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 15 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 15 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Something that keeps its value if it is stored rather than used A) Store of value. B) Fiat money. C) Representative money. D) Unit of account. Show Answer Correct Answer: A) Store of value. 2. If you want to save money for something special, you should: A) Make a savings plan. B) Spend it right away. C) Give it away. D) Hide it. Show Answer Correct Answer: A) Make a savings plan. 3. Kanye has $ 12, 000 in cash and he deposits it in Kardashian National Bank. How much does M1 change? A) $ 12, 000 x the monetary multiplier. B) $ 12, 000. C) It doesn't change, cash and checks are both M1. D) $ 12, 000 less the required reserves. Show Answer Correct Answer: C) It doesn't change, cash and checks are both M1. 4. The amount of money that is borrowed. A) Interest. B) Credit Card. C) Mortgage. D) Principal. Show Answer Correct Answer: D) Principal. 5. Exchange of one commodity or service for another A) Medium of Exchange. B) Barter. C) Store of Value. D) Money. Show Answer Correct Answer: B) Barter. 6. Characteristics of money:Stable- A) It should be a reliable measure to last for a longer period of time. B) I.e. it can't easily be faked or copied. C) Must be valuable. D) The value of currency should not change often. Show Answer Correct Answer: D) The value of currency should not change often. 7. Types of money:A good, the value of which is less than the value it represents as money. Dollar bills are an example of fiat money because their value as slips of printed paper is less than their value as money. A) Commodity money. B) Fiat money. C) All the above. D) None of the above. Show Answer Correct Answer: B) Fiat money. 8. Explain what a demand draft (DD) is. A) A demand draft (DD) is a bank-issued payment instrument that guarantees the payment of a specified amount to a beneficiary. B) A demand draft (DD) is a digital currency used for online transactions. C) A demand draft (DD) is a type of credit card. D) A demand draft (DD) is a loan provided by the bank. Show Answer Correct Answer: A) A demand draft (DD) is a bank-issued payment instrument that guarantees the payment of a specified amount to a beneficiary. 9. Diversification lowers your risk? A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 10. M1 and M2 are known as ..... A) Supply of money. B) Broad money. C) Narrow money. D) Demand for money. Show Answer Correct Answer: C) Narrow money. 11. What do you mean by credit creation by commercial banks A) Process of total deposit creation. B) Process of loan creation. C) Process of total withdrawal creation. D) Process of creation of foreign exchange. Show Answer Correct Answer: A) Process of total deposit creation. 12. Characteristics of money:Hard to counterfeit- A) It should be a reliable measure to last for a longer period of time. B) Must be valuable. C) I.e. it can't easily be faked or copied. D) The value of currency should not change often. Show Answer Correct Answer: C) I.e. it can't easily be faked or copied. 13. Which of the following best describes deflation? A) A decrease in the cost of goods and services. B) An increase in the cost of goods and service. C) A decrease in purchases of a good or service. D) An increase in purchases of a good or service. Show Answer Correct Answer: A) A decrease in the cost of goods and services. 14. This type of card allows you to withdraw money directly out of your checking account to pay for things ..... A) E-Card. B) Debit Card. C) Gift Card. D) Credit Card. Show Answer Correct Answer: B) Debit Card. 15. The commercial bank keeps part of their money in central bank. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 16. Central bank provides the same banking service to the government as commercial banks provide to people.Which is this function of Central bank? A) Lenders of last resort. B) Bank of issue. C) Banker's to governement. D) Controller of credit. Show Answer Correct Answer: C) Banker's to governement. 17. Money serves as a ..... , something that holds its value over time. A) Store of value. B) Medium of exchange. C) All the above. D) None of the above. Show Answer Correct Answer: A) Store of value. 18. Describe the process of buying and selling stocks on the stock exchange. A) The process involves sending cash directly to the company for shares. B) The process includes opening a brokerage account, researching stocks, placing orders, monitoring prices, and executing trades. C) Placing orders is not necessary when trading stocks. D) Stocks can be bought and sold without the need for a brokerage account. Show Answer Correct Answer: B) The process includes opening a brokerage account, researching stocks, placing orders, monitoring prices, and executing trades. 19. Who appoints representatives to serve on the Federal Reserve Board? A) US Congress. B) State governors. C) US President. D) Secretary of the Treasury. Show Answer Correct Answer: C) US President. 20. How do commercial banks help in the process of currency exchange? A) Commercial banks provide foreign exchange services to customers. B) Commercial banks offer free travel vouchers. C) Commercial banks provide car insurance services. D) Commercial banks sell discounted concert tickets. Show Answer Correct Answer: A) Commercial banks provide foreign exchange services to customers. 