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 4 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 4 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Define Store of value A) Value of money remains constant. B) Eliminates function of double coincidence of wants. C) Money is divisible. D) None of the above. Show Answer Correct Answer: A) Value of money remains constant. 2. Which of these is a primary function of commercial banks? A) Controlling the nation's money supply. B) Setting interest rates for the economy. C) Accepting deposits and making loans. D) Issuing government bonds. Show Answer Correct Answer: C) Accepting deposits and making loans. 3. Anything that's used to determine value during the exchange of goods and services A) Store of Value. B) Barter. C) Money. D) Medium of Exchange. Show Answer Correct Answer: D) Medium of Exchange. 4. Money that has value because the government has ordered that it is an acceptable means to pay debts A) Representative Money. B) Fiat Money. C) Currency. D) Commodity Money. Show Answer Correct Answer: B) Fiat Money. 5. What is the purpose of the Federal Deposit Insurance Corporation (FDIC)? A) To make sure that banks charge a fair amount for interest on loans. B) To make sure that banks do not fail. C) To make sure that customers do not lose money if a bank fails. D) To make sure that the government has enough gold to cover its expenses. Show Answer Correct Answer: C) To make sure that customers do not lose money if a bank fails. 6. Which agency regulates the money supply in India? A) The Government of India. B) Commercial banks. C) Reserve Bank of India. D) None of the above. Show Answer Correct Answer: C) Reserve Bank of India. 7. Which of the following characteristic ensures that our money maintains its value over time? A) Durability. B) Divisibility. C) Uniformity. D) Scarcity. Show Answer Correct Answer: D) Scarcity. 8. Describe the impact of inflation on the value of money. A) Inflation stabilizes the value of money. B) Inflation reduces the value of money by decreasing its purchasing power. C) Inflation increases the value of money by boosting its purchasing power. D) Inflation has no impact on the value of money. Show Answer Correct Answer: B) Inflation reduces the value of money by decreasing its purchasing power. 9. Repo Rate relates to ..... A) Disinvestments. B) Short-term borrowing by commercial banks. C) Dissaving. D) Long-term borrowing by commercial banks. Show Answer Correct Answer: B) Short-term borrowing by commercial banks. 10. Food, water, clothing, shelter are examples of A) Wants. B) Needs. C) Values. D) Opportunity costs. Show Answer Correct Answer: B) Needs. 11. Buying and selling of government securities by the central bank from/to banks is called? A) Open market operations. B) Margin. C) Banking. D) None of the above. Show Answer Correct Answer: A) Open market operations. 12. Which is not a problem of bartering as a medium of exchange? A) The need for a double coincidence of wants. B) The need for divisibility. C) The need for portability. D) The need for trade and exchange. Show Answer Correct Answer: D) The need for trade and exchange. 13. What is the function of money as a unit of account? A) To facilitate barter exchanges. B) To measure the value of goods and services. C) To store wealth. D) To act as a medium of exchange. Show Answer Correct Answer: B) To measure the value of goods and services. 14. Reverse Repo Rate is the rate at which Central Bank: A) Lends money to commercial Banks for short-term. B) Lends money to Commercial Banks for long term. C) Accepts deposits from the Commercial Banks. D) None of these. Show Answer Correct Answer: C) Accepts deposits from the Commercial Banks. 15. What does interest rate mean? A) Interest rate is the total amount of money you have in your bank account. B) Interest rate is the amount of money you earn from investments. C) Interest rate is a fixed fee charged for using a credit card. D) Interest rate is the cost of borrowing money or the return on savings, expressed as a percentage. Show Answer Correct Answer: D) Interest rate is the cost of borrowing money or the return on savings, expressed as a percentage. 16. You may want to ..... a loan as quickly as possible to save on interest. A) Charge. B) Pay off. C) Get into. D) None of the above. Show Answer Correct Answer: B) Pay off. 17. The money that you receive for mowing the lawn, babysitting or making good grades is called ..... A) Income. B) Credit. C) Debt. D) Interest. Show Answer Correct Answer: A) Income. 18. What would make an item unsuitable to act as money? A) It is easy to carry. B) It is recognizable. C) It is generally acceptable. D) It is perishable. Show Answer Correct Answer: D) It is perishable. 