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 21 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 21 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The term "liquidity" in banking refers to: A) Ability to meet long-term obligations. B) Ability to meet short-term obligations. C) Profitability of the bank. D) None of the above. Show Answer Correct Answer: B) Ability to meet short-term obligations. 2. ..... refers to the amount of money borrowed. A) Interest. B) Principal. C) Fiat money. D) Default. Show Answer Correct Answer: B) Principal. 3. Which of the statements gives a true picture of the effect of lowering the cash reserve ratio by the central bank of a county A) The lending capacity of commercial banks may increase or decrease. B) The lending capacity of commercial banks will increase. C) The lending capacity of commercial banks will decrease. D) There is no effect on the lending capacity of commercial banks. Show Answer Correct Answer: B) The lending capacity of commercial banks will increase. 4. What is the purpose of the Statutory Liquidity Ratio (SLR)? A) To control inflation. B) To encourage savings. C) To limit the amount of credit creation by banks. D) To stabilize the economy. Show Answer Correct Answer: C) To limit the amount of credit creation by banks. 5. In India, the central bank is: A) Federal reserve system. B) Federal system. C) Reserve bank of India. D) Both (a) and (b). Show Answer Correct Answer: C) Reserve bank of India. 6. Each of the following FED actions will contract the money supply except A) Raise the reserve ratio. B) Buy bonds. C) Raise the discount rate. D) Raise the Federal Funds rate. Show Answer Correct Answer: B) Buy bonds. 7. Primary deficit=fiscal deficit ..... A) Loan. B) Interest payments. C) Borrowings. D) None of these. Show Answer Correct Answer: B) Interest payments. 8. The main liability of a commercial bank is: A) Bonds. B) Loans. C) Deposits. D) Furniture. Show Answer Correct Answer: C) Deposits. 9. The central bank must increase the repo rate during deficient demand A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 10. What is a cheque and how is it used? A) A cheque is a digital currency used for instant transactions. B) A cheque is a written order to a bank to pay a specified amount to a designated person or entity. C) A cheque is a form of identification required for banking services. D) A cheque is a type of credit card used for online purchases. Show Answer Correct Answer: B) A cheque is a written order to a bank to pay a specified amount to a designated person or entity. 11. Which of the following is a type of financial institution? A) Insurance Company. B) Credit Union. C) Bank. D) Investment Fund. Show Answer Correct Answer: C) Bank. 12. Would you want to work in a place that gives you twice the pay of your current job but not proper working conditions and why? A) Yes, because they are giving twice the pay and money is important. B) No, because non wage factors have to be considered while taking a job. C) All the above. D) None of the above. Show Answer Correct Answer: B) No, because non wage factors have to be considered while taking a job. 13. Below are the secondary functions of commercial, EXCEPT ..... A) Lend to government. B) Offer credit card. C) Offer internet banking. D) Clearing cheque. Show Answer Correct Answer: A) Lend to government. 14. In India, LRR is determined by the commercial banks themselves A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 15. Money that people can gain access to easily and immediately to pay for goods and services A) Commodity money. B) M1. C) Interest. D) M2. Show Answer Correct Answer: B) M1. 16. Maximum credit that commercial bank can legally creat depends on their A) CRR. B) Legal reserve ratio( LRR). C) Gold Reserve. D) SLR. Show Answer Correct Answer: B) Legal reserve ratio( LRR). 17. What is the purpose of the Securities and Exchange Commission (SEC)? A) To oversee transportation infrastructure. B) To protect investors and maintain fair, orderly, and efficient markets. C) To regulate the food industry. D) To promote international trade agreements. Show Answer Correct Answer: B) To protect investors and maintain fair, orderly, and efficient markets. 18. Bank of banks:provides banking services for commercial banks and government. Has a unanimous right to issue bank notes and is responsible for the monetary system and monetary policy of the country or a monetary union. A) Central bank. B) Commercial bank. C) All the above. D) None of the above. Show Answer Correct Answer: A) Central bank. 19. Adverse Selection is a type of asymmetric information problem that occurs ..... the transaction A) After. B) Before. C) All the above. D) None of the above. Show Answer Correct Answer: B) Before. 20. What kind of interest includes "interest paid on interest" ? A) Profit. B) Compound interest. C) Complex interest. D) Simple interest. Show Answer Correct Answer: B) Compound interest. 