21. What is the meaning of the term 'liquidity preference'? A) The desire to hold money for speculation. B) The desire to hold money for transactions. C) The desire to hold money for investment. D) The desire to hold money for savings. Show Answer Correct Answer: B) The desire to hold money for transactions. 22. What does "legal tender" mean? A) Money that is widely accepted internationally. B) The official currency that must be accepted for payment in a country. C) Money made from precious metals. D) Money issued by commercial banks. Show Answer Correct Answer: B) The official currency that must be accepted for payment in a country. 23. Bank rate is for A) Central banks by Central Bank. B) Central banks by commercial banks. C) Commercial banks by Central Bank. D) Commercial banks by the government. Show Answer Correct Answer: C) Commercial banks by Central Bank. 24. Pagar al contado/ en efectivo A) To save. B) To pay in cash. C) To cash in check. D) To fill out a form. Show Answer Correct Answer: B) To pay in cash. 25. What is a check? A) A check is a type of bank account. B) A check is a loan agreement between two parties. C) A check is a written order to a bank to pay money from an account. D) A check is a form of digital currency. Show Answer Correct Answer: C) A check is a written order to a bank to pay money from an account. 26. Describe the role of commercial banks in providing payment services. A) Commercial banks provide a range of payment services including checking accounts, savings accounts, debit cards, credit cards, wire transfers, and online banking services. B) Commercial banks only provide investment services. C) Commercial banks only offer cash withdrawal services. D) Commercial banks are not involved in any payment services. Show Answer Correct Answer: A) Commercial banks provide a range of payment services including checking accounts, savings accounts, debit cards, credit cards, wire transfers, and online banking services. 27. The central bank can increase the availability of credit by: A) Selling government securities. B) Raising repo rate. C) Buying government securities. D) Raising reverse repo rate. Show Answer Correct Answer: C) Buying government securities. 28. Which of the following condition needed for financial institution become a bank A) Accepting deposit. B) Advancing loans. C) Both. D) None of these. Show Answer Correct Answer: C) Both. 29. All of the following should be considered when choosing a depository institution except A) Location of branches. B) Location of ATMs. C) Fees. D) Color of checks offered. Show Answer Correct Answer: D) Color of checks offered. 30. The ratio of a bank's total reserves to its total transactions deposits is known as the A) Required reserves. B) Excess reserves. C) Deposit ratio. D) Reserve ratio. Show Answer Correct Answer: D) Reserve ratio. 31. What does SLR stand for in the banking context? A) Security Lending Rate. B) Savings and Loans Regulation. C) Systematic Loan Requirement. D) Statutory Liquidity Ratio. Show Answer Correct Answer: D) Statutory Liquidity Ratio. 32. In the terminology of economics and money demand, the terms M3 and M4 are also known as: A) Short money. B) Long money. C) Narrow money. D) Broad money. Show Answer Correct Answer: D) Broad money. 33. A reserve ratio is the: A) Proportion of cash and security reserves the bank needs to hold. B) Fraction of deposits that the bank is required to hold. C) Loan to deposit ratio in the bank's balance sheet. D) Money belonging to the bank's largest depositors. Show Answer Correct Answer: B) Fraction of deposits that the bank is required to hold. 34. By supply of money we mean: A) Money deposited in bank. B) Money available with the public. C) Deposits with post office savings bank. D) All of these. Show Answer Correct Answer: D) All of these. 35. This bank operates in public interest without any profit motive. A) Reserve bank of India. B) State Bank of India. C) Canada Bank. D) Allahabad Bank. Show Answer Correct Answer: A) Reserve bank of India. 36. What is NOT a characteristic of money? A) Portable. B) Divisible. C) Acceptable. D) Accessible. Show Answer Correct Answer: D) Accessible. 37. Of the following, which is the component of M2 money? A) Paper currency + coins + current deposit + fixed deposit. B) Paper currency + coins + saving deposit in commercial bank. C) Paper currency + coins + current deposit. D) Paper currency + coins + Tradable Deposit Certificates + treasury bills. Show Answer Correct Answer: D) Paper currency + coins + Tradable Deposit Certificates + treasury bills. 38. Which of the following motives of holding money depends on the level of interest rate? A) Precautionary motive only. B) Precautionary motive, transactions motive and speculative motive. C) Speculative motive and precautionary motive. D) Speculative motive only. Show Answer Correct Answer: D) Speculative motive only. 39. If the Fed increases the money supply, the economy will see A) A decrease in price level and an increase in real GDP. B) An decrease in price level and a decrease in real GDP. C) An increase in price level and a decrease in real GDP. D) An increase in price level and an increase in real GDP. Show Answer Correct Answer: D) An increase in price level and an increase in real GDP. 40. What is the currency in circulation? A) Deposits made by private individuals and the public sector. B) Total withdrawn and circulated in the economy by the Central Bank. C) All the above. D) None of the above. Show Answer Correct Answer: B) Total withdrawn and circulated in the economy by the Central Bank. 41. Why is it important to save? A) To use it for credit cards. B) To use it for an emergency. C) To use it for a party. D) To use it for saving. Show Answer Correct Answer: B) To use it for an emergency. 