19. ..... are called legal tenders A) Demand deposit. B) Time deposits. C) Inter-bank deposit. D) Currency notes and coins. Show Answer Correct Answer: D) Currency notes and coins. 20. The amount of interest paid is based on an ..... A) Annuity. B) Unit of account. C) Interest rate. D) None of the above. Show Answer Correct Answer: C) Interest rate. 21. What is the other name of money multiplier A) Deposit multiplier. B) Credit multiplier. C) Cash reserve ratio. D) None of these. Show Answer Correct Answer: A) Deposit multiplier. 22. Income tax increases personal income A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 23. The central bank of the United States is the: A) United States National Bank. B) Federal Reserve Banking System. C) U.S. Treasury Bank. D) Comptroller's Bank. Show Answer Correct Answer: B) Federal Reserve Banking System. 24. The problem of adverse selection can be corrected with A) Private production and sale of information. B) Government regulation to increase the information. C) Both of the above. D) None of the above. Show Answer Correct Answer: C) Both of the above. 25. Progressive taxes A) Are higher the more you make. B) Are lower the more you make. C) Are the same for everyone. D) None of the above. Show Answer Correct Answer: A) Are higher the more you make. 26. Why do banks charge fees for their services? A) To increase the value of their stocks. B) To decrease the amount of money in circulation. C) To discourage customers from using their services. D) To cover the cost of providing services. Show Answer Correct Answer: D) To cover the cost of providing services. 27. Credit cards are:i. a generally accepted form of payment and therefore part of M1.ii. are included in M1 because you write a check to pay your monthly bill.iii. a means of borrowing money. A) I only. B) I and iii. C) Ii only. D) I and ii. E) Iii only. Show Answer Correct Answer: E) Iii only. 28. La cuenta de ahorros A) To pay in cash. B) To save. C) Checking account. D) Savings account. Show Answer Correct Answer: D) Savings account. 29. How does inflation impact the money in your savings account? A) It decreases the value of your money. B) It increases the value of your money. C) It depends on the interest rate. D) It has no impact on the value of your money. Show Answer Correct Answer: A) It decreases the value of your money. 30. Bank Negara Malaysia is frequently considered as banker to the banks because it ..... A) Accepts deposits from the public. B) Lowers the discount rate in order to restrict the money supply. C) Holds bankers' reserves, provides banks with currency and loans, and clears their checks. D) Has no monopoly power in printing paper currency. Show Answer Correct Answer: C) Holds bankers' reserves, provides banks with currency and loans, and clears their checks. 31. Mark Zuckenberg ..... a lot of money from Facebook. A) Makes. B) Does. C) Passes. D) Checks. Show Answer Correct Answer: A) Makes. 32. Money helps us count prices like 5 rupees, 10 rupees. What function is this? A) Unit of Account. B) Store of Toys. C) Grow of Plants. D) None of the above. Show Answer Correct Answer: A) Unit of Account. 33. ..... is the privately owned, publicly controlled central bank of the U.S. A) J.P. Morgan Chase. B) Bank of America. C) The Federal Reserve System (FED). D) Wells Fargo. Show Answer Correct Answer: C) The Federal Reserve System (FED). 34. Which function of money refers to its use to measure the value of goods and services? A) Medium of exchange. B) Store of value. C) Unit of account. D) Standard of deferred payment. Show Answer Correct Answer: C) Unit of account. 35. Which of the following is a banking service? A) Buying groceries. B) Sending emails. C) Withdrawing money. D) Depositing money. Show Answer Correct Answer: D) Depositing money. 36. If you don't have enough money to pay your bills, you ..... A) Get a refund. B) Get a loan. C) Get into debt. D) Splashes out. Show Answer Correct Answer: C) Get into debt. 37. The cowrie shells was used as money so widely because it is hard-wearing and long lasting. Which characteristics of money does this describe? A) Durability. B) Acceptability. C) Scarcity. D) Divisibility. Show Answer Correct Answer: A) Durability. 38. What effect does a decrease in the repo rate have on the economy? A) Increases borrowing costs. B) Encourages spending and investment. C) Reduces money supply. D) Increases inflation. Show Answer Correct Answer: B) Encourages spending and investment. 39. What does High Powered Money consist of? A) Only currency held by the public. B) Total deposits with commercial banks. C) Currency held by the public and cash reserves of banks. D) Only cash reserves of banks. Show Answer Correct Answer: C) Currency held by the public and cash reserves of banks. 40. The ratio of total deposits that a commercial bank has to keep with themselves is called: A) Legal Reserve Ratio (LRR). B) Deposit ratio. C) Cash Reserve Ratio (CRR). D) Statutory Liquidity Ratio (SLR). Show Answer Correct Answer: D) Statutory Liquidity Ratio (SLR). 