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 14 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 14 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. ..... is a currency that must be accepted for payment by decree of government A) Specie. B) Barter. C) Fiat. D) Legal tender. Show Answer Correct Answer: D) Legal tender. 2. The Fed ..... banks to ensure the soundness of the banking system. A) Opens. B) Closes. C) Runs. D) Regulates. Show Answer Correct Answer: D) Regulates. 3. One of the function of Central Bank among the following is A) Custodian of banks. B) Custodian of deliveries. C) Custodian of foreign exchange. D) Custodian of securities. Show Answer Correct Answer: C) Custodian of foreign exchange. 4. Money must be easily divided into smaller denominations (ex. making change). A) Uniformity. B) Acceptability. C) Divisibility. D) Durability. Show Answer Correct Answer: C) Divisibility. 5. A firm installs a new equipment in order to reduce it's pollution emissions. What is the effect of this on private and external costs? A) Private costs:fallExternal costs:fall. B) Private costs:fallExternal costs:rise. C) Private costs:riseExternal costs:fall. D) Private costs:riseExternal costs:rise. Show Answer Correct Answer: C) Private costs:riseExternal costs:fall. 6. Imagine Titi walks into a local bank to inquire about its services. She is curious about what the bank primarily does as a financial institution. A) To provide entertainment services to the public. B) To collect funds from the public and distribute them as credit. C) To manage government administrative tasks. D) To organize cultural events for the community. Show Answer Correct Answer: B) To collect funds from the public and distribute them as credit. 7. The ability to be used as, or directly converted to, cash A) Medium of exchange. B) M2. C) Interest. D) Liquidity. Show Answer Correct Answer: D) Liquidity. 8. Supply for money:There are several definitions of the supply of money. A somewhat broader measure of the supply of money is ..... , which includes all of M1 plus savings and time deposits held at banks. A) M1. B) M2. C) M3. D) None of the above. Show Answer Correct Answer: B) M2. 9. What is likely to happen to money in the future? A) Physical currency will disappear and we will use digital cash. B) Physical currency will stay the same and the internet will disappear. C) Physical currency will disappear and we will use cowrie shells. D) None of the above. Show Answer Correct Answer: A) Physical currency will disappear and we will use digital cash. 10. If the reserve requirement is 8 percent, how much of a $ 100 deposit must be kept by a customer's bank and not loaned to other customers? A) $ 12.00. B) $ 92.00. C) $ 8.00. D) $ 80.00. Show Answer Correct Answer: C) $ 8.00. 11. T/F:Polymer banknotes are less durable than paper banknotes. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 12. Depository institution owned by and operated for the benefit of its customers A) Commercial bank. B) Federal Reserve. C) Credit Union. D) Savings and Loan. Show Answer Correct Answer: C) Credit Union. 13. What are the potential benefits of investing in stocks? A) No potential for growth. B) The potential benefits of investing in stocks include the opportunity for capital appreciation, dividend income, and portfolio diversification. C) Limited investment options. D) Losing all your money. Show Answer Correct Answer: B) The potential benefits of investing in stocks include the opportunity for capital appreciation, dividend income, and portfolio diversification. 14. What is the definition of money according to economists? A) Only coins and notes. B) Anything that can be traded. C) Anything generally accepted as a means of exchange. D) A form of barter. Show Answer Correct Answer: C) Anything generally accepted as a means of exchange. 15. The use of a mobile (cell) phone to make payments is an example of which function ofmoney? A) A medium of exchange. B) A standard of deferred payment. C) A store of wealth. D) A unit of account. Show Answer Correct Answer: A) A medium of exchange. 16. What are the functions of commercial banks? A) The functions of commercial banks include accepting deposits, providing loans, offering overdraft facilities, facilitating international trade, issuing credit cards, providing safe deposit lockers, and acting as financial intermediaries. B) Operating as a non-profit organization. C) Providing medical services. D) Selling insurance policies. Show Answer Correct Answer: A) The functions of commercial banks include accepting deposits, providing loans, offering overdraft facilities, facilitating international trade, issuing credit cards, providing safe deposit lockers, and acting as financial intermediaries. 17. Interest earned on both principal and previous interest earnings A) Special Interest. B) Complex Interest. C) Compound Interest. D) Complicated Interest. Show Answer Correct Answer: C) Compound Interest. 18. Autonomous consumption is indicated by ..... in the consumption function. A) C. B) AC. C) C. D) None of the above. Show Answer Correct Answer: A) C. 19. Because homes were rising in cost, banks gave ..... to people who were not the perfect candidates. A) Income. B) Mortgages. C) Expenses. D) None of the above. Show Answer Correct Answer: B) Mortgages. 