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 16 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 16 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Money supply refers to A) Total volume of money held by public at a particular point of time. B) Total volume of money held by public over a period of time. C) Total volume of money held by the government. D) Both a and b. Show Answer Correct Answer: A) Total volume of money held by public at a particular point of time. 2. The lower your skill level, the higher your wage? A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 3. What is a potential consequence of having a bad credit history? A) Easier access to loans. B) Lower interest rates on future loans. C) Difficulty in getting any credit at all. D) Increased credit limits. Show Answer Correct Answer: C) Difficulty in getting any credit at all. 4. How is income earned and what are the different sources of income? A) Income is earned through winning the lottery and gambling. B) Income is earned through various sources such as employment, investments, business profits, rental income, and government assistance. C) Income is earned through begging and panhandling. D) Income is earned through stealing and illegal activities. Show Answer Correct Answer: B) Income is earned through various sources such as employment, investments, business profits, rental income, and government assistance. 5. To increase money supply, RBI should A) Increase Margin Requirements. B) Reduce Margin Requirements. C) Increase SLR. D) None of the above. Show Answer Correct Answer: B) Reduce Margin Requirements. 6. What agencies insure banks and credit unions? A) IRS and DHS. B) DHS and FDIC. C) FDIC and NCUA. D) NCUA and FICA. Show Answer Correct Answer: C) FDIC and NCUA. 7. As commercial banks keep more excess reserves, money creation A) Could either increase or decrease. B) Decreases. C) Increases. D) Remains the same. Show Answer Correct Answer: B) Decreases. 8. What are the primary functions of banks? A) Manage government policies. B) The primary functions of banks are to accept deposits, provide loans, facilitate payments, and offer financial services. C) Provide insurance services. D) Invest in real estate. Show Answer Correct Answer: B) The primary functions of banks are to accept deposits, provide loans, facilitate payments, and offer financial services. 9. Which of the following is NOT a type of deposit accepted by commercial banks? A) Savings Account Deposits. B) Fixed Deposits. C) Current Account Deposits. D) Investment Deposits. Show Answer Correct Answer: D) Investment Deposits. 10. Which picture money is modern legal tender used today? A) Gold bar. B) Paper currency and coins. C) Shell necklace. D) None of the above. Show Answer Correct Answer: B) Paper currency and coins. 11. The rate at which commercial banks take short term loans from the central bank is called A) Repo Rate. B) Cash Reserve Ratio. C) Reverse Repo Rate. D) Bank Rate. Show Answer Correct Answer: A) Repo Rate. 12. When budget receipts are greater than budget expenditure such type of budget is called: A) Balanced budget. B) Deficit budget. C) Surplus budget. D) None of these. Show Answer Correct Answer: C) Surplus budget. 13. Bank that can lend to other banks in times of need, a "bankers' bank" . A) Central Bank. B) Default. C) Member Bank. D) Liquidity. Show Answer Correct Answer: A) Central Bank. 14. What is the difference between a savings account and a checking account? A) A savings account is for long-term investments, while a checking account is for daily transactions. B) A savings account can't be used for daily transactions, while a checking account can. C) A savings account has a higher interest rate, while a checking account has a lower interest rate. D) All of the above. Show Answer Correct Answer: D) All of the above. 15. Which term best describes the function of money when a company calculates its profit by subtracting total costs from total revenue, all measured in rupees? 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. 16. Which of the four characteristics of money can be defined as "long-lasting, strong" ? A) Durability. B) Uniformity. C) Portability. D) Divisibility. Show Answer Correct Answer: A) Durability. 17. According to Keynes Preference Liquidity Theory, which one is NOT the purpose of demand for money? A) Purchase goods and services such as car and house. B) Generate profit from exchange in the price of bonds and speculated change in interest. C) Donate the money to welfare institution. D) Pay unexpected expenses, for example hospital bill. Show Answer Correct Answer: C) Donate the money to welfare institution. 18. Which of the following is a disadvantage of of the barter systemI The rate of exchangeII Storage of wealthIII Acquisition of goods A) I and II only. B) III only. C) I and III only. D) I, II and III. Show Answer Correct Answer: D) I, II and III. 19. Typically, a person must be a member of a credit union to use its financial services. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 20. An increase in Legal Reserve Deposit Ratio increases the credit creation of the commercial banks. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 21. Which of the following is NOT an example of a store of value? A) Gold. B) Land. C) Fresh fruits. D) Bonds. Show Answer Correct Answer: C) Fresh fruits. 