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 5 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 5 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The value of all goods and services can be expressed in monetary units.It means money has A) Unit of Account. B) Value of deferred payment. C) Value of medium of exchange. D) Store of value. Show Answer Correct Answer: A) Unit of Account. 2. What is the main goal of monetary policy? A) To increase government revenue through taxation. B) To regulate international trade agreements. C) To promote social welfare programs. D) To manage the economy by controlling money supply and interest rates. Show Answer Correct Answer: D) To manage the economy by controlling money supply and interest rates. 3. The ..... District Federal Reserve Bank serves Gurnee. A) Columbia. B) Richmond. C) Memphis. D) Chicago. Show Answer Correct Answer: D) Chicago. 4. In a bustling city, the central bank plays a crucial role in ensuring the financial system operates smoothly. What is the primary function of this central bank in the city's financial landscape? A) Providing general payment services and personal loans. B) Offering funds for small and medium-sized community needs. C) Maintaining stability of currency value and the financial sector. D) Facilitating foreign exchange transactions and insurance services. Show Answer Correct Answer: C) Maintaining stability of currency value and the financial sector. 5. Which of the following is actually a loan given to banks from consumers? A) Savings bonds. B) Checking accounts. C) Certificates of deposit. D) Savings accounts. Show Answer Correct Answer: C) Certificates of deposit. 6. Evaluate how the function of money as a "medium of exchange" impacts economic efficiency. A) It decreases transaction costs and increases trade. B) It increases the cost of goods and services. C) It reduces the variety of products available in the market. D) It leads to a decrease in consumer spending. Show Answer Correct Answer: A) It decreases transaction costs and increases trade. 7. What is the purpose of the stock exchange? A) To offer legal advice. B) To provide medical services. C) To provide a platform for buying and selling shares of publicly traded companies. D) To sell groceries. Show Answer Correct Answer: C) To provide a platform for buying and selling shares of publicly traded companies. 8. A bank that can lend to other banks in times of need A) City bank. B) State bank. C) Specie. D) Central Bank. Show Answer Correct Answer: D) Central Bank. 9. Which is not related to banking in India A) Currency issued by RBI is inconvertible. B) All notes except one rupee is issued by RBI. C) Legal tender money is also called Fiat money because it serves as money by the order of RBI. D) Putting all currency notes and coins into circulation, is done by RBI. Show Answer Correct Answer: C) Legal tender money is also called Fiat money because it serves as money by the order of RBI. 10. Who is the authority of issuing one rupee coin in India? A) RBI. B) SBI. C) Ministry of Finance. D) None of these. Show Answer Correct Answer: C) Ministry of Finance. 11. What is the definition of bartering? A) It is a medium of exchange for the purchase of goods and services. B) It is a system of swapping items in exchange for another item. C) It is a system used to purchase goods only. D) It is a system of storing the value of money in a bank. Show Answer Correct Answer: B) It is a system of swapping items in exchange for another item. 12. Which function of money encourages people to save money? A) Medium of Exchange. B) Acceptability. C) Unit of Account. D) Store of Value. Show Answer Correct Answer: D) Store of Value. 13. Which of the following statements represents the main function of the central bank in a country? A) . It is responsible for the regulation over the supply of money in the market. B) . It is responsible for the issuance of notes within the country. C) . It acts as a banker both to the government and to other banks in the country. D) All of the above. Show Answer Correct Answer: D) All of the above. 14. Which is qualitative credit control policy A) OMO. B) CRR. C) Moral suasion. D) SLR. Show Answer Correct Answer: C) Moral suasion. 15. Introduction of money has: A) Separated the acts of sale and purchase of an individual. B) Combined the acts of sale and purchase of an individual. C) Expanded the scope of sale and purchase. D) Both (a) and (c). Show Answer Correct Answer: D) Both (a) and (c). 16. Which monetary policy tool involves the buying and selling of government securities in the open market? A) Bank rate. B) Open market operations (OMO). C) Statutory liquidity ratio (SLR). D) Cash reserve ratio (CRR). Show Answer Correct Answer: B) Open market operations (OMO). 17. Money which is accepted as a medium of exchange because of trust between the payer and the payee is called- A) Full bodied money. B) Fiduciary money. C) Credit money. D) Fait money. Show Answer Correct Answer: C) Credit money. 