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 6 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 6 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Broad definition of money includes currency, demand deposits, saving deposits and time deposits A) Can't say. B) False. C) True. D) None of the above. Show Answer Correct Answer: C) True. 2. What is the significance of the bank rate? A) The bank rate is solely determined by consumer demand. B) The bank rate is significant as it affects interest rates, inflation, and economic activity. C) The bank rate is irrelevant to inflation. D) The bank rate only affects government spending. Show Answer Correct Answer: B) The bank rate is significant as it affects interest rates, inflation, and economic activity. 3. How do banks earn money? A) By loaning money to other customers. B) By charging interest or fees for their services. C) By borrowing money from customers. D) By storing money for customers. Show Answer Correct Answer: B) By charging interest or fees for their services. 4. Young Metro begins trusting banks and he deposits $ 10, 000 in his. The reserve requirement is 20%. How much can his bank now lend out? A) $ 10, 000. B) $ 8, 000. C) $ 2, 000. D) $ 0. Show Answer Correct Answer: B) $ 8, 000. 5. Suppose that Captain Crunch bank has a customer deposit $ 5, 000 and the bank's excess reserves go up by $ 4, 000. The reserve ratio is A) 20%. B) 40%. C) 10%. D) $ 1000. Show Answer Correct Answer: A) 20%. 6. Money has ..... main functions. A) 5. B) 2. C) 3. D) 4. Show Answer Correct Answer: D) 4. 7. What does it mean for the RBI to be the lender of last resort? A) The RBI's role is to regulate interest rates only. B) The RBI acts as a regular bank for individuals. C) The RBI only provides funds to profitable banks. D) The RBI being the lender of last resort means it provides emergency funds to banks in financial trouble to maintain stability in the financial system. Show Answer Correct Answer: D) The RBI being the lender of last resort means it provides emergency funds to banks in financial trouble to maintain stability in the financial system. 8. When you buy a house you can claim tax ..... on the mortgage. A) Assistance. B) Relief. C) Benefit. D) Aid. Show Answer Correct Answer: B) Relief. 9. Which function of money allows stores to have a standard price system for the goods and services they sell? A) Unit of Account. B) Dolla Dolla Bills. C) Store of Value. D) Medium of Exchange. Show Answer Correct Answer: A) Unit of Account. 10. M1 money supply in Malaysia consists of ..... A) Coins and bank notes. B) Currency in circulation and current deposits. C) Coins, paper money and saving deposits. D) Currency in circulation, savings deposit and time deposits. Show Answer Correct Answer: C) Coins, paper money and saving deposits. 11. Which of the following determines the amount a bank can lend to its customers? A) Excess reserve. B) Non-performing loans. C) Non is correct. D) Required reserve. Show Answer Correct Answer: A) Excess reserve. 12. What is the ability of how fast we convert a financial instrument to cash? A) Solvency. B) Stability. C) Profitability. D) Liquidity. Show Answer Correct Answer: D) Liquidity. 13. An account you can deposit money into and then write checks or use debit card to withdraw money is known as a ..... A) ATM. B) Money Market. C) Savings. D) Checking. Show Answer Correct Answer: D) Checking. 14. Maria borrowed $ 3, 000 at a simple interest rate of 4% per year. How much did she have to repay after 4 years? A) $ 480. B) $ 3, 480. C) $ 7, 800. D) $ 4, 800. Show Answer Correct Answer: B) $ 3, 480. 15. Money supply is equal to A) Total flow of money circulation by the central bank. B) Total stock of money circulation by the central bank. C) Total stock of money held by the government. D) Money saved in post office saving bank only. Show Answer Correct Answer: C) Total stock of money held by the government. 16. What is one benefit of banking? A) Complicated transactions. B) Convenience in managing money. C) Increased theft risk. D) Limited access to services. Show Answer Correct Answer: B) Convenience in managing money. 17. Characteristics of money:Scarce- A) The value of currency should not change often. B) I.e. it can't easily be faked or copied. C) It should be a reliable measure to last for a longer period of time. D) Must be valuable. Show Answer Correct Answer: D) Must be valuable. 18. How do banks increase the money supply? A) By issuing loans with their excess reserves. B) By printing their own money. C) They don't. D) By getting loans from the Fed. Show Answer Correct Answer: A) By issuing loans with their excess reserves. 19. Money is accepted as a medium of exchange because of the trust between the payer and the payee is called: A) Fiduciary money. B) Fiat money. C) Full bodied money. D) Credit money. Show Answer Correct Answer: A) Fiduciary money. 