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 7 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 7 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What do we do with money at a store? A) Eat it. B) Spend it. C) Throw it. D) Plant it. Show Answer Correct Answer: B) Spend it. 2. What is the difference between saving and spending? A) Saving involves using money for immediate purchases, while spending involves setting aside money for future use. B) Saving involves setting aside money for future use, while spending involves using money for immediate purchases. C) Saving and spending are the same thing. D) Saving involves using money for immediate purchases, while spending involves setting aside money for future use. Show Answer Correct Answer: B) Saving involves setting aside money for future use, while spending involves using money for immediate purchases. 3. Money functions as a ..... A) Medium of exchange. B) Measure of value. C) Store of value. D) All correct. Show Answer Correct Answer: D) All correct. 4. What is the primary way banks create money in the Canadian financial system? A) By minting bills and coins. B) By taking in deposits and making loans. C) By printing currency directly. D) By collecting taxes. Show Answer Correct Answer: B) By taking in deposits and making loans. 5. Money must withstand physical wear and tear from being used over and again. A) Uniformity. B) Durability. C) Portability. D) Divisibility. Show Answer Correct Answer: B) Durability. 6. What is the main reason banks accept deposits? A) To insure the money with the federal government. B) To keep money in reserve to handle withdrawals. C) To lend the money to other people. D) To pay higher interest rates to depositors. Show Answer Correct Answer: C) To lend the money to other people. 7. Which of the following is not instrument if monetary policy A) Bank rate. B) Open market operation. C) Government spending. D) Selective credit control. Show Answer Correct Answer: C) Government spending. 8. At the end of the month, the money I haven't spent is ..... A) Income. B) Spent quickly. C) Savings. D) Expenses. Show Answer Correct Answer: C) Savings. 9. Demand deposits are- A) Deposits which can be withdrawn on demand. B) It can be withdrawn through cheques and demand drafts. C) Both (a) and (b). D) None. Show Answer Correct Answer: C) Both (a) and (b). 10. Commercial bank create money by way of: A) Time deposits. B) Demand deposits. C) Treasury bills. D) Bill of exchange. Show Answer Correct Answer: B) Demand deposits. 11. 'Money enables people to borrow and lend'. Which function of money does this describe? A) Measure of value. B) Medium of exchange. C) Standard for deferred payment. D) Store of value. Show Answer Correct Answer: C) Standard for deferred payment. 12. Which of the following is NOT a primary function of money? A) Store of value. B) Unit of account. C) Measure of productivity. D) Medium of exchange. Show Answer Correct Answer: C) Measure of productivity. 13. What do commercial banks primarily do? A) Create digital payment options. B) Mint coins. C) Collect deposits and provide loans. D) Exchange goods. Show Answer Correct Answer: C) Collect deposits and provide loans. 14. What is an example of a banking service? A) Trading stocks. B) Bartering. C) Buying goods. D) ATM. Show Answer Correct Answer: D) ATM. 15. What is the meaning of the term 'velocity of circulation'? A) The speed at which money moves through the economy. B) The rate at which banks lend money to individuals. C) The frequency at which people exchange money for goods and services. D) The measure of money supply in an economy. Show Answer Correct Answer: C) The frequency at which people exchange money for goods and services. 16. How do changes in the repo rate influence borrowing? A) Changes in the repo rate influence borrowing by affecting interest rates; higher rates discourage borrowing, while lower rates encourage it. B) Changes in the repo rate only affect government borrowing, not personal loans. C) Lower repo rates have no impact on borrowing behavior. D) Higher repo rates always lead to increased borrowing regardless of other factors. Show Answer Correct Answer: A) Changes in the repo rate influence borrowing by affecting interest rates; higher rates discourage borrowing, while lower rates encourage it. 17. True or False:An increase in the Money Supply decreases interest rates, which increases consumption & investment, which increases aggregate demand. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 18. In which year the Reserve Bank of the India was established? A) 1953. B) 1945. C) 1935. D) 1947. Show Answer Correct Answer: C) 1935. 