18. Central bank is an apex bank of the country that: A) Controls the entire banking system of the country. B) Issues currency. C) Acts as a banker to the government. D) All of these. Show Answer Correct Answer: D) All of these. 19. How does the deposit multiplier work in commercial banks? A) The deposit multiplier allows banks to create money by lending out a portion of deposits while keeping a fraction as reserves. B) The deposit multiplier only applies to savings accounts, not checking accounts. C) The deposit multiplier reduces the total amount of money banks can lend. D) Banks must keep all deposits as reserves and cannot lend any money. Show Answer Correct Answer: A) The deposit multiplier allows banks to create money by lending out a portion of deposits while keeping a fraction as reserves. 20. Which term describes the act of swapping items in exchange for other items in the absence of money? A) Negotiation. B) Bartering. C) Double coincidence of wants. D) Unit of account. Show Answer Correct Answer: B) Bartering. 21. Objects that have value because the holder can exchange them for something else of value A) Fiat money. B) Interest. C) Representative money. D) Commodity money. Show Answer Correct Answer: C) Representative money. 22. The intersection point of the savings and investment curve determines: A) The level of aggregate demand. B) The price level. C) The equilibrium level of income. D) The inflation rate. Show Answer Correct Answer: C) The equilibrium level of income. 23. What is the direct exchange of goods without using money called? A) Trading. B) Auctioning. C) Bartering. D) Negotiation. Show Answer Correct Answer: C) Bartering. 24. Central banks ..... the interest of depositors A) Protect. B) Steal. C) Decrease. D) Increase. Show Answer Correct Answer: A) Protect. 25. The value of what is given up when one option is chosen over another A) Need. B) Value. C) Want. D) Opportunity cost. Show Answer Correct Answer: D) Opportunity cost. 26. Income not spent on immediate wants A) Savings. B) Income. C) All the above. D) None of the above. Show Answer Correct Answer: A) Savings. 27. Another word for "discount" A) Reduction. B) Redication. C) Reddiction. D) Redaction. Show Answer Correct Answer: A) Reduction. 28. Which is NOT a characteristic of money? A) Legal. B) Durability. C) Scarcity. D) Portability. Show Answer Correct Answer: A) Legal. 29. An account at a depository institution where money is kept for easy access and for everyday use A) Overdraft. B) Savings. C) Certificate of deposit. D) Checking. Show Answer Correct Answer: D) Checking. 30. Money serves as a ..... because it hold its value over time. A) Medium of exchange. B) Store of value. C) All the above. D) None of the above. Show Answer Correct Answer: B) Store of value. 31. The principal-agent problem would not arise if A) Governements do not intervene. B) Stockholders have complete information about the activities of the firm. C) There are information asymmetries. D) Managers take complete control of the firm. Show Answer Correct Answer: B) Stockholders have complete information about the activities of the firm. 32. This is money by government decree, has no alternate value A) Specie. B) Fiat money. C) Gold standard. D) Barter. Show Answer Correct Answer: B) Fiat money. 33. Money is primarily defined as: A) A store of gold. B) A medium of exchange. C) A means of barter. D) A method of taxation. Show Answer Correct Answer: B) A medium of exchange. 34. Which of these is an example of M1? A) Credit. B) Property. C) Cash. D) Savings deposits. Show Answer Correct Answer: C) Cash. 35. What is a common way for banks to lend money to customers? A) Overdrafts. B) Savings accounts. C) Investment accounts. D) Current accounts. Show Answer Correct Answer: A) Overdrafts. 36. The rate of interest at which Bank accepts deposit from the house hole is known as A) Lending rate. B) Borrowing rate. C) Both a and b. D) Neither a nor b. Show Answer Correct Answer: B) Borrowing rate. 37. Money serves as a ..... It allows people to measure the relative costs of goods and services. A) Store of value. B) Unit of account. C) Investment. D) None of the above. Show Answer Correct Answer: B) Unit of account. 38. Whether located at banks or public venues, automated teller machines A) Are data terminals linked to a bank's computer network. B) Can only be used to withdraw cash or transfer money between accounts. C) Accept debit cards and stored-value cards as well as ATM cards. D) Automatically deduct a user fee from the customer's bank account. Show Answer Correct Answer: A) Are data terminals linked to a bank's computer network. 39. A(n) ..... is a widespread panic in which great numbers of people try to redeem their paper money. A) Fractinal reserve banking. B) Credit union. C) Default. D) Bank run. Show Answer Correct Answer: D) Bank run. 40. What is the best definition of money? A) Anything generally accepted as payment for goods and services. B) Just the cash in your wallet as payment for goods and services. C) Precious stones or feathers that you can exchange for goods and services. D) Your debit card that you use contactless for the exchange of goods and services. Show Answer Correct Answer: A) Anything generally accepted as payment for goods and services. 