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 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 3 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which of the statements gives a true picture of the effect of lowering the cash reserve ratio by the central bank of a country? A) The lending capacity of commercial banks will increase. B) There is no effect on the lending capacity of commercial banks. C) The lending capacity of commercial banks will decrease. D) The lending capacity of commercial banks may increase or decrease. Show Answer Correct Answer: A) The lending capacity of commercial banks will increase. 2. Deposit creation process comes to an end when A) Money multiplier becomes zero. B) LRR become zero. C) Total reserves equal initial deposits. D) Fresh deposit with bank become zero. Show Answer Correct Answer: C) Total reserves equal initial deposits. 3. T/F:A commercial bank's role includes acting as the lender of last resort. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 4. Explain Medium of Exchange A) It eliminates the function of double coincidence of wants. B) It is a common Yardstick to measure money. C) The value of money remains constant. D) It will never lose its value. Show Answer Correct Answer: A) It eliminates the function of double coincidence of wants. 5. Money is a medium of exchange because ..... A) It is the same across different country. B) It can be used in barter system. C) It has different market value. D) It is widely recognized and accepted. Show Answer Correct Answer: D) It is widely recognized and accepted. 6. Without money, people must ..... or trade, for goods and services they want or need. A) Borrow. B) Barter. C) Exchange. D) None of the above. Show Answer Correct Answer: B) Barter. 7. Those deposits in which amount is deposited with the bank for a fixed period of time are called ..... A) Saving Deposits. B) Time Deposits. C) Current Deposits. D) Demand Deposits. Show Answer Correct Answer: B) Time Deposits. 8. Deposits which are payable after the expiry of a fixed period are called- A) Time deposits. B) Demand deposits. C) NONE. D) None of the above. Show Answer Correct Answer: A) Time deposits. 9. Which of the following is the BEST example of representative money? A) A fur coat. B) An IOU note. C) Gold earrings. D) Diamonds. Show Answer Correct Answer: B) An IOU note. 10. Which one is NOT an example of loan provided by a commercial bank? A) Overdraft. B) Deposits. C) Mortgage. D) Hire purchase. Show Answer Correct Answer: B) Deposits. 11. Which of these services do depository institutions offer? A) Financial advice. B) Free money. C) Ability to take more money than you have without penalty. D) None of the above. Show Answer Correct Answer: A) Financial advice. 12. I badgered my dad ..... me a new PlayStation. A) Into buying. B) To buy. C) For buying. D) On buy. Show Answer Correct Answer: A) Into buying. 13. A U.S. government agency that provides insurance on customer's deposits in a bank account. A) Fractional Reserve Banking. B) Federal Reserve System. C) Credit Union. D) Federal Deposit Insurance Corporation. Show Answer Correct Answer: D) Federal Deposit Insurance Corporation. 14. Money creation by the banking system will decrease if A) The velocity of money increases. B) People keep cash in their mattresses. C) Real interest rates are increase. D) Unemployment is low. Show Answer Correct Answer: B) People keep cash in their mattresses. 15. Credit card issued by the bank A) Encourage spending. B) Increase aggregate in the economy. C) Both a and b. D) None of these. Show Answer Correct Answer: C) Both a and b. 16. The delivery of financial services electronically is called: A) E-Business. B) E-Finance. C) E-Commerce. D) None of the above. Show Answer Correct Answer: B) E-Finance. 17. If the inflation rate rises from 3 to 5%, how will it affect the purchasing power of someone typically spending $ 200 on consumer goods? A) Their purchasing power will remain the same. B) Their purchasing power will increase. C) Their purchasing power will decrease. D) Their purchasing power will change unpredictably. Show Answer Correct Answer: C) Their purchasing power will decrease. 18. Financial exchange A) When money can be saved and used at a later date. B) Mechanism a nation uses to provide and manage money for itself. C) Process of transferring money from one individual or organization to another. D) Plastic card that allows the holder to make credit purchases up to an authorized amount. Show Answer Correct Answer: C) Process of transferring money from one individual or organization to another. 19. Divisibility in a barter system means that ..... A) The item must mutually agreed. B) The item can be divided into smaller parts. C) The item has lost its value. D) The item can be easily move to another place. Show Answer Correct Answer: B) The item can be divided into smaller parts. 