20. ..... of wants refers to the simultaneous fulfillment of mutual wants of buyers and sellers A) Medium of exchange. B) Measure of Store. C) Double coincidence of want. D) Measure of value. Show Answer Correct Answer: C) Double coincidence of want. 21. The National Banking-System was created by Congress in ..... to standardize currency and banking practices in the U.S. and issued the first national currency known as the Greenback. A) 1913. B) 1933. C) 1900. D) 1811. Show Answer Correct Answer: A) 1913. 22. How do commercial banks primarily make their profit? A) By providing free banking services. B) By charging higher interest rates on loans than they pay on deposits. C) By charging lower interest rates. D) By accepting deposits only. Show Answer Correct Answer: B) By charging higher interest rates on loans than they pay on deposits. 23. Which coin is worth the least amount? A) Dime. B) Penny. C) Quarter. D) Nickel. Show Answer Correct Answer: B) Penny. 24. Another word for "rich" A) Homeless. B) Wealthy. C) Poor. D) Bank. Show Answer Correct Answer: B) Wealthy. 25. Functions of Money:Money must serve as a ..... Holding money is a much easier way of storing value. A) Medium of exchange. B) Store of value. C) Unit of account. D) Standard of deferred payment. Show Answer Correct Answer: B) Store of value. 26. Credit Unions are not-for-profit organizations A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 27. The difference between representative money and fiat money is that A) Fiat money is counted in coins; representative money is counted in paper dollars. B) Representative money is worth more than fiat money. C) Fiat money is more durable than representative money. D) Representative money is backed by silver or gold, ; fiat money is not. Show Answer Correct Answer: D) Representative money is backed by silver or gold, ; fiat money is not. 28. Which type of card represents money that the holder has on deposit with the issuer? A) ATM card. B) Stored-value card. C) Credit card. D) Debit card. Show Answer Correct Answer: B) Stored-value card. 29. Most banks are established A) To fulfill reserve requirements. B) To be credit unions. C) By local governments. D) As corporations. Show Answer Correct Answer: D) As corporations. 30. Which of the following is a feature of a money market deposit account? A) The money must remain in the account for a specific period of time. B) Unlimited transactions every month. C) No minimum balance requirements. D) Tiered interest rates. Show Answer Correct Answer: D) Tiered interest rates. 31. Fixed deposit is also termed as A) Demand deposit. B) Checkable deposit. C) Time deposit. D) Flexi deposit. Show Answer Correct Answer: C) Time deposit. 32. Credit control is the function of ..... A) Commercial bank. B) Nationalised bank only. C) Both (a) and (b). D) Reserve bank of India. Show Answer Correct Answer: D) Reserve bank of India. 33. Money can be divided into commodity money and ..... money A) Cash. B) Paper. C) Representative. D) Token. Show Answer Correct Answer: D) Token. 34. An investment bank helps ..... issue securities A) A Corporation. B) Government. C) Foreign governments. D) None of the above. Show Answer Correct Answer: A) A Corporation. 35. Which function of money allows it to be used for future payments? A) Medium of exchange. B) Store of value. C) Unit of account. D) Standard of deferred payments. Show Answer Correct Answer: D) Standard of deferred payments. 36. Which of the following is not the function of the Central Bank A) Banking facilities to public. B) Lending to commercial banks. C) Banking facilities to government. D) Lending to government. Show Answer Correct Answer: A) Banking facilities to public. 37. Supply of money is a A) Flow variable. B) Stock variable. C) Real flow. D) None of these. Show Answer Correct Answer: B) Stock variable. 38. Pension payment is an example of: A) Capital expenditure. B) Plan expenditure. C) Non-plan expenditure. D) Revenue expenditure. Show Answer Correct Answer: D) Revenue expenditure. 39. My cousin wanted to borrow $ 300 from me. I loaned him the money but I told him that he would have to pay me back $ 330. The money that was paid back to me on top of the loan is known as ..... A) Debt. B) Credit. C) Interest. D) Savings. Show Answer Correct Answer: C) Interest. 40. SLR requires the commercial bank to build their liquid assets by way of A) Reserve of cash. B) Reserve of gold. C) Resurve of unencumbered secirities. D) All of these. Show Answer Correct Answer: D) All of these. 41. SLR means banks keep part of deposits in cash, gold, or approved papers. What must banks hold for SLR? A) Cash, gold, or approved securities. B) Only toys. C) Only foreign coins. D) None of the above. Show Answer Correct Answer: A) Cash, gold, or approved securities. 42. Securities are ..... for the person who buys them, but are ..... for the individual or firm that issues them. A) Negotiable; non negotiable. B) Assets; liabilities. C) Liabilities; assets. D) Nonnegotiable; negotiable. Show Answer Correct Answer: B) Assets; liabilities. 43. The division of money into M1, M2, and M3 is based on A) Liquidity. B) Assets. C) Amount in circulation. D) Supply. Show Answer Correct Answer: A) Liquidity. 