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 13 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 13 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is the benefit of using a savings account? A) No benefits compared to a checking account. B) Higher risk of losing money. C) Earn interest and save for future expenses. D) Access to unlimited funds. Show Answer Correct Answer: C) Earn interest and save for future expenses. 2. What is the primary role of the Federal Reserve? A) To provide loans to the public. B) To keep the United States' economy healthy. C) To print and engrave coins and currency. D) To supervise the alien technology. Show Answer Correct Answer: B) To keep the United States' economy healthy. 3. Money multiplier is given by A) 1/liabilities. B) 1/ desired reserve ratio. C) Desired reserve-excess reserve. D) 1/assets. Show Answer Correct Answer: B) 1/ desired reserve ratio. 4. Any substance that serves as a medium of exchange, a measure of value, and a store of value A) Specie. B) Fiat money. C) Money. D) Medium of exchange. E) Measure of value. Show Answer Correct Answer: C) Money. 5. The difference between M1 and M2 is based on ..... A) Portability-the ease with which an asset can be moved. B) Divisibility-the ease with which an asset can be used to make smaller payments. C) Liquidity-the ease with which an asset can be converted into cash. D) Storability-how long an asset will retain its value. Show Answer Correct Answer: C) Liquidity-the ease with which an asset can be converted into cash. 6. RBI controls the money supply through a policy called ..... A) Monetary policy. B) Market policy. C) Trade policy. D) Fiscal policy. Show Answer Correct Answer: A) Monetary policy. 7. Typically, borrowers have superior information relative to lenders about the potential returns and risks associated with an investment project. The difference in information is called A) Moral Selection. B) Risk Sharing. C) Asymmetric information. D) None of the above. Show Answer Correct Answer: C) Asymmetric information. 8. Which of the following is the largest component of the money supply (M1) in Malaysia? A) Demand deposits. B) Notes and coints. C) Travelers cheque. D) Credit card. Show Answer Correct Answer: B) Notes and coints. 9. What will be the value initial deposits if total deposits created are 600cr and LRR 10%? A) 6000cr. B) 600cr. C) 60cr. D) 100cr. Show Answer Correct Answer: C) 60cr. 10. A plastic card that can be used at an ATM or at a point of sale "POS" that immediately takes money from your depository account A) Cash Card. B) Debit Card. C) Credit Card. D) ATM Card. Show Answer Correct Answer: B) Debit Card. 11. Credit card is money A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 12. Supply for money:There are several definitions of the supply of money ..... is narrowest and most commonly used. It includes all currency (notes and coins) in circulation, all checkable deposits held at banks (bank money), and all traveler's checks. A) M1. B) M2. C) M3. D) None of the above. Show Answer Correct Answer: A) M1. 13. The main purpose of the FDIC is to make sure that A) Commercial and investment banks do not fail. B) Customers do not lose money if a bank fails. C) Banks charge a fair amount of interest on loans. D) The government has enough gold to cover its expenses. Show Answer Correct Answer: B) Customers do not lose money if a bank fails. 14. What is the primary function of the Bank Rate in the economy? A) Controlling the supply of money in the economy. B) Lending money to commercial banks. C) Selling government securities. D) Providing loans to the government. Show Answer Correct Answer: A) Controlling the supply of money in the economy. 15. In the terminology of economics and money demand, the terms M1 and M2 are also known as: A) Narrow money. B) Broad money. C) Short money. D) Long money. Show Answer Correct Answer: A) Narrow money. 16. What is the role of a central bank as the "bankers' bank" ? A) It provides loans to households. B) It holds reserves for commercial banks and clears interbank payments. C) It prints money for the government. D) It issues credit cards. Show Answer Correct Answer: B) It holds reserves for commercial banks and clears interbank payments. 17. You can easily carry money in a pocket or a purse. This reflects what characteristic of money? A) Legal tender. B) Portability. C) Divisibility. D) Durability. Show Answer Correct Answer: B) Portability. 18. This function of Central Bank involves buying and selling of government securities from or to the public and commercial banks. A) Selective Credit Control. B) Legal Reserve Requirements. C) Open Market Operations. D) None of these. Show Answer Correct Answer: C) Open Market Operations. 