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 20 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 20 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is the purpose of the repo rate set by the Central Bank? A) To limit the amount of credit creation by banks. B) To regulate interest rates in the economy. C) To stabilize the stock market. D) To control inflation. Show Answer Correct Answer: B) To regulate interest rates in the economy. 2. A commercial bank chartered by the federal government. A) Money Supply. B) Gold Standard. C) National Bank. D) Bank. Show Answer Correct Answer: C) National Bank. 3. Which monetary aggregate represents the most liquid form of money? A) M3. B) M4. C) M2. D) M1. Show Answer Correct Answer: D) M1. 4. Financial intermediaries are able to reduce transaction costs because of A) Economies of scale and expertise. B) Discounts. C) Mutual funds. D) Diversification of portfolio. Show Answer Correct Answer: A) Economies of scale and expertise. 5. Who insures deposits in commercial banks? A) Federal Reserve. B) NCUA. C) State Farm. D) FDIC. Show Answer Correct Answer: D) FDIC. 6. If a loan is repaid at a commercial bank then A) Money is destroyed. B) Money is created. C) Commercial bank assets are increased. D) Commercial bank assets are decreased. Show Answer Correct Answer: A) Money is destroyed. 7. Unit of account is the unit in which prices are quoted and ..... are kept. A) Values. B) Accounts. C) Measurements. D) Amounts. Show Answer Correct Answer: B) Accounts. 8. Under what monetary standard does the United States currently operate? A) The gold standard. B) The inconvertible fiat money standard. C) The silver standard. D) The greenback standard. Show Answer Correct Answer: B) The inconvertible fiat money standard. 9. In the Roman period ..... a gold coin was the standerd currency A) Pana. B) Pound. C) Desant. D) Shilling. Show Answer Correct Answer: C) Desant. 10. With an increase in margin requirement, availability of credit in the economy: A) Increases. B) Decreases. C) Unchanged. D) None of these. Show Answer Correct Answer: B) Decreases. 11. What is the main problem of barter system? A) The item can be divided into smaller part. B) It is not popular among the traders. C) It has to be mutually agreed by both traders. D) Money was created before. Show Answer Correct Answer: C) It has to be mutually agreed by both traders. 12. Pension funds are primarily designed to: A) Fund high-risk startup ventures. B) Provide short-term loans to businesses. C) Offer life insurance policies. D) Manage retirement savings for individuals. Show Answer Correct Answer: D) Manage retirement savings for individuals. 13. The problem with Continental dollars was that A) So much was printed they became nearly worthless. B) They were backed by gold and not silver. C) They were fiat money. D) They were backed by individual states. Show Answer Correct Answer: A) So much was printed they became nearly worthless. 14. Which of the statements gives an accurate picture of the effect of the rise of the reverse repo rate by the central bank of a country? A) The demand for goods and services in the country will decrease. B) The demand for goods and services in the country will increase. C) The demand for goods and services in the country may increase or decrease. D) There is no effect on the demand for goods and services in the country. Show Answer Correct Answer: A) The demand for goods and services in the country will decrease. 15. What are the functions of the Bank of Issue by the RBI? A) The functions of the Bank of Issue by the RBI include issuing currency notes, managing currency supply, and ensuring currency integrity. B) Regulating interest rates. C) Providing loans to individuals. D) Managing foreign exchange reserves. Show Answer Correct Answer: A) The functions of the Bank of Issue by the RBI include issuing currency notes, managing currency supply, and ensuring currency integrity. 16. A function of money is to act as a measure of value. What does this mean? A) It is used for future savings. B) It is used to compare the worth of different goods. C) It is used to pay the price of a good. D) It is used to enable monthly payments for expensive goods. Show Answer Correct Answer: B) It is used to compare the worth of different goods. 17. Paper currency issued by the fed A) Federal Reserve Notes. B) Washington Notes. C) Specie. D) State Notes. Show Answer Correct Answer: A) Federal Reserve Notes. 18. What is the best explanation of 'standard for deferred payment'as a function of money? A) Money can measure good's value. B) Money can be used for a long period of time. C) Money can be used for future payments. D) Money can be used to buy goods. Show Answer Correct Answer: C) Money can be used for future payments. 19. Where do people keep their money safe? A) In the garden. B) In the kitchen. C) Under a pillow. D) At the bank. Show Answer Correct Answer: D) At the bank. 20. When RBI act as a banker to the government. what does it do? A) It carries out government transaction. B) Advise on monetary and financial matter. C) It keeps account of government. D) All of the above. Show Answer Correct Answer: D) All of the above. 