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 17 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 17 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. How much of a person's deposit are banks required to keep on reserve? A) $ 100, 000. B) 5%. C) 20%. D) 10%. Show Answer Correct Answer: C) 20%. 2. What is the relationship between interest rates and demand for money? A) As interest rates decrease, demand for money increases. B) As interest rates increase, demand for money increases. C) Interest rates are determined by demand for money. D) Interest rates and demand for money are unrelated. Show Answer Correct Answer: A) As interest rates decrease, demand for money increases. 3. Before the idea of money, goods and services were traded for one another. This was known as ..... A) Exchange. B) Redeem. C) Offload. D) Barter. Show Answer Correct Answer: D) Barter. 4. What was the primary inherent limitation of the Barter System that directly led to the need for a medium of exchange like money? A) Lack of double coincidence of wants. B) The absence of a common Unit of Account. C) The difficulty in valuing services compared to goods. D) The non-durability of goods exchanged. Show Answer Correct Answer: A) Lack of double coincidence of wants. 5. The coins and paper bills used as money in a society A) Prices. B) Bond. C) Currency. D) Checks. Show Answer Correct Answer: C) Currency. 6. Expenses that can or go up or down each month A) Shifty Expenses. B) Fixed Expenses. C) Merry-go-round Expenses. D) Variable Expenses. Show Answer Correct Answer: D) Variable Expenses. 7. Which statement is TRUE about the demand for money curve for transaction motive and precautionary motive? A) Perfectly elastics against level of income. B) Perfectly inelastic on the level of income. C) Perfectly elastic against interest rate. D) Perfectly inelastic against interest rate. Show Answer Correct Answer: D) Perfectly inelastic against interest rate. 8. The process of money creation or credit creation is done by A) Commercial banks. B) World bank. C) Rural bank. D) Central bank. Show Answer Correct Answer: A) Commercial banks. 9. What is the role of the Federal Reserve in the banking system? A) It sets the interest rates for loans and savings accounts. B) It regulates the banking industry and ensures the stability of the financial system. C) It prints and distributes money. D) All of the above. Show Answer Correct Answer: B) It regulates the banking industry and ensures the stability of the financial system. 10. What do we call the person who helps us at the bank? A) Doctor. B) Teacher. C) Teller. D) Chef. Show Answer Correct Answer: C) Teller. 11. Why is it important to understand interest when managing money? A) Interest has no impact on financial decisions. B) Understanding interest only matters for large sums of money. C) It is important to understand interest when managing money because it affects how much you earn or owe on loans, savings, and investments. D) Interest rates are always fixed and never change. Show Answer Correct Answer: C) It is important to understand interest when managing money because it affects how much you earn or owe on loans, savings, and investments. 12. The main job of Bank Negara Malaysia is to ..... A) Control of the rate of growth of the money supply. B) Manage the national debt and foreign exchange. C) Provide low-interest loans to all financial institutions. D) Print paper currency. Show Answer Correct Answer: A) Control of the rate of growth of the money supply. 13. During deflation central bank will A) Sell government securities. B) Buy government securities. C) No buy or sell. D) None of the above. Show Answer Correct Answer: B) Buy government securities. 14. Which of the following agency is responsible for issuing Rs 1 currency note in India? A) RBI. B) Niti aayog. C) Ministry of commerce. D) Ministry of finance. Show Answer Correct Answer: D) Ministry of finance. 15. High powered money includes A) Currency and demand deposits. B) Demand deposits and saving deposits. C) Currency held by the public and the cash reserves with banks. D) None of these. Show Answer Correct Answer: C) Currency held by the public and the cash reserves with banks. 16. What items are not included in M1 measure of supply A) Currency and coins with public. B) Inter banks deposits. C) Net time deposits with banks. D) Net time deposits with bank. Show Answer Correct Answer: B) Inter banks deposits. 17. What is the equation of exchange? A) MV=PQ=GDP. B) 1/MPS. C) 1/RR. D) Excess=Actual-Required. Show Answer Correct Answer: A) MV=PQ=GDP. 18. What is meant by 'financial literacy'? A) Understanding how to invest in stocks only. B) The ability to calculate taxes accurately. C) Financial literacy is the ability to make informed and effective decisions regarding financial resources. D) Knowledge of accounting principles exclusively. Show Answer Correct Answer: C) Financial literacy is the ability to make informed and effective decisions regarding financial resources. 