20. The Fed is focused on two main figures in the economy:the unemployment rate and the rate of ..... A) Interest rates. B) Deflation. C) Inflation. D) Taxes. Show Answer Correct Answer: C) Inflation. 21. The main aim of the commercial bank is: A) Social welfare. B) To earn profits. C) To provide services to people. D) None of these. Show Answer Correct Answer: B) To earn profits. 22. Legal service ratio is equal to, A) CRR SLR. B) CRR + SLR. C) CRR/SLR. D) SLR-CLR. Show Answer Correct Answer: B) CRR + SLR. 23. The central banking system of the United States. A) Representative Money. B) Federal Reserve System. C) Federal Deposit Insurance Corporation. D) Fractional Reserve Banking. Show Answer Correct Answer: B) Federal Reserve System. 24. What does the phrase a medium of exchange mean when describing a function of money? A) Price of an item can be measured in terms of money units. B) Money is generally accepted means of payment. C) You can save money because it keeps its value. D) Borrowers know how much they need to pay back on a loan. Show Answer Correct Answer: B) Money is generally accepted means of payment. 25. Two units of the same type of money must be the same in terms of what they will buy, which is the principle of A) Uniformity. B) Functionality. C) Value. D) Pricing. Show Answer Correct Answer: A) Uniformity. 26. The principal lender-savers are A) Foreigners. B) Governments. C) Households. D) Businesses. Show Answer Correct Answer: C) Households. 27. A(n) ..... is a bank that can lend money to other banks in times of need. A) Credit union. B) Savings and loan. C) Central bank. D) Federal Reserve. Show Answer Correct Answer: C) Central bank. 28. What is the largest source of income for banks? A) The interest they receive from loans. B) Special accounts such as NOW accounts. C) Money deposited in savings accounts. D) Fees charged to customers for accounts. Show Answer Correct Answer: A) The interest they receive from loans. 29. Holds its value over a period of time A) Barter. B) Medium of Exchange. C) Money. D) Store of Value. Show Answer Correct Answer: D) Store of Value. 30. What is the origin of the American dollar? A) The Austrian taler and wampum. B) The Spanish peso and shillings. C) Wampum and shillings. D) The Spanish peso and Austrian taler. Show Answer Correct Answer: D) The Spanish peso and Austrian taler. 31. ..... refers to coins and paper bills used as money. A) Currency. B) Barter. C) Greenbacks. D) Money. Show Answer Correct Answer: A) Currency. 32. Coins and paper that are used as money; 'legal tender'. A) Money. B) Currency. C) Transfer Payments. D) Liquidity. Show Answer Correct Answer: B) Currency. 33. Which of the following is not a tools of credit control? A) SLR. B) Managed floting. C) Moral suasions. D) CRR. Show Answer Correct Answer: B) Managed floting. 34. Tools of monetary policy are ..... A) OMO. B) Interest rate. C) Discount rate. D) All of above. Show Answer Correct Answer: D) All of above. 35. In the context of money supply management by the RBI, the Statutory Liquidity Ratio (SLR) mandates commercial banks to hold a specified percentage of their deposits in the form of: A) Foreign currency and gold only. B) Cash with the RBI only (CRR). C) Cash, gold, or other securities approved by the RBI. D) Fixed deposits with other commercial banks. Show Answer Correct Answer: C) Cash, gold, or other securities approved by the RBI. 36. Sophia, Evelyn, and David are playing a game of 'Bank Manager'. They are discussing the main function of a commercial bank. Can you help them out? A) Provide investment advice and manage portfolios. B) Accept deposits and provide loans. C) Issue credit cards and process payments. D) Offer insurance products and services. Show Answer Correct Answer: B) Accept deposits and provide loans. 37. Which of the following is an example of fiduciary money? A) Coins. B) Debit card. C) Cheques. D) None of these. Show Answer Correct Answer: C) Cheques. 38. The following are functions of money, EXCEPT? A) A store of value. B) A medium of exchange. C) A shelter against inflation. D) A unit of account. Show Answer Correct Answer: C) A shelter against inflation. 39. What is the role of the Reserve Bank of India (RBI) in the Indian economy? A) To issue currency. B) To control money supply. C) To act as a lender of last resort. D) All of the above. Show Answer Correct Answer: D) All of the above. 40. When a bank is about to collapse, A) The FDIC may secretly seize the bank. B) Up to $ 10, 000 can be paid to shareholders. C) The FDIC must publicly seize the bank. D) Up to $ 10, 000 can be paid to depositors. Show Answer Correct Answer: A) The FDIC may secretly seize the bank. 41. Which of the following is an intangible asset? A) Savings. B) Offices. C) Land. D) Houses. Show Answer Correct Answer: A) Savings. 