21. Which historical form of money represents a transition between commodity money and pure fiat money? A) Electronic fund transfers (NEFT/RTGS). B) Bank-issued notes that were directly redeemable for gold or silver. C) Early standardized coins made of base metals (e.g., copper). D) Credit cards and debit cards. Show Answer Correct Answer: B) Bank-issued notes that were directly redeemable for gold or silver. 22. What is the Federal Reserve? A) Central bank of the U.S. B) Central credit union. C) Agency responsible for collecting taxes. D) Agency responsible for international trade. Show Answer Correct Answer: A) Central bank of the U.S. 23. Which of the following statements are correct about money A) It is a medium of exchange. B) It is acceptable to all. C) It acts as a measure of value of the goods and services. D) All. Show Answer Correct Answer: D) All. 24. Central banks are the ..... of cash reserves A) Agent. B) Custodian. C) Bank. D) None of the above. Show Answer Correct Answer: B) Custodian. 25. What sentence has the same meaning as "we splashed out on out last party": A) We saved a lot of money on our last party. B) We didn't spend a lot of money on our last party. C) We spent a lot of money on our last party. D) We didn't save money on the party. Show Answer Correct Answer: C) We spent a lot of money on our last party. 26. If you want to save money, you can open a ..... A) Cashpoinit. B) Savings account. C) Bank. D) Current account. Show Answer Correct Answer: B) Savings account. 27. Which type of account allows your deposited money to be withdrawn at any time by writing a check? A) Savings Account. B) Certified Cash Account. C) Checking Account. D) Certificate of Deposit. Show Answer Correct Answer: C) Checking Account. 28. "Feeling good about one's life" is the definition of A) Well-being. B) Need. C) Value. D) Want. Show Answer Correct Answer: A) Well-being. 29. Which of the following system is followed by RBI for issuing currency? A) Simple deposit system. B) Minimum reserve system. C) Proportionate system. D) Fixed fiduciary issue system. Show Answer Correct Answer: B) Minimum reserve system. 30. Checkable deposits are also known as ..... A) REPO. B) Currency. C) Near money. D) Demand deposit. Show Answer Correct Answer: D) Demand deposit. 31. The price paid to use someone else's money A) Interest. B) Debit. C) Loan. D) Credit. Show Answer Correct Answer: A) Interest. 32. Penny is an artist, and John is a carpenter. Penny agrees to paint a portrait of John's family in exchange for a handmade table created by John. How did Penny and John pay for the goods in their transaction? A) Using a store of value. B) Through bartering. C) With currency. D) With money. Show Answer Correct Answer: B) Through bartering. 33. Which of these situations is most likely to cause the Fed to introduce a tight money supply? A) A recession has reduced aggregate demand and increased unemployment. B) The federal government passes a new budget with a large deficit. C) The economy is prosperous with relatively low inflation and low unemployment. D) The economy is expanding quickly and inflation is a concern. Show Answer Correct Answer: D) The economy is expanding quickly and inflation is a concern. 34. What is investing? A) Setting aside money for future use. B) Spending money on anything you want. C) Using money in hopes of gaining more in the future by lending to businesses in exchange for a share of profits. D) Saving money constantly. Show Answer Correct Answer: C) Using money in hopes of gaining more in the future by lending to businesses in exchange for a share of profits. 35. In the story, Lala the goldsmith created money by: A) Mining gold. B) Printing notes. C) Issuing more receipts than gold held. D) Selling wheat. Show Answer Correct Answer: C) Issuing more receipts than gold held. 36. ..... is the main source of money supply in India. A) Central bank. B) Commercial banks. C) Both (i) and (ii). D) Government. Show Answer Correct Answer: C) Both (i) and (ii). 37. Which policy instrument involves persuading commercial banks to follow directives on credit flow? A) Cash Reserve Ratio. B) Repo Rate. C) Open Market Operation. D) Moral Suasion. Show Answer Correct Answer: D) Moral Suasion. 38. A banking system that keeps only a small portion of deposits on hand and lends out the rest. A) Fractional Reserve Banking. B) Federal Reserve System. C) Credit Union. D) Federal Deposit Insurance Corporation. Show Answer Correct Answer: A) Fractional Reserve Banking. 39. Credit control system means: A) Contraction credit only. B) Extension of credit only. C) Extension and contraction of money supply. D) None of these. Show Answer Correct Answer: C) Extension and contraction of money supply. 40. Liam wants cash from his bank, but it is closed, He will use the ATM. A) Credit card. B) Debit card. C) Savings account. D) None of the above. Show Answer Correct Answer: B) Debit card. 41. Which of the following best illustrates the function of money as a medium of exchange? A) Saving money in a bank account for future use. B) Using money to compare the value of different goods. C) Using money to measure the worth of an item. D) Receiving money in return for providing a service. Show Answer Correct Answer: D) Receiving money in return for providing a service. 42. 