19. The main purpose of Bank Negara is to ..... A) Invest in property. B) Grants loans. C) Accept deposits from the public. D) Print money. Show Answer Correct Answer: D) Print money. 20. In relation to the other options, how liquid is a savings account? A) Less liquid than mutual funds. B) More liquid than a checking account. C) More liquid than cash. D) More liquid than a Certificate of Deposit. Show Answer Correct Answer: D) More liquid than a Certificate of Deposit. 21. What is the difference between a debit card and a credit card? A) A debit card uses your own funds; a credit card allows borrowing. B) A debit card can only be used internationally, while a credit card is for domestic use. C) A debit card is only for online purchases; a credit card is for in-store use. D) A debit card has a higher interest rate than a credit card. Show Answer Correct Answer: A) A debit card uses your own funds; a credit card allows borrowing. 22. When the RBI increases CRR, banks must keep more money safe and can lend less. What happens to lending? A) It goes down. B) It goes up. C) It stays the same. D) None of the above. Show Answer Correct Answer: A) It goes down. 23. Repo rate is the rate when banks borrow from the RBI against securities. What does a higher repo rate make borrowing? A) More costly. B) More tasty. C) More colorful. D) None of the above. Show Answer Correct Answer: A) More costly. 24. Which was first? A) Paper money. B) Coined money. C) All the above. D) None of the above. Show Answer Correct Answer: B) Coined money. 25. Credit creation by commercial banks depends upon A) Amount of initial deposit. B) Value of LRR. C) Amount of currency in circulation. D) Both a and b. Show Answer Correct Answer: D) Both a and b. 26. Which one is the difficulty of the Barter System? A) Lack of Double Coincidence. B) Difficulty of Division of the Goods. C) Lack of General Acceptable Measure of Value. D) All the above. Show Answer Correct Answer: D) All the above. 27. What should you always get after buying something? A) Candy. B) A receipt. C) Balloons. D) Stickers. Show Answer Correct Answer: B) A receipt. 28. The President admitted taking ..... and had to resign. A) Bribes. B) Fees. C) Premiums. D) Fines. Show Answer Correct Answer: A) Bribes. 29. Overdraft protection ..... A) Allows you to withdraw more money than you have in your account. B) Protects your account from unauthorized transactions. C) Helps you save money for emergencies. D) Provides insurance for your deposits. Show Answer Correct Answer: A) Allows you to withdraw more money than you have in your account. 30. If the value of LRR is halved, money created by banks will A) Also become half. B) Increase by 4 times. C) Double. D) Remain constant. Show Answer Correct Answer: C) Double. 31. Money that can be directly used for transaction is ..... A) Near money. B) M2. C) Broad money. D) M1. Show Answer Correct Answer: D) M1. 32. What characteristic of money helps it keep its value and deters inflation? A) Uniformity. B) Acceptability. C) Portability. D) Limited supply. Show Answer Correct Answer: D) Limited supply. 33. Which type of interest rate is generally considered to be riskier? A) Fixed. B) Variable. C) All the above. D) None of the above. Show Answer Correct Answer: B) Variable. 34. A barter economy is where something is accepted in payment for a debt A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 35. Which is NOT one of the main jobs of the Federal Reserve? A) Adjusting taxes when needed. B) Setting monetary policy. C) Regulating the banks. D) Maintaining financial stability. Show Answer Correct Answer: A) Adjusting taxes when needed. 36. What is characteristic of a credit union? A) Non-profit. B) No physical locations. C) Open to anyone. D) Membership qualifications. Show Answer Correct Answer: D) Membership qualifications. 37. How does the repo rate affect monetary policy? A) The repo rate influences borrowing costs, spending, and investment, thereby shaping monetary policy. B) The repo rate is solely determined by international markets. C) The repo rate only affects government spending, not private investment. D) The repo rate has no impact on inflation rates. Show Answer Correct Answer: A) The repo rate influences borrowing costs, spending, and investment, thereby shaping monetary policy. 38. Which of the following is a function of money? A) Relatively scarce. B) Medium of exchange. C) Acceptability. D) Portability. Show Answer Correct Answer: B) Medium of exchange. 39. Paying a bank to let you borrow money A) Loan. B) Inflation. C) Interest. D) Reserve. Show Answer Correct Answer: A) Loan. 40. Electronic funds transfer EFT A) Allows customers to pay for purchases directly from their checking account. B) Movement of money electronically from one financial institution or account to another. C) Any organization that provides services related to money. D) Financial institution that accepts money from customers and deposits it into the customer's account. Show Answer Correct Answer: B) Movement of money electronically from one financial institution or account to another. 