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 23 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 23 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is the purpose of the Bank Rate set by the Central Bank? A) To stabilize the stock market. B) To limit the amount of credit creation by banks. C) To regulate interest rates in the economy. D) To control inflation. Show Answer Correct Answer: C) To regulate interest rates in the economy. 2. What is the role of money as a store of value? A) To facilitate barter exchanges. B) To measure the value of goods and services. C) To store wealth for future use. D) To act as a medium of exchange. Show Answer Correct Answer: C) To store wealth for future use. 3. Which of the following is a commonly used measure of money supply in Canada A) M2. B) M10. C) M1. D) M100. Show Answer Correct Answer: A) M2. 4. A sudden panic by depositors to withdraw their paper money from banks. A) Bank run. B) Demand deposits. C) Fractional reserve banking. D) Default. Show Answer Correct Answer: A) Bank run. 5. Credit Unions offer all of the same services as commercial banks but are not "for profit" and require a membership to utilize. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 6. Which financial institution primarily provides insurance coverage and collects premiums from policyholders? A) Venture capital firms. B) Life insurance companies. C) Credit unions. D) Factoring companies. Show Answer Correct Answer: B) Life insurance companies. 7. Can I pay ..... cash? A) To. B) In. C) With. D) By. Show Answer Correct Answer: B) In. 8. Which of these tools in an example of monetary policy? A) Reducing income taxes. B) Borrowing money through deficit spending. C) Increasing government spending. D) Changing reserve requirements. Show Answer Correct Answer: D) Changing reserve requirements. 9. Explain the function of money in an economy. A) Money is only used for online transactions. B) Money serves as a medium of exchange, unit of account, store of value, and standard of deferred payment in an economy. C) Money is used for decorating homes. D) Money is used for measuring time. Show Answer Correct Answer: B) Money serves as a medium of exchange, unit of account, store of value, and standard of deferred payment in an economy. 10. Characteristics of money:Divisible- A) It should be broken down into smaller denominations. B) Should be conveniently carried and transferred. C) Should be generally acceptable by all. D) None of the above. Show Answer Correct Answer: A) It should be broken down into smaller denominations. 11. The Federal Reserve System is often called A) The System. B) Supreme Fed System. C) The FED. D) All of the above. Show Answer Correct Answer: C) The FED. 12. When you stop at the United Dairy Farmers store in Troy, OH to buy a quart of ice cream, you expect that they will allow you to pay in US paper money and coins. This is an example of the ..... characteristic of money. A) Acceptability. B) Uniformity. C) Durablity. D) Divisibility. Show Answer Correct Answer: A) Acceptability. 13. When money is used to acquire goods and services, it is functioning as a A) Medium of exchange. B) Store of value. C) Standard of account. D) Equation of value. Show Answer Correct Answer: A) Medium of exchange. 14. Name one function of commercial banks A) To print money. B) To decide interest rates. C) Lender of last resort. D) To provide loans and overdrafts. Show Answer Correct Answer: D) To provide loans and overdrafts. 15. Using the money multiplier formula (1/RR), how much "new" money can be created with a RR of .25 and an initial excess reserve of $ 800 A) $ 200. B) $ 800. C) $ 3200. D) $ 2400. Show Answer Correct Answer: C) $ 3200. 16. People who are unbanked are most likely to ..... A) Have a college degree. B) Have a mortgage. C) Have a high credit score. D) Have a low income. Show Answer Correct Answer: D) Have a low income. 17. Which institutions perform the activity of credit creation? A) Commercial banks. B) Central Bank. C) Private bank. D) None of these. Show Answer Correct Answer: A) Commercial banks. 18. What is an external benefit if a government decides to subsidize rail travel? A) Increased crowding on trains. B) A rise in government expenditure. C) Reduced congestion on roads. D) Lower fares for train passengers. Show Answer Correct Answer: C) Reduced congestion on roads. 19. The main purpose of Bank Negara Malaysia is to ..... A) Accept deposit from the public. B) Print money. C) Grant loans. D) Invest in property. Show Answer Correct Answer: B) Print money. 20. Who regulates money supply? A) Commercial Bank. B) Reserve Bank of India. C) Govt, of India. D) Planning Commission. Show Answer Correct Answer: B) Reserve Bank of India. 