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 19 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 19 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. A bank run (or run on the bank) is when many depositors, due to a fear of a bank failure, rush to withdraw their money. When it occurs at multiple banks, it is called bank panic. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 2. What is the main function of the Central Bank? A) Regulating currency and controlling credit creation. B) Accepting deposits from the public. C) Granting loans to investors. D) Selling foreign exchange. Show Answer Correct Answer: A) Regulating currency and controlling credit creation. 3. The buying an selling of government securities in financial markets is an example of A) Discount rate. B) Prime rate. C) Open market operations. D) Tight money policy. Show Answer Correct Answer: C) Open market operations. 4. Choose which equation is correct about money supply? A) M2 or Current money = Paper currency +Quasi Money/ Near money. B) M2 or Current money = M1 +Quasi Money/ Near money. C) M2 or Current money = M1+ REPOs. D) M2 or Current money = M1 + Fixed deposits in other banking institution. Show Answer Correct Answer: B) M2 or Current money = M1 +Quasi Money/ Near money. 5. Which of the following is not represented in the CAMELS ratings? A) Liquidity. B) Sensitivity to market risk. C) Cash adequacy. D) Management quality. E) Asset quality. Show Answer Correct Answer: C) Cash adequacy. 6. What is the function of money that allows people to measure the relative costs of goods and services? A) Medium of exchange. B) Interest rate. C) Store of value. D) Unit of account. Show Answer Correct Answer: D) Unit of account. 7. What is the significance of SLR in the banking system? A) Setting credit quotas for different sectors. B) Controlling credit creation. C) Increasing liquidity in the economy. D) Regulating the repo rate. Show Answer Correct Answer: B) Controlling credit creation. 8. What influences financial decisions? A) Values. B) Needs. C) Wants. D) All of these. Show Answer Correct Answer: D) All of these. 9. Money has what if it doesn't deteriorate when it is being handled? A) Scarcity. B) Divisibility. C) Durability. D) Portability. Show Answer Correct Answer: C) Durability. 10. ..... affects the purchasing power of money. A) Insurance. B) Investment. C) Inflation. D) None of the above. Show Answer Correct Answer: C) Inflation. 11. Signature of ..... appears on a 2000 currency note A) Governor. B) Chief minister. C) President. D) Prime minister. Show Answer Correct Answer: A) Governor. 12. Who has the right of note issue? A) Central Bank. B) Commercial Bank. C) Co-operative Bank. D) Government. Show Answer Correct Answer: A) Central Bank. 13. "To deposit" means A) To cancel money into your account. B) To withdraw money into your account. C) To check money into your account. D) To put money into your account. Show Answer Correct Answer: D) To put money into your account. 14. Why does a bank sometimes hold excess reserves? A) To be sure they can meet their customers' demands. B) To protect against high prices. C) To make check clearing easier. D) To keep from lending too much money. Show Answer Correct Answer: A) To be sure they can meet their customers' demands. 15. Imagine Benjamin, Scarlett, and Arjun are discussing the difference between a debit card and a credit card. Can you help them understand the difference? A) A debit card uses your own money, while a credit card allows you to borrow money. B) A debit card has a higher interest rate than a credit card. C) A debit card requires a credit check, while a credit card does not. D) A debit card offers rewards and cashback, while a credit card does not. Show Answer Correct Answer: A) A debit card uses your own money, while a credit card allows you to borrow money. 16. All of the following are assets except: A) Factories. B) Buildings. C) Furniture. D) Credit card. Show Answer Correct Answer: D) Credit card. 17. Things of economic value that a person or company owns A) Assets. B) Debits. C) All the above. D) None of the above. Show Answer Correct Answer: A) Assets. 18. The security feature in U.S. money that has been the most difficult to counterfeit. A) Tinting the paper. B) Watermarks. C) Security Strip. D) All of the above. Show Answer Correct Answer: C) Security Strip. 19. What do we call the machine that gives us money from our bank account? A) Cash register. B) Vending machine. C) ATM. D) Computer. Show Answer Correct Answer: C) ATM. 20. What are M1 and M2? A) Fiat money. B) Money supplies. C) Currency. D) Specie. Show Answer Correct Answer: B) Money supplies. 21. Mechanism designed to keep the money supply portable, durable, divisible, and limited in supply A) Monetary standard. B) Legal tender. C) Treasury coin notes. D) Gold standard. E) Inconvertible fiat money standard. Show Answer Correct Answer: A) Monetary standard. 