct Answer: D) Central banks influence the economy by adjusting interest rates, conducting open market operations, and regulating financial institutions. 13. Money or other substance generally accepted as payment for goods and services. A) Medium of exchange. B) Scarcity. C) Measure of value. D) Store of Value. Show Answer Correct Answer: A) Medium of exchange. 14. What can a camel be traded for A) Sheep and a cow. B) Sheep and a moose. C) 3 sheep and a horse. D) 2 sheep and a cow. Show Answer Correct Answer: D) 2 sheep and a cow. 15. Banks generate their largest portion of income from: A) Loans. B) Short-term investment. C) Demand deposits. D) Long-term investments. E) Certificates of deposit. Show Answer Correct Answer: A) Loans. 16. What is the cash reserve ratio (CRR)? A) Interest rate set by commercial banks. B) Portion of deposits banks must keep as cash with the central bank. C) Amount banks lend to each other in the market. D) Percentage of a bank's deposits held in government bonds. Show Answer Correct Answer: B) Portion of deposits banks must keep as cash with the central bank. 17. If indeed the deposits made by banks are ₹ 10, 000 crore and legitimate reserve requirements are 40 percent, then the amount of initial deposits will be A) ₹ 14000 crore. B) ₹ 2000 crore. C) ₹ 4000 crore. D) ₹ 3000 crore. Show Answer Correct Answer: C) ₹ 4000 crore. 18. How does inflation impact the value of money? A) Inflation has no impact on the value of money. B) Inflation increases the value of money by boosting its purchasing power. C) Inflation stabilizes the value of money. D) Inflation decreases the value of money by reducing its purchasing power. Show Answer Correct Answer: D) Inflation decreases the value of money by reducing its purchasing power. 19. The primary liabilities of a commercial bank are A) Bonds. B) Mortgages. C) Deposits. D) None of the above. Show Answer Correct Answer: C) Deposits. 20. What is money if it is available but only in a limited supply? A) Portable. B) Scarce. C) Durable. D) Divisible. Show Answer Correct Answer: B) Scarce. 21. The Fed's key function is to A) Make sure the nation's banking system is sound and safe. B) Maintain an effective payment system for banks and government. C) Promote a healthy economy by using monetary policy. D) All of the above. Show Answer Correct Answer: D) All of the above. 22. How does diversification help reduce risk in an investment portfolio? A) Putting all investments in one industry ensures safety. B) Diversification spreads investments across different asset classes, industries, and regions to minimize the impact of poor performance. C) Diversification only focuses on one asset class, which limits risk. D) Investing in a single company is the best way to reduce risk. Show Answer Correct Answer: B) Diversification spreads investments across different asset classes, industries, and regions to minimize the impact of poor performance. 23. Early colonists in Virginia used tobacco as A) Wampum. B) Fiat money. C) Commodity money. D) Specie. Show Answer Correct Answer: C) Commodity money. 24. Which of the following is not a function performed by the Central Bank A) Banker's Bank. B) Issue of currency. C) Credit creation. D) None of the above. Show Answer Correct Answer: C) Credit creation. 25. Two units of the same type of money must be the same in terms of what they will buy. A) Uniformity. B) Limited Supply. C) Durability. D) Portability. Show Answer Correct Answer: A) Uniformity. 26. How does the Bank Rate impact the economy? A) Buying government securities. B) Regulating the margin requirement. C) Offering short-term loans to commercial banks. D) Controlling the supply of money in the economy. Show Answer Correct Answer: D) Controlling the supply of money in the economy. 27. Which of the following is one of the three functions of money? A) Scarcity. B) Divisibility. C) Store of value. D) Portability. Show Answer Correct Answer: C) Store of value. 28. ..... is the function of money that allows people to measure the relative costs of goods and services. A) Medium of exchange. B) Unit of account. C) All the above. D) None of the above. Show Answer Correct Answer: B) Unit of account. 29. Explain the function of money as a medium of exchange. A) Money is used for personal savings only. B) Money is primarily used for bartering goods. C) Money functions as a universally accepted intermediary in transactions, simplifying trade and promoting economic efficiency. D) Money has no impact on economic transactions. Show Answer Correct Answer: C) Money functions as a universally accepted intermediary in transactions, simplifying trade and promoting economic efficiency. 30. The lender of last resort is a function of A) Commercial bank. B) Rural bank. C) Central bank. D) Post office. Show Answer Correct Answer: C) Central bank. 31. A good that is used as a medium of exchange but also has intrinsic worth because it has other uses. Gold or silver coins are commodity money. A) Representative Money. B) Fiat Money. C) Commodity Money. D) Currency. Show Answer Correct Answer: C) Commodity Money. 32. Which does NOT describe a role of the Federal Reserve? A) Decide whether or not to raise or lower US taxes. B) To regulate & watch US banks. C) Provide special financial services to banks. D) Keep the economy stable & healthy through Monetary Policy. Show Answer Correct Answer: A) Decide whether or not to raise or lower US taxes. 33. Which measure of money supply is considered the narrowest? A) M4. B) M2. C) M3. D) M1. Show Answer Correct Answer: D) M1. 34. Commodity money is something you can use or eat and also trade. Which is commodity money? A) Shells with value. B) Paper drawings. C) Plastic blocks. D) None of the above. Show Answer Correct Answer: A) Shells with value. 