21. OMO can add money by the RBI buying government papers from banks. What does buying do to money in the economy? A) Increases it. B) Stops it. C) Hides it. D) None of the above. Show Answer Correct Answer: A) Increases it. 22. Reverse repo rate is the rate at which ..... A) Government can borrow money from RBI. B) Farmers can take loan from nationalised banks. C) Government can borrow money from foreign government. D) Commercial bank park their surplus fund to RBI. Show Answer Correct Answer: D) Commercial bank park their surplus fund to RBI. 23. Currency in India is issued on the basis of A) Legal reserve ratio. B) Minimum reserve system. C) Cash reserve ratio. D) None of the above. Show Answer Correct Answer: B) Minimum reserve system. 24. ..... refers to the direct exchange of one set of goods or services for another. A) Loan. B) Barter. C) Greenbacks. D) Currency. Show Answer Correct Answer: B) Barter. 25. What do we need to buy things at a store? A) Money. B) Crayons. C) Books. D) Toys. Show Answer Correct Answer: A) Money. 26. RBI is also known as A) Bank of issue. B) Central bank. C) World bank. D) Both (a) and (b). Show Answer Correct Answer: D) Both (a) and (b). 27. Statutory Liquidity Ratio (SLR) refers to reserves kept: A) As foreign currency. B) As paper receipts. C) As physical gold. D) In liquid form. Show Answer Correct Answer: D) In liquid form. 28. The number of times a unit of money exchanges hands during a unit period of time is known as: A) Count of circulation of money. B) Circulation of money. C) Momentum of circulation of money. D) Velocity of circulation of money. Show Answer Correct Answer: D) Velocity of circulation of money. 29. Money with intrinsic value that can have some other use is called A) Fiat money. B) Commodity money. C) Token money. D) Barter money. Show Answer Correct Answer: B) Commodity money. 30. What is the current central banking system of the United States called? A) National Bank. B) Federal Deposit Insurance Corporation (FDIC). C) Federal Reserve System. D) 1st Bank of the United States. Show Answer Correct Answer: C) Federal Reserve System. 31. Reverse repo rate: A) Generates interest income. B) Is increased to curb inflation. C) Is not a policy rate. D) Both (a) and (b). Show Answer Correct Answer: D) Both (a) and (b). 32. Full bodied money is that money whose money value and commodity value are: A) Equal in the market. B) Declared as equal by the government. C) Declared as equal by the RBI. D) Different in the market. Show Answer Correct Answer: A) Equal in the market. 33. LRR and money creation have A) Negative relation. B) Positive relation. C) No relation. D) None of the above. Show Answer Correct Answer: A) Negative relation. 34. Who is the creator of credit in the banking system? A) Commercial banks. B) Central bank. C) All the above. D) None of the above. Show Answer Correct Answer: A) Commercial banks. 35. What is the relationship between transaction demand for money and nominal GDP? A) They are positively related. B) It depends on the interest rate. C) They are inversely related. D) They have no relationship. Show Answer Correct Answer: A) They are positively related. 36. Which of the following functions modern banks do not perform? A) Issue of letter of credit. B) Publishing of statistics. C) Handling of Foreign Exchange Reserves. D) Conducting Enquiry Survey. Show Answer Correct Answer: C) Handling of Foreign Exchange Reserves. 37. Saving accounts differ from checking accounts in that ..... A) Saving accounts have more fees. B) Saving accounts have unlimited transactions. C) Saving accounts have overdraft protection. D) Saving accounts have higher interest rates. Show Answer Correct Answer: D) Saving accounts have higher interest rates. 38. ..... refers to the money that people keeps in the bank A) Withdrawals. B) Deposits. C) Loans. D) Credits. Show Answer Correct Answer: B) Deposits. 39. The notes printed and issued are declared ..... throughout the country. A) Unlimited legal tender. B) Medium of exchange. C) Limited illegal money. D) Unlimited legal money. Show Answer Correct Answer: A) Unlimited legal tender. 40. ..... is the rate at which commercial banks borrow from central bank in emergency A) Reverse repo rate. B) CRR. C) Bank rate. D) SLR. Show Answer Correct Answer: C) Bank rate. 41. Name the credit-control method which refers to difference between the amount of loan and market value of the security offered by the borrower against the loan A) Legal Reserve Requirements. B) Margin Requirements. C) Selective Credit Controls. D) Moral Suasion. Show Answer Correct Answer: B) Margin Requirements. 42. Currency should be durable. This means: A) You cannot light it on fire. B) It should be cheap to mass produce. C) It must be tough so it doesn't break. D) It should be silver or gold. Show Answer Correct Answer: C) It must be tough so it doesn't break. 