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 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 2 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. An ATM can allow you to ..... A) Access and transfer money. B) Order goods online. C) Speak with others around the world. D) Pay money directly to your boss. Show Answer Correct Answer: A) Access and transfer money. 2. What system was used for transactions before the invention of money? A) Credit System. B) Monetary System. C) Barter System. D) Digital Currency. Show Answer Correct Answer: C) Barter System. 3. Which of the following is NOT a key function of a central bank? A) Issuer of legal tender. B) Lender of last resort. C) Banker to the government. D) Providing mortgages to households. Show Answer Correct Answer: D) Providing mortgages to households. 4. In India, coins are issued by A) Ministry of Finance. B) RBI. C) SBI. D) Ministry of Urban development. Show Answer Correct Answer: A) Ministry of Finance. 5. Your forgot to pay $ 100 on your credit card bill this month, your next month's bill is going to be $ 112. How much interest did they charge for missing your payment? A) 12%. B) 2%. C) 112%. D) 22%. Show Answer Correct Answer: A) 12%. 6. If you said that a pair of jeans and a fleece vest were both worth $ 35, you would be speaking of money as a A) Standard of value. B) Medium of exchange. C) Store of value. D) Method of barter. Show Answer Correct Answer: A) Standard of value. 7. The Monetary policy generally targets to ensure ..... A) Greater tax collections for the government. B) Price stability in the economy. C) Stable foreign relations. D) Employment generation in the country. Show Answer Correct Answer: B) Price stability in the economy. 8. M1 and M2 makeup all of this in the U.S. economy. A) Currency. B) Fiat money. C) Money supply. D) Representative money. Show Answer Correct Answer: C) Money supply. 9. When incidence and burden of tax falls on different persons that type of tax is called: A) Direct tax. B) Indirect tax. C) Regressive tax. D) None of these. Show Answer Correct Answer: B) Indirect tax. 10. Janet inherited a valuable necklace and needs a safe place to keep it when she isn't wearing it, A) Checking account. B) Savings account. C) Safe deposit box. D) None of the above. Show Answer Correct Answer: C) Safe deposit box. 11. The part of initial deposits to be kept with RBI is A) SLR. B) Reverse repo. C) CRR. D) Margin. Show Answer Correct Answer: C) CRR. 12. When checks have been written for more money than is in the account, it is called A) Reconciliation. B) Overdraft. C) Cancelled payment. D) Stop payment. Show Answer Correct Answer: B) Overdraft. 13. The RBI issues all currency in India except ..... A) Two thousand rupee note. B) One rupee note, coins. C) Five hundred rupee note. D) None of the above. Show Answer Correct Answer: B) One rupee note, coins. 14. What is the importance of savings accounts in banking? A) Savings accounts are essential for safe money storage, earning interest, promoting saving habits, and providing liquidity. B) Savings accounts are primarily for making large investments. C) Savings accounts are only for children to learn about money. D) Savings accounts are used to pay off debts immediately. Show Answer Correct Answer: A) Savings accounts are essential for safe money storage, earning interest, promoting saving habits, and providing liquidity. 15. Which the following option is the functions of central bank as a banker to the commercial bank? A) Lender of the last resort. B) Policy maker (for monetary policy). C) Control foreign exchange. D) Managing the national debt. Show Answer Correct Answer: B) Policy maker (for monetary policy). 16. Construction of school building is: A) Revenue receipts. B) Capital receipts. C) Revenue expenditure. D) Capital expenditure. Show Answer Correct Answer: D) Capital expenditure. 17. What are the main functions of banks? A) Store money, earn money, borrow money. B) Trade goods and services, measure costs, earn income. C) Invest money, save money, lend money. D) Buy money, sell money, charge interest. Show Answer Correct Answer: A) Store money, earn money, borrow money. 18. Discuss the function of money as a store of value. A) Money functions as a store of value by fluctuating in value unpredictably. B) Money functions as a store of value by depreciating in value over time. C) Money functions as a store of value by being easily counterfeited. D) Money functions as a store of value by maintaining its worth over time, enabling individuals to preserve wealth and purchasing power. Show Answer Correct Answer: D) Money functions as a store of value by maintaining its worth over time, enabling individuals to preserve wealth and purchasing power. 19. How inflation is controlled by RBI? A) By increasing the repo rate. B) By increasing legal reserve ratio. C) By increasing marginal requirement. D) All of these. Show Answer Correct Answer: D) All of these. 