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 18 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 18 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Asymmetric information is a situation where A) People do not gather information properly. B) One party in a transaction has more information that the other party. C) People take risks becuase of lack of information. D) Borrowers behave diferently from lenders. Show Answer Correct Answer: B) One party in a transaction has more information that the other party. 2. A system that requires banks to hold reserves equal to some fraction (%) of their checkable deposits. A) Money Multiplier. B) Bank Failures. C) Expansionary Effect on Economy of a Bank Deposit. D) Fractional Reserve Banking System. Show Answer Correct Answer: D) Fractional Reserve Banking System. 3. Paper currency issued by the Treasury that was redeemable in both gold and silver A) Monetary standard. B) Legal tender. C) Tresury coin notes. D) Gold standard. E) Inconvertible fiat money standard. Show Answer Correct Answer: C) Tresury coin notes. 4. Demand for Money:People often demand money as a precaution against an uncertain future. Unexpected expenses, such as medical or car repair bills, often require immediate payment. The need to have money available in such situations is referred to as the ..... for demanding money. A) Transactions Motive. B) Precautionary Motive. C) Speculative Motive. D) None of the above. Show Answer Correct Answer: B) Precautionary Motive. 5. Which of the following institutions is most likely to purchase accounts receivable from businesses to provide immediate cash flow? A) Factoring companies. B) Pension funds. C) Life insurance companies. D) Venture capital firms. Show Answer Correct Answer: A) Factoring companies. 6. The speaker ..... (wymienia) ways of selling things. A) Changes. B) Switches. C) Exchanges. D) Outlines. Show Answer Correct Answer: D) Outlines. 7. Currency that must be accepted for payment by decree of government. A) Legal tender. B) Specie. C) Barter. D) Gold Standard. Show Answer Correct Answer: A) Legal tender. 8. If a consumers deposits $ 500 in the bank and the bank has to keep 10% in reserve, how much must they keep? A) $ 450. B) $ 50. C) $ 100. D) $ 500. Show Answer Correct Answer: B) $ 50. 9. Which of the following is not the main forms of money? A) Bank deposits. B) Gift certificate. C) Cash. D) Central bank reserves. Show Answer Correct Answer: B) Gift certificate. 10. How does the RBI ensure financial stability in the economy? A) By increasing taxes on all financial institutions. B) By eliminating all forms of currency in the economy. C) The RBI ensures financial stability through regulation, supervision, and monetary policy management. D) By allowing unregulated lending practices to flourish. Show Answer Correct Answer: C) The RBI ensures financial stability through regulation, supervision, and monetary policy management. 11. How do credit unions differ from traditional banks in their structure? A) They are formed by a group of individuals with common interests. B) They focus on safeguarding funds and estates. C) They specialize in international banking services. D) They are owned by government entities. Show Answer Correct Answer: A) They are formed by a group of individuals with common interests. 12. ..... pool risk by collecting premiums from a large group of people who want to protect themselves and/or their loved ones against a particular loss, such as a fire, car accident, illness, lawsuit, disability or death. A) Tabung Haji. B) Insurance companies. C) Socso. D) None of the above. Show Answer Correct Answer: B) Insurance companies. 13. How many Federal Reserve Banks are there in the United States? A) 5. B) 10. C) 12. D) 20. Show Answer Correct Answer: C) 12. 14. RBI was set up in ..... and nationalized in ..... A) 1949, 1935. B) 1937, 1949. C) 1935, 1949. D) 1937, 1950. Show Answer Correct Answer: C) 1935, 1949. 15. What's important to do before buying something online? A) Buy immediately. B) Ignore reviews. C) Forget the cost. D) Compare prices. Show Answer Correct Answer: D) Compare prices. 16. What is the currency deposit ratio (cdr)? A) Ratio of money held by the public in currency to that of money held in bank deposits. B) Ratio of money held by public in bank deposits to that of money held by public in currency. C) Ratio of money held in demand drafts to that of money held in treasury bonds. D) None of the above. Show Answer Correct Answer: A) Ratio of money held by the public in currency to that of money held in bank deposits. 17. ..... insures accounts at commercial banks for up to $ 250, 000 A) FDIC. B) NCUA. C) All the above. D) None of the above. Show Answer Correct Answer: A) FDIC. 18. A(n) ..... is a specific type of loan that is used to buy real estate. A) Mortgage. B) Fiat money. C) Commodity money. D) Savings and loan. Show Answer Correct Answer: A) Mortgage. 19. Which is NOT a function of commercial bank? A) Providing financial and tax planning advice. B) Print money. C) Providing insurance. D) Exchanging foreign currencies. Show Answer Correct Answer: B) Print money. 20. Types of money:A good whose value serves as the value of money. Gold coins are an example of commodity money. In most countries, commodity money has been replaced with fiat money. A) Commodity money. B) Fiat money. C) All the above. D) None of the above. Show Answer Correct Answer: A) Commodity money. 