22. Which statement about a country's banks is correct? A) Commercial banks hold the financial accounts of the government. B) Commercial banks offer loans to consumers and firms. C) The central bank sets the government's tax and spending policies. D) The central bank supplies foreign currency to members of the public. Show Answer Correct Answer: B) Commercial banks offer loans to consumers and firms. 23. Money multiplier is A) 1/ CRR. B) 1/ SLR. C) 1/ LRR. D) NONE OF THESE. Show Answer Correct Answer: C) 1/ LRR. 24. What is the place responsible for creating and printing U.S. paper money? A) U.S. Mint. B) Federal Reserve Bank. C) Bureau of Engraving and Printing. D) FDIC. Show Answer Correct Answer: C) Bureau of Engraving and Printing. 25. Coins and paper money printed by the government A) Deposit. B) Interest. C) Money. D) Currency. Show Answer Correct Answer: D) Currency. 26. The pronunciation of 'debt' A) Deet. B) Dept. C) Det. D) Debt. Show Answer Correct Answer: C) Det. 27. Only central bank can print money. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 28. A good tax should be all of these but? A) Efficient. B) Simple. C) Equal. D) Overbearing. Show Answer Correct Answer: D) Overbearing. 29. Ethan, Harper, and Anika are having a debate. They are trying to figure out the purpose of a savings account. Can you help them? A) Ethan thinks it's to invest money and earn interest. B) Harper believes it's to borrow money and earn interest. C) Anika suggests it's to save money and earn interest. D) Or is it to spend money and earn interest, as their friend suggested?. Show Answer Correct Answer: C) Anika suggests it's to save money and earn interest. 30. Which of the following is the NOT a power given to the federal government by the National Banking Acts of 1863 and 1864? A) The power to require banks to hold adequate gold and silver reserves to cover bank notes. B) The power to issue a single national currency. C) The power to charter banks. D) The power to help government carry out its power to tax, regulate interstate and foreign commerce. Show Answer Correct Answer: D) The power to help government carry out its power to tax, regulate interstate and foreign commerce. 31. Maximum credit that the commercial banks can legally create depends on their A) SLR. B) Term deposits. C) Gold reserves. D) Cash Reserves with the RBI. Show Answer Correct Answer: D) Cash Reserves with the RBI. 32. Statistical definitions of Supply of Money:M2 + repurchase agreements, money market fund shares, and units as well as debt securities with a maturity of up to and including two years. A) M1. B) M2. C) M3. D) None of the above. Show Answer Correct Answer: C) M3. 33. Which one is wrong about supply money A) Not influence by the interest rate. B) Influence by transaction motive. C) Involves government intervention. D) None of the above. Show Answer Correct Answer: B) Influence by transaction motive. 34. What type of banking focuses on investment and wealth management? A) Retail banking. B) Commercial banking. C) Wealth management banking. D) Corporate banking. Show Answer Correct Answer: C) Wealth management banking. 35. What is one of the primary functions of money? A) Store of value. B) Measure of wealth. C) Unit of account. D) Medium of exchange. Show Answer Correct Answer: D) Medium of exchange. 36. Which option is not correct? A) Bank rate is the rate at which commercial bank borrow money from RBI. B) Central bank control money supply in the economy. C) Commercial bank sell securities on the behalf of government. D) Sum of CRR and SLR is LRR. Show Answer Correct Answer: C) Commercial bank sell securities on the behalf of government. 37. Which of the following is NOT required to open a checking account? A) Proof of identity. B) Social security number. C) Minimum age requirement. D) Proof of address. Show Answer Correct Answer: C) Minimum age requirement. 38. The simple interest formula is I=Prt. The P represents the principal. What is PRINCIPAL in an economic sense? A) The amount the bank owes you for being a customer at their bank. B) The percent interest for his year. C) The amount of money borrowed or deposited. D) The head administrator of a school. Show Answer Correct Answer: C) The amount of money borrowed or deposited. 39. If the desired reserve ratio is 2%, then the money multiplier is A) 50. B) 5. C) 500. D) None of the above. Show Answer Correct Answer: A) 50. 40. Which would somebody use to withdraw money from a checking account? A) Credit card. B) Debit card. C) Gift card. D) Store-value card. Show Answer Correct Answer: B) Debit card. 41. How do electronic banking services work? A) They require physical visits to the bank for all transactions. B) Electronic banking services enable online access to bank accounts for transactions and account management. C) They are exclusively for business accounts and not personal accounts. D) They only allow cash withdrawals from ATMs. Show Answer Correct Answer: B) Electronic banking services enable online access to bank accounts for transactions and account management. 