20. Divisibility means that money can be easily divided into A) Smaller units of value. B) Currency and coins. C) Representative money and fiat money. D) Different units of exchange. Show Answer Correct Answer: A) Smaller units of value. 21. Which monetary policy tool involves changing the reserve requirements? A) Interest rates. B) Reserve requirements. C) Open market operations. D) Discount rate. Show Answer Correct Answer: B) Reserve requirements. 22. Which of the following is not a source of income? A) Your annual salary for doing your job. B) The stipend you receive for doing an internship. C) Your monthly student loan payment. D) The wages you receive after a work shift. Show Answer Correct Answer: C) Your monthly student loan payment. 23. Which among following is correct about current account? A) No restriction on number of deposits or withdrawals. B) No interest on the deposit. C) Bank will collect service charges. D) All. Show Answer Correct Answer: D) All. 24. In an option contract for a bunch of shares Mr. A (buyer of shares) and Mr. B (seller of shares) agree to realize the contract on a future date. Mr. A purchases the right to exercise the option contract. Which option will this be called? A) Call option. B) Put option. C) Neither a Put and nor a Call option. D) Future contract. Show Answer Correct Answer: A) Call option. 25. The term "legal tender" serves which basic function? A) Medium of exchange. B) Standard of value. C) Store of value. D) Divisibility. Show Answer Correct Answer: A) Medium of exchange. 26. A means for comparing the values of goods and services A) Liquidity. B) Store of value. C) Unit of account. D) M1. Show Answer Correct Answer: C) Unit of account. 27. The headquarters of RBI is located at ..... A) Madras. B) Calcutta. C) New Delhi. D) Mumbai. Show Answer Correct Answer: D) Mumbai. 28. Who is most impacted by a rising rate of inflation? A) Renters in urban areas. B) Retirees living on fixed incomes. C) Individuals with higher levels of savings. D) People with variable-rate mortgages. Show Answer Correct Answer: B) Retirees living on fixed incomes. 29. What is the main role of central bank? A) Offer internet banking. B) Accepting deposit from consumers. C) Provide loan to consumers. D) Oversee and manage a country money supply. Show Answer Correct Answer: D) Oversee and manage a country money supply. 30. The main functions of financial institutions is to receive ..... and make ..... A) Loans, deposits. B) Taxes, loans. C) Deposits, loans. D) Loans, taxes. Show Answer Correct Answer: C) Deposits, loans. 31. A bank can only lend out it's A) Total checkable deposits. B) Required reserves. C) Excess reserves. D) Actual reserves. Show Answer Correct Answer: C) Excess reserves. 32. What is the primary purpose of a central bank's monetary policy? A) To keep inflation low and steady. B) To increase government spending. C) To manage foreign exchange rates. D) To provide loans to individuals. Show Answer Correct Answer: A) To keep inflation low and steady. 33. When was RBI set up? A) 1935. B) 1950. C) 1947. D) 1991. Show Answer Correct Answer: A) 1935. 34. What are the three main types of money? A) Banknotes, stocks, bonds. B) Gold coins, silver coins, paper notes. C) Digital currency, credit money, barter money. D) Commodity money, fiat money, representative money. Show Answer Correct Answer: D) Commodity money, fiat money, representative money. 35. Which of the following will increase the money supply? A) Fall in repo rate. B) Purchase of securities in open market. C) Decrease in cash reserve ratio. D) All of these. Show Answer Correct Answer: D) All of these. 36. Which of the following is not an objective of RBI? A) Maintenance of foreign exchange reserve. B) Economic Stability. C) Issue of Currency. D) Advancing Loans to public. Show Answer Correct Answer: D) Advancing Loans to public. 37. A commercial bank has two conflicting goals; A) Interest payments and interest accrual. B) Liabilities and assets. C) Money creation and money destruction. D) Profits and liquidity. Show Answer Correct Answer: D) Profits and liquidity. 38. ..... account is a version of checking account, issued by credit union. A) Overdraft. B) Credit. C) NOW. D) Share-draft. Show Answer Correct Answer: D) Share-draft. 39. What is a subsidy? A) A sum of money given by government as assistance for individuals or firms. B) A sum of money charged by government from individuals or firms. C) A sum of money given by firms to the government. D) A sum of money donated by firms to charity. Show Answer Correct Answer: A) A sum of money given by government as assistance for individuals or firms. 