19. Which of the following is the BEST example of commodity money? A) An IOU note. B) $ 10 bill. C) Promissory note. D) Precious stones. Show Answer Correct Answer: D) Precious stones. 20. Depository institution that invests the majority of its funds in home mortgages A) Federal Reserve System. B) Thrift institution. C) Mutual savings bank. D) Credit union. E) Savings and loan association. Show Answer Correct Answer: E) Savings and loan association. 21. The Federal Reserve System is A) Owned by the government. B) Unable to lend money to other banks. C) Publicly controlled. D) Under the authority of Congress. Show Answer Correct Answer: C) Publicly controlled. 22. T/F:Gold is universally accepted as a form of money. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 23. The privately owned, publicly controlled central bank of the U.S A) FDIC. B) Federal Reserve System. C) State bank. D) Bank of the United States. Show Answer Correct Answer: B) Federal Reserve System. 24. An essential function for a bank is to A) Maximize its assets. B) Create money through lending. C) Lend all of its deposits. D) Minimize its reserve ratio. Show Answer Correct Answer: B) Create money through lending. 25. What happens when you make a purchase using a credit card? A) The money is immediately deducted from your account. B) The place where you made the purchase receives the money within 24 hours. C) The credit card issuer pays the store. D) The amount of the purchase is deducted from a prepaid account. Show Answer Correct Answer: C) The credit card issuer pays the store. 26. System that functions as the central bank of the United States A) Federal Reserve System. B) Thrift institution. C) Mutual savings bank. D) Credit union. E) Savings and loan association. Show Answer Correct Answer: A) Federal Reserve System. 27. ..... is money that is deemed legal tender by the government, and it is not based on or convertible into a commodity. A) Commodity money. B) Fiat money. C) Money supply. D) Liquidity. Show Answer Correct Answer: B) Fiat money. 28. High powered money is equal to A) Money supplied by the RBI only. B) Total supply of money in the economy. C) Notes and coins held by the people. D) Money held by the people, vault cash with the commercial bank as well as cash reserves with the commercial bank. Show Answer Correct Answer: D) Money held by the people, vault cash with the commercial bank as well as cash reserves with the commercial bank. 29. Which of the following agency is responsible for issuing rs. 1currency note in India A) Ministry of Finance. B) Niti Aayog. C) Ministry of Commerce. D) Reserve Bank of India. Show Answer Correct Answer: A) Ministry of Finance. 30. A(n) ..... is a bank that belongs to the Federal Reserve System. A) Member bank. B) Credit union. C) Savings and loan. D) Greenbacks. Show Answer Correct Answer: A) Member bank. 31. The creation of ..... is called credit creation A) Secondary deposits. B) Time deposits. C) Primary deposits. D) None of these. Show Answer Correct Answer: A) Secondary deposits. 32. What happens to the credit creation capacity of banks when the Legal Reserve Ratio (LRR) is increased? A) It becomes unpredictable. B) It increases. C) It remains the same. D) It decreases. Show Answer Correct Answer: D) It decreases. 33. Transfer of value has become easier with A) Evolution of money. B) Storage of money. C) Measure of value. D) All of these. Show Answer Correct Answer: A) Evolution of money. 34. If on receiving a $ 300 deposit, the banks excess reserves increase by $ 255, the current reserve requirement must be: A) 12%. B) 15%. C) 10%. D) 5%. Show Answer Correct Answer: B) 15%. 35. What is the primary method the Federal Reserve uses to control inflation according to monetary policy? A) Adjusting government spending. B) Modifying tax rates. C) Regulating stock market. D) Implementing interest rate changes. Show Answer Correct Answer: D) Implementing interest rate changes. 36. Regressive taxes ..... A) Are higher the more you make. B) Are lower the more you make. C) Are the same for everyone. D) None of the above. Show Answer Correct Answer: B) Are lower the more you make. 37. What should you do before spending money? A) Throw it. B) Run around. C) Take a nap. D) Count it. Show Answer Correct Answer: D) Count it. 38. Which one is the Bank of the Public? A) Commercial Bank. B) Central Bank. C) Both (a) and (b). D) None of the above. Show Answer Correct Answer: A) Commercial Bank. 39. What was created by President Abraham Lincoln to combat counterfeiting? A) Secret Service. B) Federal Reserve System. C) Bureau of Engraving and Printing. D) Mutilated Currency Division. Show Answer Correct Answer: A) Secret Service. 