41. What are common options for saving money? A) Savings accounts, certificates of deposit (CDs), stocks. B) Barter, trade, investment. C) Interest rate, assets, income. D) Inflation, stocks, borrowing. Show Answer Correct Answer: A) Savings accounts, certificates of deposit (CDs), stocks. 42. Accepting deposits from individuals and firms and providing loans to the public are the basic function of ..... A) Merchant bank. B) Commercial bank. C) Insurance Companies. D) Central bank. Show Answer Correct Answer: B) Commercial bank. 43. Mortimer transfers $ 100 from his savings account to his checking account. The effect on the money supply will be A) M1 increases, M2 decreases, M3 is unchanged. B) M1, M2, M3 all increase. C) M1 will increase, M2 and M3 are unchanged. D) M1 will increase, M2 will increase, M3 falls. Show Answer Correct Answer: C) M1 will increase, M2 and M3 are unchanged. 44. Transaction in a commercial bank is govern by the central bank. A) False. B) True. C) All the above. D) None of the above. Show Answer Correct Answer: B) True. 45. What's the first thing you should do before buying something? A) Close your eyes. B) Check the price. C) Ask friends. D) Pick a color. Show Answer Correct Answer: B) Check the price. 46. Which of these is not a function of money A) Perishability. B) Store of value. C) Medium of exchange. D) Means of deferred payment. Show Answer Correct Answer: A) Perishability. 47. Which of the following is money in the form of gold or silver coins? A) Fiat money. B) Bitcoin. C) Specie money. D) Commodity money. Show Answer Correct Answer: C) Specie money. 48. How does selective credit control function in India? A) It increases interest rates across all sectors uniformly. B) Selective credit control functions by regulating credit flow to specific sectors through measures like credit ceilings and margin requirements. C) It only applies to foreign investments in India. D) It eliminates credit for all sectors without exception. Show Answer Correct Answer: B) Selective credit control functions by regulating credit flow to specific sectors through measures like credit ceilings and margin requirements. 49. What is true about the Central Bank? A) The Central Bank is the banker to banks, government, and financial institutions. B) Central Bank is the banker to the citizens. C) The Central Bank operates to make a profit for its owners. D) The Central Bank deal with the general public. Show Answer Correct Answer: A) The Central Bank is the banker to banks, government, and financial institutions. 50. If you have 2 meters cloth and you want wheat against it then how much wheat you should get . Which drawback of barter exchange is highlighted A) Lack of medium of exchange. B) Lack of store of value. C) Lack of measure of value. D) None of these. Show Answer Correct Answer: C) Lack of measure of value. 51. Demand for money depends positively on: A) Inflation rate. B) Interest rate. C) Income. D) Price of gold. Show Answer Correct Answer: C) Income. 52. Saving and loan institution A) Money placed into an account. B) Nonprofit financial institution that is privately owned and provides banking services for its members. C) Financial institution that offers savings and loan services. D) Financial institution that does not accept deposits. Show Answer Correct Answer: C) Financial institution that offers savings and loan services. 53. Poland ..... (handluje) with western countries. A) Makes money. B) Sells. C) Invests. D) Trades. Show Answer Correct Answer: D) Trades. 54. Open market operations as an instrument of credit control are performed by: A) The central bank of the country. B) The commercial bank of the country. C) Both (a) and (b). D) None of these. Show Answer Correct Answer: A) The central bank of the country. 55. To act as money, an item should be homogeneous and recognizable. Which characteristics of money does this describe? A) Acceptability. B) Scarcity. C) Durability. D) Uniformity. Show Answer Correct Answer: D) Uniformity. 56. What is the defect of the barter system? A) Lack of double coincidence of wants. B) Difficulty in the measurement of value. C) Difficulty in store of value. D) All of these. Show Answer Correct Answer: D) All of these. 57. Created during the Civil War, the National Banking System A) Was made up of banks chartered by the federal government. B) Resulted in shifting the paper money supply from being entirely privately-issued to being entirely publicly-issued. C) Eventually replaced state-chartered banks. D) All of these. Show Answer Correct Answer: D) All of these. 58. Which one is included in the primary function of money? A) Medium of Exchange. B) Measure of Value. C) Both of the above. D) Store of value. Show Answer Correct Answer: C) Both of the above. 59. How could the Federal Reserve encourage banks to lend out more of their reserves? A) Reduce the discount rate. B) Raise the required amount of reserve. C) Increase the prime rate. D) Reduce the money supply. Show Answer Correct Answer: A) Reduce the discount rate. 60. Money affects well-being A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. ← 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