40. Commodity money can best be defines as ..... A) An item that serves the function of money, but has no value as anything else. B) An item that serves the function of money and has other uses. C) The price of currency in relation to another. D) All correct. Show Answer Correct Answer: B) An item that serves the function of money and has other uses. 41. Which of the following statements is true about the money supply? A) It is the total volume of money that is held by the government of a country. B) It is the total volume of money that is held by the general public of a country over a time period. C) It is the total volume of money that is held by the general public of a country at a particular point in time. D) All of the above. Show Answer Correct Answer: C) It is the total volume of money that is held by the general public of a country at a particular point in time. 42. Trade is made easier because of this function of money that eliminates the need to barter (trade goods for goods). A) Medium of Exchange. B) Divisibility. C) Unit of Account. D) Store of Value. Show Answer Correct Answer: A) Medium of Exchange. 43. What are wage factors A) Timings. B) Commission. C) Security. D) Condition. Show Answer Correct Answer: B) Commission. 44. A type of money that has value because it can be exchanged for something else of value (ex. gold). A) Representative money. B) Commodity money. C) Fiat money. D) Certificate money. Show Answer Correct Answer: A) Representative money. 45. If the RBI increases the Bank Rate, money supply in the economy will A) Increase. B) Decrease. C) Remain unchanged. D) None of the above. Show Answer Correct Answer: B) Decrease. 46. The basic functions of ..... include accepting deposits from individuals and firms and providing loans to the public A) A commercial bank. B) Bank Negara Malaysia. C) An insurance company. D) All are correct. Show Answer Correct Answer: A) A commercial bank. 47. Many people who go to see their bank manager have a ..... problem. A) Cash-book. B) Cash-book. C) Cash flow. D) Cashing up. Show Answer Correct Answer: C) Cash flow. 48. Bank belonging to the Federal Reserve System. A) Default. B) Central Bank. C) Liquidity. D) Member Bank. Show Answer Correct Answer: D) Member Bank. 49. When describing a function of money, what does 'a store of value' mean? A) Money is used to exchange for goods and services. B) Money circulates around the economy over time. C) Money may be kept for future spending. D) Money does not lose its value over time. Show Answer Correct Answer: C) Money may be kept for future spending. 50. A business or financial institution that stores and manages money for individuals and other businesses: A) Check Cashing Center. B) Credit Union. C) Bank. D) ATM. Show Answer Correct Answer: C) Bank. 51. Define commercial banks and their role in the economy. A) Commercial banks primarily focus on international trade and export financing. B) Commercial banks are government-owned institutions that do not accept deposits. C) Commercial banks are financial institutions that accept deposits, provide loans, and facilitate economic growth by offering financial services. D) Commercial banks only provide investment advice to clients. Show Answer Correct Answer: C) Commercial banks are financial institutions that accept deposits, provide loans, and facilitate economic growth by offering financial services. 52. The government keep their money in the central bank. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 53. Which of the following is not the instrument of credit control? A) Bank Rate. B) CRR. C) SLR. D) Managed floating. Show Answer Correct Answer: D) Managed floating. 54. Who supplies money in India A) RBI. B) Government. C) Commercial Bank. D) All of these. Show Answer Correct Answer: D) All of these. 55. The rate of interest paid by the Central Bank to the commercial banks on their deposits with the Central Bank is called A) Bank Rate. B) Repo Rate. C) Reverse Repo Rate. D) Discount Rate. Show Answer Correct Answer: C) Reverse Repo Rate. 56. The FDIC was established to A) Create a government banking monopoly. B) Protect the savings of the American people. C) Federalize the banking system. D) Help with the financing of World War II. Show Answer Correct Answer: B) Protect the savings of the American people. 57. The Demand for Money is made up of A) M1. B) Savings Bonds and Securities. C) Real GDP. D) Transactions Demand + Assets Demand. Show Answer Correct Answer: D) Transactions Demand + Assets Demand. 58. T/F:The central bank of a country can be a commercial bank at the same time. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 59. When revenue expenditure is greater than revenue receipts it is called A) Fiscal deficit. B) Primary deficit. C) Revenue deficit. D) None of these. Show Answer Correct Answer: C) Revenue deficit. 60. What is the significance of the Dow Jones Industrial Average? A) It is a key indicator of the stock market's performance and overall economic health. B) It determines the price of gold. C) It predicts the winner of the Super Bowl. D) It measures the temperature of the ocean. Show Answer Correct Answer: A) It is a key indicator of the stock market's performance and overall economic health. ← 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 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 8Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books