22. What is included in money supply. A) Currency with public. B) Demand deposits. C) Both a and b. D) None of the above. Show Answer Correct Answer: C) Both a and b. 23. What are the main components of a balance sheet for a bank? A) Assets, Liabilities, Equity. B) Income, Expenses, Revenue. C) Profit, Loss, Revenue. D) Cash, Inventory, Debt. Show Answer Correct Answer: A) Assets, Liabilities, Equity. 24. What is a budget and why is it important? A) A budget is a plan for investing in stocks and bonds only. B) A budget is a list of all the things you want to buy without any financial planning. C) A budget is a document that only tracks expenses without considering income. D) A budget is a financial plan that outlines expected income and expenses, and it is important for resource allocation, tracking spending, and achieving financial goals. Show Answer Correct Answer: D) A budget is a financial plan that outlines expected income and expenses, and it is important for resource allocation, tracking spending, and achieving financial goals. 25. The balance in savings, or current account deposits, held by the public in commercial banks is also considered money since cheques drawn on these accounts are used to settle transactions. Such deposits are called demand deposits A) Time deposit. B) Fixed Deposit. C) Demand deposit. D) Supply of money. Show Answer Correct Answer: C) Demand deposit. 26. T/F:In a barter system, the double coincidence of wants makes trading efficient. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 27. What is the primary purpose of a commercial bank? A) To accept deposits and provide loans. B) To manage government funds and assets. C) To issue currency and control monetary policy. D) To provide investment advice to clients. Show Answer Correct Answer: A) To accept deposits and provide loans. 28. Which of the following statements is true about credit creation by banks? A) Banks create credit on the basis of their total assets. B) Banks create credit on the basis of their total deposits. C) Banks create credit out of nothing. D) Banks create credit on the basis of their total securities. Show Answer Correct Answer: B) Banks create credit on the basis of their total deposits. 29. Which of the following is not non tax revenue receipts of government? A) Excise duty. B) Escheat. C) Special assessment. D) Fees and fines. Show Answer Correct Answer: A) Excise duty. 30. ..... is the rate at which the central bank borrow funds from commercial bank A) Reverse repo rate. B) Bank rate. C) SLR. D) CRR. Show Answer Correct Answer: A) Reverse repo rate. 31. Who circulates all mint and one rupee notes in India? A) Ministry of External Affairs. B) RBI. C) Ministry of Finance. D) State Government. Show Answer Correct Answer: C) Ministry of Finance. 32. Money enables people to save. Which function of money does this describe? A) Measure of value. B) Medium of exchange. C) Standard for deferred payment. D) Store of value. Show Answer Correct Answer: D) Store of value. 33. What are some common banking services offered to customers? A) Grocery delivery. B) Car rentals. C) Pet grooming. D) Some common banking services offered to customers include savings accounts, checking accounts, loans, credit cards, and online banking. Show Answer Correct Answer: D) Some common banking services offered to customers include savings accounts, checking accounts, loans, credit cards, and online banking. 34. If exports are to be increased then the currency of a country should be A) Appreciated. B) No change. C) Appreciated or depreciated. D) Depreciated. Show Answer Correct Answer: D) Depreciated. 35. What are the target percentages for keeping inflation and unemployment low? A) 2%-3%. B) 1%-2%. C) 3%-4%. D) 0%-1%. Show Answer Correct Answer: A) 2%-3%. 36. Describe the concept of compound interest. A) Compound interest is the interest calculated on the initial principal and also on the accumulated interest of previous periods. It grows exponentially over time. B) Compound interest is calculated only on the initial principal amount. C) Compound interest decreases over time. D) Compound interest is not affected by the interest accumulated from previous periods. Show Answer Correct Answer: A) Compound interest is the interest calculated on the initial principal and also on the accumulated interest of previous periods. It grows exponentially over time. 37. The new issues market is also known as A) Primary market. B) Money market. C) Stock exchange. D) Secondary market. Show Answer Correct Answer: A) Primary market. 38. What is used to measure inflation? A) A ruler. B) CPI Consumer Price Index. C) A scale. D) None of the above. Show Answer Correct Answer: B) CPI Consumer Price Index. 39. Specific type of loan used to buy real estate A) Principal. B) Interest. C) Credit Card. D) Mortgage. Show Answer Correct Answer: D) Mortgage. 40. What is the difference between a savings account and a current account? A) A savings account is for saving and earning interest; a current account is for daily transactions with no interest. B) A savings account is for daily transactions; a current account is for saving and earning interest. C) A savings account has higher fees than a current account. D) A savings account can only be opened by businesses, while a current account is for individuals. Show Answer Correct Answer: A) A savings account is for saving and earning interest; a current account is for daily transactions with no interest. 