21. Why the use of money is better than barter? A) Barter finds easy double coincidence of wants. B) Barter avoids indivisibility of goods. C) In barter durability issue might arise. D) None of the above. Show Answer Correct Answer: D) None of the above. 22. If you are earning interest, then which type of interest would more likely lead to more earnings? A) Simple interest. B) Compound interest. C) All the above. D) None of the above. Show Answer Correct Answer: B) Compound interest. 23. A student records her income and spending for past month, she uses the function of money A) Medium of exchange. B) Standard of deferred payments. C) Unit of account. D) Store of value. Show Answer Correct Answer: C) Unit of account. 24. Who regulates money supply in India? A) Commercial Banks. B) Planning Commission. C) Government of India. D) Reserve Bank of India. Show Answer Correct Answer: D) Reserve Bank of India. 25. Priya, Mia, and Benjamin are planning their high school budget. Can you help them identify some common expenses they should consider? A) Textbooks, school supplies, transportation costs, lunch or meals, extracurricular activities, and personal expenses. B) Clothing, music lessons, summer camps. C) Cell phone bills, movie tickets, video games. D) Tuition fees, field trips, sports equipment. Show Answer Correct Answer: A) Textbooks, school supplies, transportation costs, lunch or meals, extracurricular activities, and personal expenses. 26. Which of the following is NOT a policy instrument of Bank Negara Malaysia? A) Open market operations. B) The amount of required reserves held by banks members. C) The tax rate imposed on interest income. D) The interest rate charged on loans to bank members. Show Answer Correct Answer: C) The tax rate imposed on interest income. 27. Which of the following is NOT a limitation of the barter system? A) High Transaction Speed. B) Search Cost. C) Lack of Double Coincidence of Wants. D) Lack of Common Unit of Measurement. Show Answer Correct Answer: A) High Transaction Speed. 28. Which are the following are NOT functions of commercial banks in credit creation? A) Issue bank drafts. B) Provide loans. C) Accept deposits. D) Control foreign exchange. Show Answer Correct Answer: D) Control foreign exchange. 29. How quickly an asset can be converted into cash is known as what? A) Liquidity. B) Ease of Withdraw. C) Ease of Access. D) Transferability. Show Answer Correct Answer: A) Liquidity. 30. People sell goods for money and use the money for buying goods they want. Which is this function of money? A) Store of value. B) Medium of exchange. C) Unit of Account. D) Deferred payment. Show Answer Correct Answer: B) Medium of exchange. 31. When interest rates rise, demand for money: A) Remains constant. B) Becomes infinite. C) Increases. D) Decreases. Show Answer Correct Answer: D) Decreases. 32. Which account is effective for storing emergency money? A) Money Market Deposit Account. B) Checking Account. C) Savings Account. D) Certificate of Deposit. Show Answer Correct Answer: C) Savings Account. 33. Time deposit is a bank deposit from which withdrawals may be made at a ..... future date of maturity . A) Random. B) Specified. C) Required. D) Convertible. Show Answer Correct Answer: B) Specified. 34. Major economic crises such as the Great Depression of the 1930's, led to expansion of the Fed's role in the U.S. banking system and with managing the U.S. economy. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 35. Which form of money is issued by the central bank? A) Fiat money. B) Token money. C) Commodity money. D) Digital money. Show Answer Correct Answer: A) Fiat money. 36. Which bank operate in public interest without profit motive A) UBI. B) SBI. C) RBI. D) PNB. Show Answer Correct Answer: C) RBI. 37. The ..... guarantees your bank deposits up to $ 250, 000? A) FDIC (Federal Deposit Insurance Corporation). B) The President. C) The Bank. D) Chinese Government. Show Answer Correct Answer: A) FDIC (Federal Deposit Insurance Corporation). 38. In the 1990s, the Russian people lost confidence in the value of the ruble, and many were no longer willing to sell goods and services in exchange for Russian currency. Which characteristic of money did the Russian currency lack? A) Durability. B) Limited supply. C) Acceptability. D) Uniformity. Show Answer Correct Answer: C) Acceptability. 39. Financial institutions that accepted the deposits of small investors A) Federal Reserve System. B) Thrift institution. C) Mutual savings bank. D) Credit union. E) Savings and loan association. Show Answer Correct Answer: B) Thrift institution. 