40. In inflationary gap can be corrected by: A) Increasing taxes. B) Increasing government spending. C) Decreasing taxes. D) Increasing subsidies on exports. Show Answer Correct Answer: A) Increasing taxes. 41. Institution that accepts deposits for lending purpose is known as ..... A) Public. B) Central Bank. C) Commercial Bank. D) Government. Show Answer Correct Answer: C) Commercial Bank. 42. What is fiat money? A) Bit coins. B) A government issued currency. C) Cheques. D) Gold. Show Answer Correct Answer: B) A government issued currency. 43. When people say money is used as a 'unit of account', what do they mean? A) It can be traded and exchanged easily, and split into different amounts easily. B) It's a way of comparing the relative value of different things. C) It can be saved and used at some point in the future. D) None of the above. Show Answer Correct Answer: B) It's a way of comparing the relative value of different things. 44. Money or other items generally accepted as payment for goods and services. A) Measure of value. B) Medium of exchange. C) Scarcity. D) Store of Value. Show Answer Correct Answer: B) Medium of exchange. 45. Which of the following is the component of M1 measure of money supply A) Term deposit. B) Demand deposit. C) Both a and b. D) None of these. Show Answer Correct Answer: B) Demand deposit. 46. ..... is the ratio of deposits which bank keep with the central bank A) CRR. B) Bank rate. C) SLR. D) Reverse repo rate. Show Answer Correct Answer: A) CRR. 47. What of the following is not a property of money? A) Durability. B) Carries intrinsic value. C) Recognizable value. D) Portability. Show Answer Correct Answer: B) Carries intrinsic value. 48. About how much should you save in an emergency fund? A) 6 months of expenses. B) 1 month of expenses. C) 1 year of expenses. D) 3 months of expenses. Show Answer Correct Answer: A) 6 months of expenses. 49. Objects that have value in themselves and that are also used as money A) Commodity money. B) Representative money. C) M2. D) Fiat money. Show Answer Correct Answer: A) Commodity money. 50. Money you get back for returning something you bought is a ..... A) ATM. B) Refund. C) Cashpoint. D) Receipt. Show Answer Correct Answer: B) Refund. 51. T/F: "Divisibility" means money can be divided into smaller units without losing value. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 52. What might the Fed do in order to "cool" the economy down? A) Lower reserve requirements. B) Lower interest rates. C) Raise interest rates. D) Raise taxes. Show Answer Correct Answer: C) Raise interest rates. 53. A card authorizing the holder to buy goods or services A) Principal. B) Mortgage. C) Credit Card. D) Interest. Show Answer Correct Answer: C) Credit Card. 54. What is moral suasion in the context of RBI? A) A regulatory measure imposed by RBI to control banks' actions. B) A formal guideline issued by RBI that mandates specific banking practices. C) A financial penalty levied on banks for non-compliance. D) Moral suasion in the context of RBI refers to the use of persuasion and dialogue to influence banks' behavior without enforcing regulations. Show Answer Correct Answer: D) Moral suasion in the context of RBI refers to the use of persuasion and dialogue to influence banks' behavior without enforcing regulations. 55. Which is NOT a place to keep money safe? A) Wallet. B) Bank. C) Sandbox. D) Purse. Show Answer Correct Answer: C) Sandbox. 56. If I had another $ 25, 000 a year, I would consider myself ..... A) Well done. B) Well off. C) Well deserved. D) Well-made. Show Answer Correct Answer: B) Well off. 57. Which is a good synonym for the word barter in the term barter economy? A) Trade. B) Fiat. C) Monetary. D) Specie. Show Answer Correct Answer: A) Trade. 58. "The Fed" refers to the ..... A) Federal Income Tax. B) Federal Reserve System. C) Federal Government. D) Federal Bureau of Investigation. Show Answer Correct Answer: B) Federal Reserve System. 59. Which out of the following is a non-developmental expenditure? A) Scientific research. B) Social Welfare. C) Administration. D) None of them. Show Answer Correct Answer: C) Administration. 60. If the United States is experiencing inflation, the Fed will likely A) Increase the supply of money in the economy. B) Decrease the supply of money in the economy. C) All the above. D) None of the above. Show Answer Correct Answer: B) Decrease the supply of money in the economy. ← 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