42. One role monetary policy is to control ..... by changing the ..... A) Inflation; quantity of money in circulation. B) Unemployment; level of taxation. C) The price level; government spending. D) Inflation ; price level. Show Answer Correct Answer: A) Inflation; quantity of money in circulation. 43. In India, who is responsible for issuing currency notes? A) Ministry of Finance. B) State Bank of India. C) Reserve Bank of India. D) Government of India. Show Answer Correct Answer: C) Reserve Bank of India. 44. How much money is a quarter worth? A) 1 dollar. B) 25 cents. C) 5 cents. D) 10 cents. Show Answer Correct Answer: B) 25 cents. 45. The fee charged by a financial institution when you borrow money A) Withdraw. B) Interest. C) Deposit. D) Loan. Show Answer Correct Answer: B) Interest. 46. A key difference between commercial banks and credit unions is that A) Commercial banks are 'for-profit' and credit unions are 'not-for-profit'. B) Commercial banks typically pay higher interest rates than credit unions. C) Credit unions are more commonly located in rural areas while commercial banks are more commonly located in urban areas. D) Commercial banks offer more services, such as debit cards and online banking, than credit unions. Show Answer Correct Answer: A) Commercial banks are 'for-profit' and credit unions are 'not-for-profit'. 47. In a one-person economy, money has: A) No role. B) Limited role. C) Maximum use. D) Role only in savings. Show Answer Correct Answer: A) No role. 48. An institution for receiving, keeping and lending money A) Bond. B) Stock. C) Bank. D) Company. Show Answer Correct Answer: C) Bank. 49. Which of the following is not a quantitative instrument of credit control? A) Bank Rate Policy. B) Margin Requirements. C) Varying legal reserves. D) Open Market Operations. Show Answer Correct Answer: B) Margin Requirements. 50. In the principal-agent problem A) The managers are agents and stockholders are principals. B) The managers are principals and stockholders are agents. C) Managers and stockholders work for each other's interest. D) Stockholders incentivize managers to work harder. Show Answer Correct Answer: A) The managers are agents and stockholders are principals. 51. The basic money supply in the United States is made up of currency, coins, and checking account deposits. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 52. A $ 5000 deposit is made. The current reserve ratio is .1. How much money will the bank have in excess reserves? A) $ 2500. B) $ 5000. C) $ 4500. D) $ 500. Show Answer Correct Answer: C) $ 4500. 53. Barter trading will occurs when there is a ..... A) Double coincidence of wants. B) Singular of interest. C) Bargaining intermediary. D) Sufficient supply of cash. Show Answer Correct Answer: A) Double coincidence of wants. 54. If legal reserve ratio is 20% the value of money multiplier would be A) 5. B) 4. C) 3. D) 2. Show Answer Correct Answer: A) 5. 55. How many quarters make 1 dollar? A) 4. B) 2. C) 3. D) 5. Show Answer Correct Answer: A) 4. 56. When the Federal Reserve wants to encourage the economy to grow, what does it do with the money supply? A) Increase the money supply. B) Decrease the money supply. C) Sell all of its assets. D) Issue more government securities. Show Answer Correct Answer: A) Increase the money supply. 57. There are ..... Regional Federal Reserve Banks, and one Federal Reserve Board of Governors. A) 12. B) 4. C) 50. D) 52. Show Answer Correct Answer: A) 12. 58. Assume that the reserve requirement is 20 percent, but banks voluntarily keep some excess reserves. A $ 1 million increase in new reserves will result in A) A decrease in the money supply of more than $ 5 million. B) An increase in the money supply of less than $ 5 million. C) An increase in the money supply of $ 5 million. D) A decrease in the money supply of $ 5 million. Show Answer Correct Answer: B) An increase in the money supply of less than $ 5 million. 59. How does the RBI manage liquidity in the banking system? A) By limiting the number of ATMs in circulation. B) The RBI manages liquidity using tools like CRR, SLR, open market operations, and repo rates. C) By adjusting interest rates on savings accounts. D) Through direct government funding to banks. Show Answer Correct Answer: B) The RBI manages liquidity using tools like CRR, SLR, open market operations, and repo rates. 60. What is the role of the Central Bank in controlling money supply? A) By changing the reserve ratio. B) By conducting open market operations. C) By changing the bank rate. D) All of the above. Show Answer Correct Answer: D) All of the above. ← 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