20. Definition of Commercial Bank is A) Financial institutions owned by public companies to maximize profits and to guarantee the safety of public deposits. B) Financial institutions owned by the government to administrate national financial matters, to control and implement national financial policy systems. C) All the above. D) None of the above. Show Answer Correct Answer: A) Financial institutions owned by public companies to maximize profits and to guarantee the safety of public deposits. 21. Which of these is a banking service? A) To open a door. B) To spend money. C) To check homework. D) To transfer money. Show Answer Correct Answer: D) To transfer money. 22. What are subprime mortgages? A) Loans made below the prime home price. B) Loans made on below standard houses. C) Mortgages made below the average interest rate. D) Mortgages made to people with low incomes and poor credit. Show Answer Correct Answer: D) Mortgages made to people with low incomes and poor credit. 23. Who is the present Governor of RBI? A) Shakti kanta das. B) Raghuram Rajan. C) Amit Shah. D) Nirmala Sitaraman. Show Answer Correct Answer: A) Shakti kanta das. 24. What is contactless payment? A) Transaction completed where you don't use your hands. B) Transaction with no physical connection to the person being paid. C) Payment made where no people are contacted. D) Payment where money is not used. Show Answer Correct Answer: B) Transaction with no physical connection to the person being paid. 25. Which of the following is an example of fiat money that has no intrinsic value but is widely accepted due to government mandate and trust? A) A gold coin of a specific weight and purity. B) Salt used as a wage and medium of exchange in ancient times. C) Modern paper currency and coins that are legal tender. D) A receipt for gold stored in a vault, redeemable on demand. Show Answer Correct Answer: C) Modern paper currency and coins that are legal tender. 26. Why might a person invest in CDs rather than savings? A) CDs are easily available. B) CDs have a lower risk of losing money. C) CDs can be used at any time. D) CDs offer a higher interest rate. Show Answer Correct Answer: D) CDs offer a higher interest rate. 27. Explain the importance of commercial banks in the economy. A) Commercial banks are irrelevant in the economy. B) Commercial banks hinder economic growth. C) Commercial banks only benefit the wealthy. D) Commercial banks are important in the economy for providing financial services, allocating resources, promoting economic growth, and supporting businesses and individuals. Show Answer Correct Answer: D) Commercial banks are important in the economy for providing financial services, allocating resources, promoting economic growth, and supporting businesses and individuals. 28. Which function of money is known as "unit of account" . A) Medium of exchange. B) Measure of value. C) Standard of deferred payment. D) Store of value. Show Answer Correct Answer: B) Measure of value. 29. ..... is a designation printed on paper currency that says it must be accepted as payment A) Fiat. B) Barter. C) Specie. D) Legal tender. Show Answer Correct Answer: D) Legal tender. 30. What is the value of total deposits created if initial deposits are 100 crores and LRR is 20% A) 200 cr. B) 1000cr. C) 250cr. D) 500cr. Show Answer Correct Answer: D) 500cr. 31. What is the benefit of saving money? A) Financial security, emergency funds, and future investments. B) Impulse buying. C) Avoiding debt. D) Limited financial freedom. Show Answer Correct Answer: A) Financial security, emergency funds, and future investments. 32. What is the reserve deposit ration (rdr)? A) The proportion of money RBI lends to commercial banks. B) The proportion of total deposits commercial banks keep as reserves. C) The total proportion of money that commercial banks lend to the customers. D) None of the above. Show Answer Correct Answer: B) The proportion of total deposits commercial banks keep as reserves. 33. Demand deposits are considered to be ..... accounts A) Cash. B) Checking. C) Time. D) Cheque. Show Answer Correct Answer: B) Checking. 34. If total deposits created by commercial banks are Rs 12000.LRR is 25% calculate initial deposit A) Rs6000. B) Rs 3000. C) Rs 4000. D) Rs 5000. Show Answer Correct Answer: B) Rs 3000. 35. Who regulates money in India? A) Reserve bank of India. B) Commercial banks. C) Niti Ayog. D) Government of India. Show Answer Correct Answer: A) Reserve bank of India. 36. Trade a good or service for a good or service provided by someone else A) Barter. B) Moeny. C) All the above. D) None of the above. Show Answer Correct Answer: A) Barter. 37. Define Unit of Account A) It is a common yardstick to measure money. B) Savings and deposits can be done monthly. C) When your bank account is protected. D) None of the above. Show Answer Correct Answer: A) It is a common yardstick to measure money. 38. The use of money as credits smooth a transaction because is serve as ..... A) Store of value. B) Measure of value. C) Standards of deferred payment. D) Medium of exchange. Show Answer Correct Answer: C) Standards of deferred payment. 