42. Function of money which is increasingly popular today A) Medium of exchange. B) Store of value. C) Measure of value. D) Standard of deferred payment. Show Answer Correct Answer: D) Standard of deferred payment. 43. "Ariana Rose purchases a new computer from the MYT Computer and paid by credit card." Based on the statement, choose the appropriate money function. A) A store of value. B) A measure of value. C) A medium of exchange . D) A standard of deferred payment tools. Show Answer Correct Answer: D) A standard of deferred payment tools. 44. What is the agency responsible for collecting taxes at the Federal level? A) Security and Exchange Commission (SEC). B) Internal Revenue Service (IRS). C) Consumer Financial Protection Bureau. D) Federal Reserve System (FED). Show Answer Correct Answer: B) Internal Revenue Service (IRS). 45. In India there are four alternative measures of money supply:M1, M2, M3, and M4 of these M1= A) Currency with people. B) Currency with people+ Demand deposdit. C) Currency with people+ Demand deposdit+ Other deposit with RBI. D) None of these. Show Answer Correct Answer: C) Currency with people+ Demand deposdit+ Other deposit with RBI. 46. Something accepted by all parties as payment for goods and services A) Specie. B) Fiat money. C) Medium of exchange. D) Measure of value. E) Money. Show Answer Correct Answer: C) Medium of exchange. 47. Adi is looking to open a bank account and wants to ensure that the bank he chooses operates in accordance with Islamic financial regulations. He is particularly interested in a bank that uses a profit-sharing system instead of charging interest. Which type of bank should Adi consider? A) Commercial Bank. B) Sharia Bank. C) Conventional Bank. D) People's Credit Bank. Show Answer Correct Answer: B) Sharia Bank. 48. Why do bank notes often used as money? A) They have an intrinsic value. B) They are durable. C) They are generally acceptable. D) They are portable. Show Answer Correct Answer: C) They are generally acceptable. 49. What is the name of Central Bank in India? A) SBI. B) RBI. C) PNB. D) None of the above. Show Answer Correct Answer: B) RBI. 50. A savings account is more LIQUID than a residential real estate A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 51. What is the main problem with using cattle as money? A) They are not scarce. B) They are not durable. C) They are not divisible. D) They are not portable. Show Answer Correct Answer: C) They are not divisible. 52. Money serves as a ..... , or means through which goods and services can be exchanged. A) Store of value. B) Medium of exchange. C) All the above. D) None of the above. Show Answer Correct Answer: B) Medium of exchange. 53. Barter system is ..... A) Exchange of goods with other goods. B) Demand of one meets supply. C) Exchange of ideas. D) Note of the above. Show Answer Correct Answer: A) Exchange of goods with other goods. 54. Operating ..... include salaries, other payments to staff and banking administrative costs. A) Profitable. B) Expenses. C) Loan. D) None of the above. Show Answer Correct Answer: B) Expenses. 55. A bond will increase in value if A) Interest rates increase. B) The government increases it's debt. C) Interest rates decrease. D) The company files bankruptcy. Show Answer Correct Answer: C) Interest rates decrease. 56. A(n) ..... entitles its holder to buy goods and services based on the holder's promise to pay for these goods and services. A) Iou. B) Debit card. C) Goldsmith note. D) Cedit card. Show Answer Correct Answer: D) Cedit card. 57. Demand deposits include A) Saving account deposits and fixed deposits. B) Saving account deposits and current account deposits. C) Current account deposits and fixed deposits. D) All types of deposits. Show Answer Correct Answer: B) Saving account deposits and current account deposits. 58. Which of the following is NOT an example of a liquid asset? A) Certificate of Deposit. B) Savings account. C) Cash. D) A checking account. Show Answer Correct Answer: A) Certificate of Deposit. 59. What is one difference between Banks and Credit Unions? A) Banks have Checking accounts and Credit Unions have Savings Accounts. B) Banks are for profit. Credit Unions are Non-profit. C) Banks can give loans and Credit Unions cannot. D) Credit Unions allow everyone to join and Banks are selective. Show Answer Correct Answer: B) Banks are for profit. Credit Unions are Non-profit. 60. Canada currently uses the gold standard A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. ← 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 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