40. What does liquidity refer to in banking? A) The ability to accept deposits. B) The ability to turn an asset into cash quickly without loss. C) The ability to lend money. D) The ability to earn high interest. Show Answer Correct Answer: B) The ability to turn an asset into cash quickly without loss. 41. With money it is possible to buy goods on credit. which function of money it shows? A) Store of value. B) Standard of deferred payments. C) Unit of account. D) None of the above. Show Answer Correct Answer: B) Standard of deferred payments. 42. The receipts of reputed goldsmiths or paper money were called A) Hundis. B) Bonds. C) Treasuries. D) Depth money. Show Answer Correct Answer: A) Hundis. 43. What is the barter system? A) Exchanging goods directly for other goods. B) A type of bank account. C) Exchanging goods for money. D) Using digital payment methods. Show Answer Correct Answer: A) Exchanging goods directly for other goods. 44. If governments print too much money and flood the market with currency it causes ..... This is bad for the overall economy because prices will rise quickly and savings will be lost. A) Tariffs. B) Deregulation. C) Inflation. D) More demand for money. Show Answer Correct Answer: C) Inflation. 45. If a man is legally separated from his wife, is he still ..... for her debts? A) Answerable. B) Bound. C) Chargeable. D) Liable. Show Answer Correct Answer: D) Liable. 46. Jamin keeps a part of his earnings as cash in a safety deposit box, which means he is employing money as ..... A) A store of value. B) A medium of exchange. C) A measure of value. D) None of the above. Show Answer Correct Answer: A) A store of value. 47. What's the name of the piece of paper that proves you bought or paid for something? A) Resit. B) Receipt. C) Recipe. D) Revisit. Show Answer Correct Answer: B) Receipt. 48. The time and money spent in carrying out financial transactions are called: A) Liquidity Services. B) Transaction costs. C) Economies of scale. D) None of the above. Show Answer Correct Answer: B) Transaction costs. 49. What are the three main functions of money? A) Barter, trade, and investment. B) Currency, inflation, and interest rates. C) Means of production, standard of living, and economic growth. D) Medium of exchange, unit of account, and store of value. Show Answer Correct Answer: D) Medium of exchange, unit of account, and store of value. 50. ComnercialBank create credit A) Out of nothing. B) On the basis of their assets. C) On the basis of deposits. D) On the basis of securities. Show Answer Correct Answer: C) On the basis of deposits. 51. Suppose the required reserve ratio is 20% and there is no currency drain. Then a $ 100 increase in the monetary base results in the banking system increasing the quantity of money by A) $ 100. B) $ 500. C) $ 400. D) $ 1, 000. E) $ 80. Show Answer Correct Answer: B) $ 500. 52. Money by government decree A) Money. B) Fiat money. C) Medium of exchange. D) Specie. E) Measure of value. Show Answer Correct Answer: B) Fiat money. 53. The Value of credit multiplier will be high when Legal Reserve Ratio is: A) Zero. B) Low. C) Infinity. D) High. Show Answer Correct Answer: B) Low. 54. Which of the following is TRUE about banks and credit unions? A) Banks offer higher interest rates on savings accounts than credit unions. B) Banks are owned by their customers, while credit unions are owned by shareholders. C) Credit unions are insured by the FDIC, while banks are not. D) Banks are for-profit institutions, while credit unions are non-profit. Show Answer Correct Answer: D) Banks are for-profit institutions, while credit unions are non-profit. 55. Fiat currency that must be accepted in payment for debts A) Monetary standard. B) Legal tender. C) Treasury coin notes. D) Gold standard. E) Inconvertible fiat money standard. Show Answer Correct Answer: B) Legal tender. 56. Which is a TRUE statement about banks. A) Limited Losses if your debit card disappears. B) The Federal Deposit Insurance Corporation (FDIC) insures customers' money. C) Deposits are insured by the National Credit Union Administration (NCUA). D) None of the above. Show Answer Correct Answer: B) The Federal Deposit Insurance Corporation (FDIC) insures customers' money. 57. ..... is another word for trading. A) Charities. B) Good. C) Bartering. D) Service. Show Answer Correct Answer: C) Bartering. 58. If CRR = 20% and deposits are Rs 100, maximum loans possible are: A) Rs 120. B) Rs 100. C) Rs 80. D) Rs 20. Show Answer Correct Answer: C) Rs 80. 59. Which is an example of 'store of value' A) Purchasing items with token money. B) Borrowing money from a friend. C) Exchanging money foor goods and services. D) Saving money in a bank for future use. Show Answer Correct Answer: D) Saving money in a bank for future use. 60. ..... refers to objects that have value in themselves and that are also used as money. A) Fiat money. B) Gold standard. C) Commodity money. D) Savings and loan. Show Answer Correct Answer: C) Commodity money. ← 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