42. Name the credit control method which refers to difference between the amount of loan and market value of the security offered by the borrower against the loan. A) Direct Action. B) Legal Reserve Requirement. C) Moral Suasion. D) Margin Requirement. Show Answer Correct Answer: D) Margin Requirement. 43. Which of the following is NOT the function of central bank? A) Control statutory reserve. B) Management of national debt. C) Issuing traveller's cheque. D) Store intentional reserve. Show Answer Correct Answer: C) Issuing traveller's cheque. 44. What tool does a central bank use to influence interest rates? A) Interest rate swaps. B) Currency interventions. C) Open market operations. D) Reserve requirements. Show Answer Correct Answer: C) Open market operations. 45. Which of the following may increase money supply in an economy? A) Bank Negara Malaysia selling government securities in the open market. B) An increase in reserve requirement. C) A decrease in the discount rate. D) An increase in the discount rate. Show Answer Correct Answer: C) A decrease in the discount rate. 46. What has the monopoly of note issue in every country? A) Commercial Banks. B) Central banks. C) All the above. D) None of the above. Show Answer Correct Answer: B) Central banks. 47. Other name for legal reserve requirement is ..... A) Cash reserve ratio. B) Variables reserve ratio. C) Statutory liquidity ratio. D) Bank rate. Show Answer Correct Answer: B) Variables reserve ratio. 48. Why are college loans considered investments? A) Because they provide immediate financial returns. B) Because they result in getting more education usually means you'll qualify for higher-paying jobs. C) Because they are interest-free. D) Because they can be paid off quickly. Show Answer Correct Answer: B) Because they result in getting more education usually means you'll qualify for higher-paying jobs. 49. What is the significance of the Cash Reserve Ratio (CRR) in the banking system? A) Controlling credit creation. B) Setting credit quotas for different sectors. C) Regulating the repo rate. D) Increasing liquidity in the economy. Show Answer Correct Answer: A) Controlling credit creation. 50. Money is expected to have value and be used by all to make purchases. A) Divisibility. B) Durability. C) Uniformity. D) Acceptability. Show Answer Correct Answer: D) Acceptability. 51. Repo rate is the rate at which: A) Commercial Banks can keep their deposits with the central bank. B) Commercial Banks purchase government securities from the Central Bank. C) Commercial Banks can take loans from the Central Bank. D) Short-term loans are given by commercial banks. Show Answer Correct Answer: C) Commercial Banks can take loans from the Central Bank. 52. In the Money Market graph, the A) Demand for money is perfectly elastic. B) Supply of money is perfectly inelastic. C) The price axis is labeled real interest rate. D) The supply curve is leaning. Show Answer Correct Answer: B) Supply of money is perfectly inelastic. 53. What is the stock market? A) A type of farmers market where people buy and sell food. B) A place where parts of businesses are bought and sold. C) A special type of grocery store that sells stocks. D) A type of bank that gives out loans to new businesses. Show Answer Correct Answer: B) A place where parts of businesses are bought and sold. 54. What is the bank rate managed by the Bank of Canada? A) The rate at which businesses can borrow from private banks. B) The rate at which chartered banks can borrow from the Bank of Canada. C) The interest rate at which Canadian citizens can borrow money. D) The rate at which the government lends money to other countries. Show Answer Correct Answer: B) The rate at which chartered banks can borrow from the Bank of Canada. 55. Which of the following serves as the national currency that we use in this country today? A) Specie. B) Euro. C) Goldsmith note. D) Federal reserve note. Show Answer Correct Answer: D) Federal reserve note. 56. 1/required reserve ratio determines the A) Excess reserves. B) Money multiplier. C) Required reserves. D) Lending capacity. Show Answer Correct Answer: B) Money multiplier. 57. When Mr. Moore gets his paycheck, he knows he doesn't have to spend it all at once because money is A) Standard of Value. B) Medium of Exchange. C) Store of Value. D) Representative money. Show Answer Correct Answer: C) Store of Value. 58. Who is author of the ancient book on economics, Arthashastra? A) Chanakya. B) Megasthenes. C) Amartya Sen. D) Sushrut. Show Answer Correct Answer: A) Chanakya. 59. Commercial bank can control the supply of money by printing money. A) False. B) True. C) All the above. D) None of the above. Show Answer Correct Answer: A) False. 60. Amelia receives a card from her financial institution that allows to her use an ATM for depositing and withdrawing money, checking her account information, and more. Amelia has a what? A) ATM Card. B) Debit Card. C) Savings Account. D) Cash Card. E) Credit Card. Show Answer Correct Answer: A) ATM Card. ← 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