41. When money value of money exceeds commodity value of money, it is called: A) Fiduciary money. B) Full bodied money. C) Credit money. D) Fiat money. Show Answer Correct Answer: C) Credit money. 42. What is the role of commercial banks in the money creation process? A) They lend money to individuals and businesses. B) They create credit by accepting deposits and making loans. C) They control the money supply in the economy. D) They issue currency. Show Answer Correct Answer: B) They create credit by accepting deposits and making loans. 43. The one rupee note and coins are issued by: A) Commercial Bank. B) RBI (Central Bank). C) Ministry of Finance. D) Central Government. Show Answer Correct Answer: C) Ministry of Finance. 44. Given below are two statements, one (A) and the other labelled as (B):Statement (A):M1 is considered as narrow moneyStatement (B):M1 = Currency + Net demand depositsIn the context of the above two statements, which of the following is correct? A) Both (A) and (B) are correct. B) Both (A) and (B) are incorrect. C) Only (A) is correct. D) Only (B) is correct. Show Answer Correct Answer: A) Both (A) and (B) are correct. 45. Qualitative measure of credit control A) CRR. B) Bank rate. C) Margin requirement. D) Open market operation. Show Answer Correct Answer: C) Margin requirement. 46. Why were metals preferred for use as money A) They were durable. B) They could be devided into parts and be carried around. C) They were Scarce. D) All. Show Answer Correct Answer: D) All. 47. Which of the four characteristics of money can be defined as "Consistent or Identical" ? A) Portability. B) Durability. C) Divisibility. D) Uniformity. Show Answer Correct Answer: D) Uniformity. 48. What is known as the apex institution of a country's financial and monetary system? A) Commercial Banks. B) Member Banks. C) Central Banks. D) None of the above. Show Answer Correct Answer: C) Central Banks. 49. What is a bank card used for? A) Playing games. B) Reading books. C) Drawing pictures. D) Getting money. Show Answer Correct Answer: D) Getting money. 50. What function of money enables it to be used for future purchases? A) Unit of account. B) Medium of exchange. C) Store of value. D) Measure of liquidity. Show Answer Correct Answer: C) Store of value. 51. More the CRR, more the credit creation. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 52. Who issue 1 rupee note A) RBI. B) COMMERCIAL BANK. C) MINISTRY OF FINANCE. D) ALL THE ABOVE. Show Answer Correct Answer: C) MINISTRY OF FINANCE. 53. Why does the state/government have to intervene in the market? A) To increase the role of the price mechanism in allocating resources. B) To prevent private sector firms from overcharging consumers. C) To make the distribution of income more uneven. D) To encourage the consumption of harmful products. Show Answer Correct Answer: B) To prevent private sector firms from overcharging consumers. 54. Why did the Zimbabwean dollar lose its acceptability in 2009? A) It was not divisible. B) It was replaced by the US dollar. C) It was not portable. D) The country experienced hyperinflation. Show Answer Correct Answer: D) The country experienced hyperinflation. 55. If a pen costs Rs 10 and a pencil costs Rs 2, the relative price of a pen in terms of pencils is: A) 0.5 pencil. B) 2 pencils. C) 5 pencils. D) 10 pencils. Show Answer Correct Answer: C) 5 pencils. 56. How do you pronounce 'receipt'? A) Reseept. B) Reseet. C) Resept. D) Reset. Show Answer Correct Answer: B) Reseet. 57. Double coincidence of wants is an issue associated with the system of A) Sale. B) Donations. C) Barter. D) Transfer. Show Answer Correct Answer: C) Barter. 58. Which of the following statements about the characteristics of debt and equities is TRUE? A) They can both be long-term financial instruments. B) Bond holders are residual claimants. C) The income from bonds is typically more variable than that from equities. D) Bonds pay dividends. Show Answer Correct Answer: A) They can both be long-term financial instruments. 59. Which bank enjoys monopoly power of Note issue? A) NABARD. B) Central Bank. C) Commercial Bank. D) All of the above. Show Answer Correct Answer: B) Central Bank. 60. How do banks make profits from loans according to the text? A) By charging a fee for borrowing that is higher than the interest paid to savers. B) By investing in high-return stocks and shares. C) By keeping all the money in reserve and not lending it. D) By insuring the deposits with the federal government. Show Answer Correct Answer: A) By charging a fee for borrowing that is higher than the interest paid to savers. ← 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 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