19. Yuni is planning a trip abroad and wants to ensure that she is financially protected against any unforeseen events that may occur during her travels, such as health issues or property damage. Which financial institution should she consider to cover these potential risks? A) Stock Exchange. B) Pawnshop. C) Cooperative. D) Insurance Company. Show Answer Correct Answer: D) Insurance Company. 20. What is the value of money multiplier when initial deposits are Rs 500 crores and LRR is 10%? A) 20. B) 10. C) 0.1. D) 0.2. Show Answer Correct Answer: B) 10. 21. The 'Big Bang Theory' is related to which of the following? A) Origin of Himalayas. B) Continental Drift. C) Origin of Universe. D) Eruption of Volcanoes. Show Answer Correct Answer: C) Origin of Universe. 22. Credit creation 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: A) Commercial bank. 23. ..... is a bank that can lend money to other banks in times of crisis A) Congress. B) Department of the Interior. C) National Bank. D) Central Bank. Show Answer Correct Answer: D) Central Bank. 24. Government-issued coins and paper notes that may be used to exchange goods and services; essentially, the physical representation of money A) Currency. B) Fiat Money. C) Commodity Money. D) Representative Money. Show Answer Correct Answer: A) Currency. 25. Which of the following best defines Commodity Money? A) Money that can only be used to purchase a specific category of goods. B) Money that is printed on paper but backed by gold reserves. C) An item that has intrinsic value, besides its use as a medium of exchange. D) Money that is declared legal tender by government decree. Show Answer Correct Answer: C) An item that has intrinsic value, besides its use as a medium of exchange. 26. What is a common service provided by commercial banks beyond accepting deposits? A) Controlling the money supply. B) Providing insurance. C) Issuing government bonds. D) Managing the national debt. Show Answer Correct Answer: B) Providing insurance. 27. How is money a store of value? A) It is a means by which items can be exchanged. B) Goods and services can be measured by the dollar. C) People can use it to measure the relative cost of goods. D) It can be saved and spent in the future. Show Answer Correct Answer: D) It can be saved and spent in the future. 28. Money overcomes issues of barter system A) Seldom. B) Can't say. C) Zero. D) 1. Show Answer Correct Answer: D) 1. 29. How does the RBI act as a banker to the government? A) The RBI acts as a banker to the government by managing its accounts, facilitating transactions, and providing financial services. B) The RBI does not manage government accounts. C) The RBI only provides loans to private banks. D) The RBI acts as a financial advisor to the government. Show Answer Correct Answer: A) The RBI acts as a banker to the government by managing its accounts, facilitating transactions, and providing financial services. 30. Who was Harshad Mehta A) A Businessman. B) A Bank Owner. C) A Stock Broker. D) A Robber. Show Answer Correct Answer: C) A Stock Broker. 31. The formula used for calculating money multiplier: A) 1/CRR. B) 1/SLR. C) 1/LRR. D) All of the above. Show Answer Correct Answer: C) 1/LRR. 32. When the money supply increases, nominal interest rate will A) Remain the same. B) Decrease. C) Increase. D) Shift left. Show Answer Correct Answer: B) Decrease. 33. Which bank controls the banking and monetary structure of India? A) World Bank. B) Reserve Bank of India. C) Axis Bank. D) State Bank of India. Show Answer Correct Answer: B) Reserve Bank of India. 34. Money is functioning as a standard of value when you A) Use it to compare two houses that are different prices. B) Buy jeans at the mall. C) Buy a rare baseball card that you expect will increase in value. D) Trade a cup of sugar for two eggs. Show Answer Correct Answer: A) Use it to compare two houses that are different prices. 35. Money is backed by our faith that others will accept it from us in exchange for goods and services A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 36. ..... is the rate of interest charged by the central bank on loan giving to the commercial bank A) Reverse repo rate. B) Bank rate. C) Statutory liquidity ratio. D) Cash reserve ratio. Show Answer Correct Answer: B) Bank rate. 37. Which of the following is not the part of the money supply? A) Currency notes held with the public. B) Coins held with the public. C) Term deposits with commercial banks. D) Demand deposits. Show Answer Correct Answer: C) Term deposits with commercial banks. 