44. Imagine Oliver, Evelyn, and Mason are playing a game of Monopoly. They are curious about the term used to describe the total amount of money in circulation within their game. Can you help them out? A) Money supply. B) Inflation rate. C) Interest rate. D) Currency. Show Answer Correct Answer: A) Money supply. 45. It is the continuing increase of the general price level in the market. A) Stagflation. B) Recession. C) Inflation. D) Deflation. Show Answer Correct Answer: C) Inflation. 46. An important job of the Federal Reserve is to A) Protect the nation. B) Manage and control the money supply. C) Make sure all goods are safe. D) All of the above. Show Answer Correct Answer: B) Manage and control the money supply. 47. Money borrowed from a bank that you pay in fixed monthly payments or installments. A) Personal Loan. B) Investment Banking. C) CD. D) Money Market Account. Show Answer Correct Answer: A) Personal Loan. 48. Functions of Money:Money serves as a ..... , which means that money acts as an intermediary between the buyer and the seller. A) Medium of exchange. B) Store of value. C) Unit of account. D) Standard of deferred payment. Show Answer Correct Answer: A) Medium of exchange. 49. ..... is the bank that trades in money with 2 main activities:receiving deposits and making loans. A) Commercial bank. B) Investment bank. C) Central bank. D) Private bank. Show Answer Correct Answer: A) Commercial bank. 50. Cash reserve ratio is defined as A) Reserve maintained by commercial banks within themselves. B) Reserve maintained by commercial banks with central bank. C) Any of the above. D) None of the above. Show Answer Correct Answer: B) Reserve maintained by commercial banks with central bank. 51. ..... is that money whose money value is equal to commodity value. A) Fiduciary money. B) Credit money. C) Fiat money. D) Full bodied money. Show Answer Correct Answer: D) Full bodied money. 52. How do banks facilitate international trade? A) Banks facilitate international trade by offering letters of credit, foreign exchange services, trade financing, and processing international payments. B) Banks charge high fees for all international services. C) Banks only deal with domestic transactions. D) Banks provide insurance for international shipments. Show Answer Correct Answer: A) Banks facilitate international trade by offering letters of credit, foreign exchange services, trade financing, and processing international payments. 53. Signature of ..... appears on a Rs. 2, 000 currency A) President of India. B) Chief Justice of India. C) Governor of Reserve bank of India. D) Prime Minister India. Show Answer Correct Answer: C) Governor of Reserve bank of India. 54. Which of the four characteristics of money can be defined as "able to be broke down" ? A) Durability. B) Divisibility. C) Uniformity. D) Portability. Show Answer Correct Answer: B) Divisibility. 55. Which is a main goal of the Federal Reserve? A) Print currency for American citizens. B) Create a high level of inflation. C) Create a stable, healthy economy. D) Develop new laws for the United States. Show Answer Correct Answer: C) Create a stable, healthy economy. 56. What is the main objective of a central bank's monetary policy? A) Stabilize the economy. B) Control government spending. C) Increase inflation. D) Increase employment only. Show Answer Correct Answer: A) Stabilize the economy. 57. What is the potential advantage of using a direct deposit for receiving a paycheck? A) It increases the amount of deposit. B) It provides an opportunity to double your paycheck. C) It allows for quicker access to the funds compared to receiving a paper check. D) It requires a physical trip to the bank to deposit the check. Show Answer Correct Answer: C) It allows for quicker access to the funds compared to receiving a paper check. 58. Describe the process of applying for a loan. A) Choosing a loan type without checking credit score. B) Waiting for a decision before researching lenders. C) The process of applying for a loan involves determining the loan type, checking credit score, researching lenders, gathering documents, filling out the application, submitting it, waiting for a decision, and signing the agreement if approved. D) Submitting the application without any documents. Show Answer Correct Answer: C) The process of applying for a loan involves determining the loan type, checking credit score, researching lenders, gathering documents, filling out the application, submitting it, waiting for a decision, and signing the agreement if approved. 59. The interest on the reccuring deposit (RD) is ..... the interest on fixed deposit (FD) A) Less than. B) Equal to. C) Greater than. D) No related to. Show Answer Correct Answer: A) Less than. 60. Credit creation by commercial bank will take place when the bank ..... A) Accept deposit from the public. B) Grant loans. C) Invest on property. D) Print money. Show Answer Correct Answer: B) Grant loans. ← 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 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