21. What function does a central bank fulfil? A) It prints and issues currency. B) It offers overdraft facilities to individuals. C) It operates deposit accounts. D) It raises taxation. Show Answer Correct Answer: A) It prints and issues currency. 22. Fiscal deficit is equal to A) Direct tax. B) Interest. C) Borrowings. D) All of these. Show Answer Correct Answer: C) Borrowings. 23. What is the role of a central bank in relation to commercial banks? A) To issue shares. B) To compete with them. C) To manage their profits. D) To lend to them as a last resort. Show Answer Correct Answer: D) To lend to them as a last resort. 24. High-powered money is also called: A) Monetary base. B) SLR. C) Net worth. D) Cashless money. Show Answer Correct Answer: A) Monetary base. 25. Credit control means A) Contraction of credit only. B) Extension of Credit only. C) Contraction and Extension of Credit. D) None of these. Show Answer Correct Answer: C) Contraction and Extension of Credit. 26. What is money commonly accepted as in exchange for goods and services? A) A savings account. B) A form of credit. C) A type of loan. D) A medium of exchange. Show Answer Correct Answer: D) A medium of exchange. 27. Money supply consists of A) Currency. B) Deposit. C) Both. D) None. Show Answer Correct Answer: C) Both. 28. What type of bank account is typically used for daily transactions and comes with a debit card? A) Credit account. B) Loan account. C) Savings account. D) Checking account. Show Answer Correct Answer: D) Checking account. 29. Why will a commercial bank increase its lending to customers? A) If it sees that a person is in need. B) If it thinks that it is for charitable cause. C) If it thinks that it will make profit. D) If it thinks that it is for the well-being of the customer. Show Answer Correct Answer: C) If it thinks that it will make profit. 30. A monetary standard under which the fiat money supply cannot be converted into gold or silver by its citizens A) Monetary standard. B) Legal tender. C) Treasury coin notes. D) Gold standard. E) Inconvertible fiat money standard. Show Answer Correct Answer: E) Inconvertible fiat money standard. 31. What is the purpose of an ATM? A) To allow users to apply for loans directly. B) The purpose of an ATM is to provide convenient access to banking services. C) To provide cash only during business hours. D) To serve as a physical bank branch. Show Answer Correct Answer: B) The purpose of an ATM is to provide convenient access to banking services. 32. An individual who has a surplus of rice which she wishes to exchange for clothing. If she is not lucky enough she may not be able to find another person who has the diametrically opposite demand for rice with a surplusof clothing to offer in exchange. This is Known as ..... A) Bater system. B) Double coincidence of wants. C) Problem of Double coincidence of wants. D) None of the above. Show Answer Correct Answer: C) Problem of Double coincidence of wants. 33. Marginal requirement is the difference between ..... A) Amount of loans and amount of deposits. B) Amount of assets mortgage and loan taken. C) Saving deposits and current deposits. D) None. Show Answer Correct Answer: B) Amount of assets mortgage and loan taken. 34. What are the advantages of Barter System? A) Simple System. B) More Mutual Co-operation. C) No Economic Disparities. D) All the above. Show Answer Correct Answer: D) All the above. 35. What is the difference between quantitative and qualitative credit control? A) Quantitative credit control is only used for large businesses. B) Qualitative credit control relies solely on statistical analysis. C) Quantitative credit control ignores financial data completely. D) Quantitative credit control uses numerical data for management, while qualitative credit control focuses on non-numerical factors and judgment. Show Answer Correct Answer: D) Quantitative credit control uses numerical data for management, while qualitative credit control focuses on non-numerical factors and judgment. 36. Banking that uses apps on devices such as smartphones, tablets, etc. A) Ibanking. B) Mobile. C) Cyberbanking. D) Online. Show Answer Correct Answer: B) Mobile. 37. What did the government do to help slow/end the Great Recession? A) Allowed the banks to fail to teach them a lesson. B) Charged banks $ 700 Billion to fix the damage they caused. C) Authorized a $ 700 Billion bailout of the banks and auto industry. D) Created a number of new banks to strengthen the economy. Show Answer Correct Answer: C) Authorized a $ 700 Billion bailout of the banks and auto industry. 38. Why do we save money in a bank A) Money is safer in bank. B) Money in the bank grow. C) Both a and b. D) Neither a nor b. Show Answer Correct Answer: C) Both a and b. 39. The total value of financial assets in the economy that are considered money. These are several different measures of the money supply, called monetary aggregates. A) Money Supply. B) Gold Standard. C) National Bank. D) Bank. Show Answer Correct Answer: A) Money Supply. 40. Which is not the function if central bank A) Controller of the money supply. B) Banker to the government. C) Bankers bank. D) Overdraft facility. Show Answer Correct Answer: D) Overdraft facility. 41. It allows us to trade A) Legal Tender. B) Means of exchange. C) Unit of Account. D) Store of Value. Show Answer Correct Answer: B) Means of exchange. 