38. The system of exchanging goods directly against other goods without the use of money is called A) Barter system. B) Bargain system. C) Cash system. D) Monetary system. Show Answer Correct Answer: A) Barter system. 39. Kim K. deposits $ 200 in her checking account. Later that day Kanye gets a loan for $ 3, 000 from the same bank. What happens to the money supply A) Increases by $ 3000. B) Increases by $ 2800. C) Decreases by $ 3000. D) Increases by $ 200. Show Answer Correct Answer: A) Increases by $ 3000. 40. When you take money out of the bank, it's called: A) Shopping. B) Saving. C) Withdrawal. D) Counting. Show Answer Correct Answer: C) Withdrawal. 41. Earnings through advertising on the Internet-an affordable way to ..... income. A) Charge. B) Reduce. C) Generate. D) None of the above. Show Answer Correct Answer: C) Generate. 42. The component not included in money supply A) Currency with private individuals. B) Currency with business firms. C) Stock of gold with RBI. D) All of these. Show Answer Correct Answer: C) Stock of gold with RBI. 43. A cashless society uses: A) Only gold coins. B) Cheques only. C) Only barter. D) Digital transactions. Show Answer Correct Answer: D) Digital transactions. 44. Which characteristic of money ensures it is not easily copied or forged? A) Scarcity. B) Acceptability. C) Durability. D) Uniformity. Show Answer Correct Answer: A) Scarcity. 45. Stocks are investments that help people increase their assets. A) TRUE. B) FALSE. C) All the above. D) None of the above. Show Answer Correct Answer: A) TRUE. 46. Which of the following is a characteristic that makes an item unsuitable to act as money? A) It is recognizable. B) It is generally acceptable. C) It is easy to carry. D) It is perishable. Show Answer Correct Answer: D) It is perishable. 47. What is the role of the central bank in an economy? A) To provide loans to individuals. B) To issue currency. C) To accept deposits from the public. D) To create credit for businesses. Show Answer Correct Answer: B) To issue currency. 48. Which of the following is not a quantitative method of credit control? A) Bank Rate Policy. B) Variable Reserve Ratio. C) Margin Requirements. D) Open Market Operation. Show Answer Correct Answer: C) Margin Requirements. 49. Credit Multiplier is: A) 1/CRR. B) Cash X 1/CRR. C) Cash x CRR. D) None of these. Show Answer Correct Answer: A) 1/CRR. 50. What is the effect of lending on the economy as described in the text? A) It leads to a decrease in the number of businesses. B) It decreases the amount of money available to spend. C) It increases the amount of money available to spend. D) It has no effect on the amount of money available to spend. Show Answer Correct Answer: C) It increases the amount of money available to spend. 51. Which of the following agency e is responsible for issuing rupees 1 currency note in India A) Ministry of finance. B) Ministry of commerce. C) Niti aayog. D) Reserve Bank of India. Show Answer Correct Answer: A) Ministry of finance. 52. Which of the following is true about money supply A) It is measured over a period of time. B) It remains constant. C) It is measured at a point of time. D) None of the above. Show Answer Correct Answer: C) It is measured at a point of time. 53. Which of the following is not a characteristic of money? A) Durability. B) Portability. C) Invisibility. D) Divisibility. Show Answer Correct Answer: C) Invisibility. 54. Which of the following are objectives of budget? A) Reallocation of resources. B) Redistribution of income. C) Economic stability. D) All of these. Show Answer Correct Answer: D) All of these. 55. Which of following agency is responsible for issuing ₹ 1 currency note in India? A) Finance ministry. B) Home Ministry. C) NITI Aayog. D) RBI. Show Answer Correct Answer: A) Finance ministry. 56. Demand for money.The Transaction Motive of money means A) For investment. B) For day to day work. C) A and B both. D) None of the above. Show Answer Correct Answer: B) For day to day work. 57. When general prices increase, the value of money: A) Increases. B) Decreases. C) Doubles. D) Remains the same. Show Answer Correct Answer: B) Decreases. 58. Credit function is the principal function of the commercial banks A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 59. The process of money creation 8s done by A) Commercial bank. B) World bank. C) Central bank. D) Rural bank. Show Answer Correct Answer: B) World bank. 60. What characteristic of money ensures it can be easily transported? A) Homogeneous. B) Durable. C) Portable. D) Divisible. Show Answer Correct Answer: C) Portable. ← 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 8Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books