43. Yardstick of economic value in exchanges A) Interest rate. B) Unit of account. C) All the above. D) None of the above. Show Answer Correct Answer: B) Unit of account. 44. What was the first economic system A) Cash money exchange. B) Capitalism. C) Barter System. D) Gold exchange. Show Answer Correct Answer: C) Barter System. 45. Financial Institution A) Any organization that provides services related to money. B) Nonprofit financial institution that is privately owned and provides banking services for its members. C) Financial institution that offers savings and loan services. D) Financial institution that does not accept deposits. Show Answer Correct Answer: A) Any organization that provides services related to money. 46. The tools and strategies the Federal Reserve uses to stabilize the economy is called? A) Easy Money. B) Fiscal Policy. C) Monetary Policy. D) Tight Money. Show Answer Correct Answer: C) Monetary Policy. 47. Describe the function of money as a unit of account. A) Money as a unit of account helps in measuring and comparing the value of goods and services. B) Money as a unit of account determines the quality of goods and services. C) Money as a unit of account is used for transportation purposes. D) Money as a unit of account is only applicable in the digital economy. Show Answer Correct Answer: A) Money as a unit of account helps in measuring and comparing the value of goods and services. 48. The system in which Goods were exchanged for goods is called A) Barter system. B) Monetary system. C) Both. D) None. Show Answer Correct Answer: A) Barter system. 49. What is the function of Moral Suasion in credit control? A) Regulating margin requirements. B) Setting credit quotas for different sectors. C) Direct action against commercial banks. D) Advising commercial banks to follow directives. Show Answer Correct Answer: D) Advising commercial banks to follow directives. 50. I have been setting aside $ 100 a month for my children to have money to go to college. This idea is known as what? A) Income. B) Savings. C) Credit. D) Debt. Show Answer Correct Answer: B) Savings. 51. Barter means people trade goods for other goods. What is a problem with barter? A) You need someone who wants what you have. B) It always uses coins. C) It gives extra toys. D) None of the above. Show Answer Correct Answer: A) You need someone who wants what you have. 52. If the reserve requirement is 10% and I put in $ 100, what is the amount a bank can loan out? A) .9. B) $ 90. C) $ 80. D) $ 72. Show Answer Correct Answer: B) $ 90. 53. If Reserve Deposit Ratio is 12.5%, the value of Money Multiplier will be: A) 10. B) 5. C) 2. D) 8. Show Answer Correct Answer: D) 8. 54. Fiat money is money which ..... A) Its value is not fixed to the price of gold. B) Has a face value equals to its metallic value, as well as has full support value . C) Has no intrinsic value, such as a RM50 bill. D) Has a higher face value compared to its metallic value. Show Answer Correct Answer: C) Has no intrinsic value, such as a RM50 bill. 55. A(n) ..... bank accepts deposits and is covered by deposit insurance. A) Commercial. B) Central. C) Investment. D) Savings and Loan. Show Answer Correct Answer: A) Commercial. 56. What is the purpose of Rationing of Credit as a credit control measure? A) Fixing credit quotas for different activities. B) Increasing liquidity in the economy. C) Regulating the repo rate. D) Encouraging speculative activities. Show Answer Correct Answer: A) Fixing credit quotas for different activities. 57. How does a loan work? A) A loan works by providing funds to a borrower who repays the amount with interest over time. B) A loan is a type of insurance policy. C) A loan is an investment that earns dividends. D) A loan is a gift that does not need to be repaid. Show Answer Correct Answer: A) A loan works by providing funds to a borrower who repays the amount with interest over time. 58. Direct tax is called direct because it is collected directly from: A) The sellers on goods sold. B) The income earners. C) The buyers of goods. D) The producers on goods produced. Show Answer Correct Answer: B) The income earners. 59. How was Bank Indonesia (BI) established, and what was its primary function? A) It was founded as a private commercial bank in 1951. B) It was formed through the nationalization of De Javasche Bank in 1951, functioning as a central and circulation bank. C) It was created by merging several small regional banks in 1946. D) It was established by a foreign government to manage Indonesia's finances. Show Answer Correct Answer: B) It was formed through the nationalization of De Javasche Bank in 1951, functioning as a central and circulation bank. 60. Currency issue by RBI is A) Limited legal tender. B) Unlimited legal tender. C) Both. D) None. Show Answer Correct Answer: B) Unlimited legal tender. ← 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