1 of the 3 functions of money that allows it to serve as a common denominator to measure value. A) Divisibility. B) Store of value. C) Measure of value. D) Medium of exchange. Show Answer Correct Answer: C) Measure of value. 43. Explain the process of creating money through the banking system. A) Money is created by the government printing more currency. B) Money is generated through individuals saving in banks. C) Banks create money by selling products to customers. D) Banks create money through the process of issuing loans to customers. Show Answer Correct Answer: D) Banks create money through the process of issuing loans to customers. 44. Which type of depository institution has account holder requirements, such as employment at a certain company. A) Commercial bank. B) Federal Reserve. C) Savings and Loan. D) Credit Union. Show Answer Correct Answer: D) Credit Union. 45. What is the significance of credit scores in banking? A) Credit scores are only relevant for credit card applications. B) Credit scores have no impact on mortgage rates. C) Credit scores are significant in banking as they determine a borrower's creditworthiness and influence loan approval and interest rates. D) Credit scores are determined solely by income level. Show Answer Correct Answer: C) Credit scores are significant in banking as they determine a borrower's creditworthiness and influence loan approval and interest rates. 46. The main purpose of Bank Negara Malaysia requires to the commercial banks keep statutory reserve to ..... A) Block profits of commercial banks. B) Ensure that commercial banks have sufficient liquidity. C) Facilitate the commercial bankto clear the cheque customers. D) Control the commercial banks to finance. Show Answer Correct Answer: B) Ensure that commercial banks have sufficient liquidity. 47. Which of the following financial institutions does NOT have to meet minimum reserve ratios?i. the Fedii. commercial banksiii. credit unions A) Iii only. B) I, ii, and iii. C) I only. D) Ii and iii. E) Ii only. Show Answer Correct Answer: C) I only. 48. Which one is the example of commercial bank in Malaysia? A) Malaysia Bank. B) Federal Reserves. C) Bank Negara. D) Public Bank. Show Answer Correct Answer: D) Public Bank. 49. Name three banking services provided to customers. A) Insurance policies. B) Checking accounts. C) Investment portfolios. D) Savings accounts, loans, credit cards. Show Answer Correct Answer: D) Savings accounts, loans, credit cards. 50. If you are going to change currency, what do you need to know? A) Exchange rate. B) Financial accounts. C) PIN. D) CVC. Show Answer Correct Answer: A) Exchange rate. 51. What is the relationship between the central bank and commercial banks? A) The central bank only provides loans to individuals, not commercial banks. B) Commercial banks are independent of the central bank's regulations. C) The central bank supervises and supports commercial banks, ensuring financial stability and liquidity. D) The central bank competes with commercial banks for customers. Show Answer Correct Answer: C) The central bank supervises and supports commercial banks, ensuring financial stability and liquidity. 52. Which of the following is a function of commercial banks? A) Issuing currency. B) Controlling inflation. C) Managing national debt. D) Accepting deposits. Show Answer Correct Answer: D) Accepting deposits. 53. Which of the following is a characteristic of money, NOT a function? A) Unit of account. B) Store of value. C) Portability. D) Medium of exchange. Show Answer Correct Answer: C) Portability. 54. Which of these is not a function of Central Bank A) Banker's Bank. B) Accepting deposits of general public. C) Custodian of Foreign Exchange Reserves. D) Currency Authority. Show Answer Correct Answer: B) Accepting deposits of general public. 55. Main function of money is A) Liquidity. B) Solidness. C) All the above. D) None of the above. Show Answer Correct Answer: A) Liquidity. 56. To smoothen the transaction, an intermediate good is necessary which is acceptable to both parties. Such a good is called ..... A) Substitute good. B) Complimentary good. C) Money. D) All of the above. Show Answer Correct Answer: C) Money. 57. What paper do you receive after you buy something in a store A) Ticket. B) Slip. C) Bill. D) Receipt. Show Answer Correct Answer: D) Receipt. 58. The percentage of demand deposits which the commercial banks are legally required to maintain as their liquid assets is called: A) CRR. B) Repo rate. C) SLR. D) Reverse repo rate. Show Answer Correct Answer: C) SLR. 59. What are the advantages of using a debit card? A) Limited acceptance at retailers. B) High interest rates on purchases. C) Automatic credit line increase with usage. D) Advantages of using a debit card include direct access to funds, lower fees, easy expense tracking, and no debt accumulation. Show Answer Correct Answer: D) Advantages of using a debit card include direct access to funds, lower fees, easy expense tracking, and no debt accumulation. 60. Which is the Agency Function of Commercial Banks? A) Locker Facility. B) Advancing Loans. C) Act as Trustee. D) Accepting Deposits. Show Answer Correct Answer: C) Act as Trustee. ← 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