41. What is the value of multiplier if LR is 10% A) 50. B) 10. C) 20. D) 5. Show Answer Correct Answer: B) 10. 42. Commercial banks create money by way of A) Time deposits. B) Demand deposits. C) Treasury bills. D) Bills of exchange. Show Answer Correct Answer: B) Demand deposits. 43. Anything that people will accept as payment for goods and services A) Money. B) Barter. C) All the above. D) None of the above. Show Answer Correct Answer: A) Money. 44. Inflation is to be combated the RBI- A) Raise in CRR and lower SLR. B) Lower CRR and raise SLR. C) Raise both CRR and SLR. D) None of these. Show Answer Correct Answer: C) Raise both CRR and SLR. 45. Who is the controller of the credit in the banking system? A) Commercial banks. B) Central bank. C) All the above. D) None of the above. Show Answer Correct Answer: B) Central bank. 46. Influencing the economy by changing the reserve requirement is called: A) Easy Money. B) Fiscal policy. C) Monetary policy. D) Tight Money. Show Answer Correct Answer: C) Monetary policy. 47. The advantage of using money is A) It is durable. B) It doesnot require much space to keep. C) IT is potable. D) All. Show Answer Correct Answer: D) All. 48. What types of loans do banks typically offer? A) Home equity loans. B) Payday loans. C) Credit card loans. D) Personal loans, mortgage loans, auto loans, student loans, business loans. Show Answer Correct Answer: D) Personal loans, mortgage loans, auto loans, student loans, business loans. 49. Which of the following would be the initial effect of an individual making a $ 10, 000 cash deposit in a bank? A) The money supply would rise by $ 10, 000. B) The money supply would fall by $ 10, 000. C) The money supply would not be affected by the deposit. D) The money supply would fall, but by less than the $ 10, 000 deposit. Show Answer Correct Answer: C) The money supply would not be affected by the deposit. 50. By settling the mutual claims between banks, the Central Bank acts as a ..... A) Lender of last resort. B) Custodian of cash reserves. C) Clearing House. D) None of the above. Show Answer Correct Answer: C) Clearing House. 51. What is the significance of the lender of last resort function of central banks? A) It decreases the stability of the financial system. B) It encourages risky behavior by financial institutions. C) It provides emergency liquidity to financial institutions during times of crisis. D) It leads to inflation in the economy. Show Answer Correct Answer: C) It provides emergency liquidity to financial institutions during times of crisis. 52. What is the purpose of a savings account? A) The purpose of a savings account is to save money and earn interest on the deposited funds. B) The purpose of a savings account is to spend money and accumulate debt. C) The purpose of a savings account is to invest in stocks and bonds. D) The purpose of a savings account is to donate money to charity. Show Answer Correct Answer: A) The purpose of a savings account is to save money and earn interest on the deposited funds. 53. Barter refers to the system of A) Mutual exchange. B) Exchange of goods for money. C) Exchange of service for money. D) None of these. Show Answer Correct Answer: A) Mutual exchange. 54. Central Bank is a/an A) Regional bank. B) Apex Bank. C) Commercial Bank. D) Rural Bank. Show Answer Correct Answer: B) Apex Bank. 55. What is a financial option contract? A) It is a financial contract where agreement has to be compulsorily carried on the expiry date. B) It is a financial contract where both the parties have to deposit the margin money. C) It is a financial contract where the option seller has right to exercise or not to exercise contract. D) It is a financial contract where the option buyer has right to exercise or not to exercise contract. Show Answer Correct Answer: D) It is a financial contract where the option buyer has right to exercise or not to exercise contract. 56. Why would a company need to issue stock? A) To raise money. B) To show customers that it's successful. C) To stop the government from regulating it. D) To increase its' customer base. Show Answer Correct Answer: A) To raise money. 57. Which of the following is a type of banking service that allows your principal to grow through the adding in of interest? A) Credit account. B) Savings account. C) Charge account. D) Basic checking account. Show Answer Correct Answer: B) Savings account. 58. During inflation bank rate will A) Reduce bank rate. B) Increase bank rate. C) No change. D) None of the above. Show Answer Correct Answer: B) Increase bank rate. 59. The National Banking System was created in ..... to standardize currency and banking practices in the U.S. A) 1900. B) 1861. C) 1863. D) 1933. Show Answer Correct Answer: C) 1863. 60. Working in which is better: A) A secure job with a good size of firm but medium pay. B) A secure job with more pay but a small size of firm. C) A not secure job with the most pay but smallest size of firm. D) None of the above. Show Answer Correct Answer: A) A secure job with a good size of firm but medium pay. ← 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