35. Which is the wrong example of money? A) Central bank reserves. B) Gold & bank deposits. C) Coin & banknotes. D) Asset. Show Answer Correct Answer: D) Asset. 36. Which of the following is a typical characteristic of the barter system? A) A common medium of exchange. B) Double coincidence of wants. C) A common unit of account. D) A standard for deferred payments. Show Answer Correct Answer: B) Double coincidence of wants. 37. Anything that is used to determine value during an exchange of goods and services is known as a(n) ..... A) Medium of exchange. B) Portability. C) Acceptability. D) Barter. Show Answer Correct Answer: A) Medium of exchange. 38. A common denominator that can be used to express worth in terms that most individuals understand A) Money. B) Measure of value. C) Specie. D) Fiat money. E) Medium of exchange. Show Answer Correct Answer: B) Measure of value. 39. Money supply in a modern economy consists of: A) Only coins. B) Only paper currency. C) Cash and bank deposits. D) Only bank loans. Show Answer Correct Answer: C) Cash and bank deposits. 40. M1 plus funds that cannot be used for cash directly, but can be converted fairly easily A) M1. B) Medium of exchange. C) M2. D) Fiat money. Show Answer Correct Answer: C) M2. 41. We go to the ..... to ..... money A) Cashpoint / withdraw. B) Bankomat / take. C) Bankomat / make. D) Cashpoint / take. Show Answer Correct Answer: A) Cashpoint / withdraw. 42. Nonprofit service cooperative that is owned by, and operated for, the benefit of its members A) Federal Reserve System. B) Thrift institution. C) Mutual savings bank. D) Credit union. E) Savings and loan association. Show Answer Correct Answer: D) Credit union. 43. How does the Statutory Liquidity Ratio (SLR) impact the banking sector? A) Setting credit quotas for different activities. B) Regulating the margin requirement. C) Managing foreign exchange reserves. D) Controlling credit creation. Show Answer Correct Answer: D) Controlling credit creation. 44. Does location affect your choice of depository institution? A) No. B) Yes. C) All the above. D) None of the above. Show Answer Correct Answer: B) Yes. 45. Which characteristic of money is crucial for it to last awhile in circulation? A) Portability. B) Durability. C) Uniformity. D) Divisibility. Show Answer Correct Answer: B) Durability. 46. What happens to a stock owner if the stock price increases? A) They earn interest. B) They borrow money. C) They make money. D) They lose money. Show Answer Correct Answer: C) They make money. 47. The possibility of losing some or all of a particiular investment. A) Risk. B) Index. C) Profit. D) Industry. Show Answer Correct Answer: A) Risk. 48. The washerman barbers neeti kavaikaru were paid in ..... for their work in villages in earlier days A) Money. B) Food grains. C) Gift. D) All. Show Answer Correct Answer: B) Food grains. 49. What is the primary purpose of the Federal Reserve's open market operations? A) To control the money supply. B) To set tax rates. C) To issue currency. D) To regulate the stock market. Show Answer Correct Answer: A) To control the money supply. 50. Means through which goods and services can be exchanged A) Medium of exchange. B) Store of value. C) All the above. D) None of the above. Show Answer Correct Answer: A) Medium of exchange. 51. Why are the interest rates not the same for borrowing and lending? A) Banks charge a higher interest rate for loans than they pay for savings accounts. B) Banks charge a lower interest rate for loans than they pay for savings accounts. C) Banks charge the same interest rate for loans and savings accounts. D) Banks do not charge interest for loans or savings accounts. Show Answer Correct Answer: A) Banks charge a higher interest rate for loans than they pay for savings accounts. 52. Holding the stock of rice requires a lot of spaceWhich Problem of barter system expressed here? A) Deferred payment. B) Medium of Exchange. C) Store of value. D) Unit of Account. Show Answer Correct Answer: C) Store of value. 53. The required percentage of deposits to be kept as cash with the bank is called: A) CRR. B) Money multiplier. C) SLR. D) Monetary base. Show Answer Correct Answer: A) CRR. 54. Percentage of the total amount of money loaned or borrowed A) Interest rate. B) Assets. C) All the above. D) None of the above. Show Answer Correct Answer: A) Interest rate. 55. The rate at which central bank lends to commercial banks is called? A) SLR. B) CRR. C) Bank rate. D) None of the above. Show Answer Correct Answer: C) Bank rate. 56. What are the risks associated with investing in the stock market? A) Regulatory changes, climate change, demographic shifts. B) Interest rates, political instability, currency fluctuations. C) Market volatility, potential for loss of principal, lack of diversification, economic downturns. D) Inflation, unemployment, technological advancements. Show Answer Correct Answer: C) Market volatility, potential for loss of principal, lack of diversification, economic downturns. 57. Which of the following is a quantitative method of credit control? A) Credit Rationing. B) Open Market Operations. C) Moral Suasion. D) Margin Requirements. Show Answer Correct Answer: B) Open Market Operations. 58. Identify the correct option of the components of the money supply. A) Currency + demand deposits. B) Currency + demand deposits + other deposits. C) All the above. D) None of the above. Show Answer Correct Answer: A) Currency + demand deposits. 59. What helps us carry coins? A) Box. B) Wallet. C) Bag. D) Cup. Show Answer Correct Answer: B) Wallet. 60. What is another word for money? A) Chair. B) Tree. C) Book. D) Cash. Show Answer Correct Answer: D) Cash. ← 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