42. What are credit unions (caisses populaires)? A) Institutions that safeguard funds and estates. B) Cooperative savings and lending institutions formed by a group of individuals with common interests. C) Organizations that provide investment advice to individuals. D) Banks that specialize in international transactions. Show Answer Correct Answer: B) Cooperative savings and lending institutions formed by a group of individuals with common interests. 43. What does "cut back" mean? A) Charge. B) Decrease expenses. C) Spend more. D) Increase expenses. Show Answer Correct Answer: B) Decrease expenses. 44. Why is money considered essential? A) It is only used in banks. B) It is not widely accepted. C) It complicates exchanges. D) It plays a crucial role in facilitating exchange. Show Answer Correct Answer: D) It plays a crucial role in facilitating exchange. 45. What is "credit creation" in banking? A) Issuing government debt. B) Printing new banknotes. C) The process by which banks increase the money supply through lending. D) Setting interest rates. Show Answer Correct Answer: C) The process by which banks increase the money supply through lending. 46. During a history class, Adi learned about the origins of banking. The teacher explained that the term "bank" has a fascinating history. From which language does the term "bank" originate, and what was its original meaning in the context of early banking activities? A) Greek, meaning "marketplace" . B) French, meaning "exchange" . C) Italian, meaning "bench" . D) Latin, meaning "coin" . Show Answer Correct Answer: C) Italian, meaning "bench" . 47. What is the purpose of moral suasion as a policy tool of the Central Bank? A) To regulate interest rates. B) To control inflation. C) To persuade commercial banks to change their lending behavior. D) To stabilize the stock market. Show Answer Correct Answer: C) To persuade commercial banks to change their lending behavior. 48. When was first Indian rupee printed A) 30th November, 1917. B) 22nd August, 1947. C) 14th November, 1912. D) 14th December, 1904. Show Answer Correct Answer: A) 30th November, 1917. 49. Collect money in the form of deposits from customers and by issuing bank CDs and bonds. Take care of their customers payment services. Earn money by giving interest bearing loans to customers and by investing money in revenue giving assets. A) Central bank. B) Commercial bank. C) All the above. D) None of the above. Show Answer Correct Answer: B) Commercial bank. 50. A saving account in a bank represents the function of money: A) Store of value. B) A medium of exchange. C) A standard for deferred payments. D) A measure of value. Show Answer Correct Answer: A) Store of value. 51. ..... is the effect of rise in rate of SLR on creation of credit. A) Decrease in Credit Creation. B) Increase in Credit Creation. C) No Effect. D) None of the above. Show Answer Correct Answer: A) Decrease in Credit Creation. 52. What are the earliest forms of money used in human history? A) Cloth, wood, and glass. B) Plastic, paper, and electronic currency. C) The earliest forms of money used in human history include commodities such as shells, beads, and livestock, as well as precious metals like gold and silver. D) Stones, leaves, and feathers. Show Answer Correct Answer: C) The earliest forms of money used in human history include commodities such as shells, beads, and livestock, as well as precious metals like gold and silver. 53. The ratio of total deposits that a commercial bank has to keep with reserve bank Of India is called: A) Statutory liquidity Ratio. B) Liquid Reserve Ratio. C) Case Reserve Ratio. D) Deposit Ratio. Show Answer Correct Answer: C) Case Reserve Ratio. 54. The firm will go bankrupt if it cannot meet its ..... A) Liabilities. B) Promises. C) Duties. D) Charges. Show Answer Correct Answer: A) Liabilities. 55. Do checking accounts pay interest? A) No, never. B) Sometimes. C) Yes, always. D) None of the above. Show Answer Correct Answer: B) Sometimes. 56. How do changes in interest rates affect the economy? A) Changes in interest rates can impact the economy by influencing consumer spending, investment, and overall economic growth. B) Changes in interest rates have no impact on the economy. C) Changes in interest rates lead to a decrease in inflation. D) Changes in interest rates only affect government spending. Show Answer Correct Answer: A) Changes in interest rates can impact the economy by influencing consumer spending, investment, and overall economic growth. 57. In the early 1800's, currency in the U.S. was issued by A) Banks. B) The Fed. C) Congress. D) A central bank. Show Answer Correct Answer: A) Banks. 58. Your take-home pay, or net income, is A) The amount you receive after benefits, such as vacation pay and health insurance, have been added. B) The amount you receive after taxes, insurance, or other costs have been subtracted. C) The total amount you earn. D) The amount of cash on hand you have. Show Answer Correct Answer: B) The amount you receive after taxes, insurance, or other costs have been subtracted. 59. What is the term used for coins and notes printed by the government? A) Checks. B) Currency. C) Debit cards. D) Deposits. Show Answer Correct Answer: B) Currency. 60. Why does the Federal Reserve alter monetary policy? A) To lessen the effect of natural business cycles. B) To provide services to member banks. C) To regulate the banking industry. D) To enable banks to clear checks. Show Answer Correct Answer: A) To lessen the effect of natural business cycles. ← 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