39. Currency should be divisible. This means: A) You can use smaller pieces of it if you want. B) You can cut it in half and give both pieces to a vendor. C) If it's lost someone must return it to you. D) It must have a picture of a president on it. Show Answer Correct Answer: A) You can use smaller pieces of it if you want. 40. Two types of near money are A) Savings accounts and traveler's checks. B) Savings accounts and certificates of deposit. C) Traveler's checks and checking accounts. D) Checking accounts and certificates of deposit. Show Answer Correct Answer: B) Savings accounts and certificates of deposit. 41. What is one challenge of the barter system? A) Easy to determine value. B) Everyone accepts goods. C) Difficult to find a match. D) Goods are always divisible. Show Answer Correct Answer: C) Difficult to find a match. 42. Which of the following is a commonly accepted definition of money? A) Any goods which is commonly use as a store of value. B) Any good which is exchange for gold at a fixed rate. C) Any good which is commonly accepted as a medium of exchange. D) Any good which is accepted to a bank. Show Answer Correct Answer: C) Any good which is commonly accepted as a medium of exchange. 43. If the total deposits created by commercial banks is Rs. 10, 000 crores and legal reserve requirements is 40%, then amount of initial deposits will be ..... A) Rs. 3, 000 crores. B) Rs. 14, 000 crores. C) Rs. 4, 000 crores. D) Rs. 2, 000 crores. Show Answer Correct Answer: C) Rs. 4, 000 crores. 44. What is NOT a safe way to pay for things online? A) Credit card. B) Telling strangers your information. C) Gift card. D) PayPal. Show Answer Correct Answer: B) Telling strangers your information. 45. Which of the following is considered a component of the money supply? A) Savings bonds. B) Corporate shares. C) Treasury bills. D) Currency in circulation. Show Answer Correct Answer: D) Currency in circulation. 46. Banks are able to create credit many times more than the initial deposit through A) Accepting deposit. B) Providing overdraft facility. C) Advancing loan. D) Secondary deposit. Show Answer Correct Answer: D) Secondary deposit. 47. Which statement accurately describes how banks function? A) Banks allow people to store, earn, and borrow money. B) Banks allow people to make their own coins. C) Customers usually lose their money if a bank closes. D) Customers are usually charged higher mortage rates. Show Answer Correct Answer: A) Banks allow people to store, earn, and borrow money. 48. What type of policy does the Fed use to counteract a contraction? A) Easy money policy. B) Fiscal policy. C) Tight money policy. D) Policy lags. Show Answer Correct Answer: A) Easy money policy. 49. What should you say when buying something? A) Goodbye. B) Please and thank you. C) Good morning. D) See you later. Show Answer Correct Answer: B) Please and thank you. 50. When did Congress print paper money for the first time? A) At the beginning of the Civil War. B) When the Constitution was ratified. C) During the Civil War. D) When the country went on the gold standard. Show Answer Correct Answer: C) During the Civil War. 51. Commercial banks can make a profit by the ..... between lending and saving interest rate. A) Distinguish. B) Differs. C) Spread. D) Comparison. Show Answer Correct Answer: C) Spread. 52. Axis Bank is ..... A) Public sector bank. B) Development Bank. C) Cooperative Bank. D) Private Bank. Show Answer Correct Answer: D) Private Bank. 53. What is the primary role of venture capital firms? A) To provide loans to individuals with low credit scores. B) To fund new or expanding firms with great potential. C) To manage retirement funds for employees. D) To offer low-risk investment opportunities to the public. Show Answer Correct Answer: B) To fund new or expanding firms with great potential. 54. Which of the following instrument cannot be used by Central Bank to control money supply? A) Repo Rate. B) Open Market Operations. C) Government spending. D) Bank Rate. Show Answer Correct Answer: C) Government spending. 55. If recession is to be combated: A) Bank rate needs to be lowered. B) CRR needs to be lowered. C) Both (a) and (b). D) Repo rate needs to be lowered and CRR needs to be raised. Show Answer Correct Answer: C) Both (a) and (b). 56. If production in that factory exceeds the target, the workers get a ..... A) Premium. B) Bonus. C) Gratuity. D) Donation. Show Answer Correct Answer: B) Bonus. 57. Rizal wants to buy a new car but doesn't have enough cash to pay for it upfront. He approaches a financial institution that provides loans for credit financing, allowing him to make installment payments for the vehicle. This institution is known as a: A) Insurance Company. B) Pension Fund Company. C) Pawnshop. D) Leasing Company. Show Answer Correct Answer: D) Leasing Company. 58. Which of the following is the function of a Central bank? A) Issue of notes. B) Banker to the Government and Banks. C) Supply and control of money. D) All of these. Show Answer Correct Answer: D) All of these. 59. The currency created by the central bank is called A) Money. B) High powered money. C) Money supply. D) Bank money. Show Answer Correct Answer: B) High powered money. 60. All of the following were problems with banking before the Civil War EXCEPT A) Wildcat banks printed large amounts of currency. B) The economy grew faster than the gold stock. C) State banks issued their own currencies. D) Many banks issued more currency than they could bank. Show Answer Correct Answer: B) The economy grew faster than the gold stock. ← 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