41. Bank Negara was established in ..... A) 26 January 1959. B) 26 February 1959. C) 31 August 1957. D) 16 September 1963. Show Answer Correct Answer: A) 26 January 1959. 42. Banks create credit on the basis of A) Deposits. B) Securities. C) Total assets. D) None of the above. Show Answer Correct Answer: A) Deposits. 43. When looking for a savings account, it is best to look for an account with ..... interest. A) Higher. B) Lower. C) No. D) None of the above. Show Answer Correct Answer: A) Higher. 44. What is the primary function of money? A) Medium of exchange. B) Means of production. C) Distribution of wealth. D) Measure of income. Show Answer Correct Answer: A) Medium of exchange. 45. You bought a mug that cost $ 15 and you paid with a $ 20 bill. What did you get back? A) Recipe. B) Refund. C) Change. D) Recheck. Show Answer Correct Answer: C) Change. 46. U.S. government institution that provided insurance on depositor's accounts A) Central Bank. B) Bank of the United States. C) Federal Reserve. D) FDIC. Show Answer Correct Answer: D) FDIC. 47. Explain the term 'banking system'. A) The banking system refers to the stock market only. B) A banking system is a type of insurance policy. C) A banking system is a government agency that prints money. D) The banking system is a network of financial institutions that manage deposits, loans, and transactions. Show Answer Correct Answer: D) The banking system is a network of financial institutions that manage deposits, loans, and transactions. 48. Which of the following statements about M1 assets is true? A) M1 assets do not have liquidity. B) M1 assets are stored in savings accounts. C) M1 assets cannot be converted into cash easily. D) M1 assets can be converted into cash easily. Show Answer Correct Answer: D) M1 assets can be converted into cash easily. 49. System in which currency could be exchanged for a certain amount of gold. A) Federal Reserve Notes. B) Legal tender. C) Fiat Money. D) Gold Standard. Show Answer Correct Answer: D) Gold Standard. 50. The market demand curve for money is generate from ..... A) The amount demanded by household to consume on goods and services. B) The vertical sum of money for transaction, precautionary and speculative motives. C) The vertical sum of money that are prepared for savings. D) The amount that provided by central bank to be used for a country. Show Answer Correct Answer: B) The vertical sum of money for transaction, precautionary and speculative motives. 51. During excess demand the A) CRR should be increased. B) Repo rate should be reduced. C) Government bonds should be bought by the central bank. D) Reverse repo rate should be reduced. Show Answer Correct Answer: A) CRR should be increased. 52. What do we get after buying something at a store? A) A book. B) A letter. C) A toy. D) A receipt. Show Answer Correct Answer: D) A receipt. 53. What does the FDIC do? A) Pays you interest in your checking account. B) Protects your money should the bank be robbed. C) Loan you money based on your credit score. D) Takes your money and doesn't give it back. Show Answer Correct Answer: B) Protects your money should the bank be robbed. 54. A portfolio is the collection of all of one's financial assets? A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 55. Assertion (A):The central bank issues currency notes in an economy. Reason (R):The central bank ensures adequate cash flow in the economy by directly printing and distributing money to the public. A) Both A and R are true, and R is the correct explanation of A. B) Both A and R are true, but R is not the correct explanation of A. C) A is true, but R is false. D) A is false, but R is true. Show Answer Correct Answer: C) A is true, but R is false. 56. Pedir prestado/a A) To borrow. B) Cash. C) To exchange. D) Bank. Show Answer Correct Answer: A) To borrow. 57. The fact that money must withstand the wear and tear that comes from being used over and over again is a measure of its A) Age. B) Currency. C) Durability. D) Portability. Show Answer Correct Answer: C) Durability. 58. Easily transferred from one person to another, to make the exchange of money for goods/services easier A) Scarcity. B) Divisibility. C) Durability. D) Portability. Show Answer Correct Answer: D) Portability. 59. The main advantages of a monetary system of exchange compared to a barter system is the increased ..... A) Time devoted to shopping. B) Efficiency in arranging transactions. C) Ability to record transactions. D) Time necessary to find trading partners. Show Answer Correct Answer: B) Efficiency in arranging transactions. 60. Direct exchange of goods against goods is called: A) CHARTER. B) MONEY. C) BARTER. D) NONE OF THESE. Show Answer Correct Answer: C) BARTER. ← 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 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