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 8 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 8 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which of the following statements is true about demand deposits? A) It includes both fixed deposits and current account deposits. B) It includes both savings account deposits and fixed deposits. C) It includes both current account deposits and savings account deposits. D) It includes fixed deposits, current account deposits and savings account deposits. Show Answer Correct Answer: C) It includes both current account deposits and savings account deposits. 2. Which of the following changes by the central bank can increase the money supply A) Increase in CRR. B) Purchase of government securities in the open market. C) Sale of government securities in the open market. D) Increase in repo rate. Show Answer Correct Answer: B) Purchase of government securities in the open market. 3. People can use their earnings to build ..... A) Money. B) Time. C) Wealth. D) None of the above. Show Answer Correct Answer: C) Wealth. 4. Correct formula of deposit multiplier is ..... A) 1/CRR. B) 1/SLR. C) 1/LRR. D) None. Show Answer Correct Answer: C) 1/LRR. 5. An account at a depository institution where you keep money that is easy to access, but not used for everyday consumption A) Overdraft. B) Savings. C) Certificate of deposit. D) Checking. Show Answer Correct Answer: B) Savings. 6. A condition that exists when a borrower cannot repay a loan A) Default. B) Central Bank. C) Liquidity. D) Member Bank. Show Answer Correct Answer: A) Default. 7. Total deposits creaed by commercial banks is Rs 12, 000 crore and LRR is 25%. Calculate the amount of initial deposits. A) Rs 4000 crore. B) Rs 6000 crore. C) Rs 5000 crore. D) Rs 3000 crore. Show Answer Correct Answer: D) Rs 3000 crore. 8. In economics terms, what does it mean if something has liquidity? A) The asset can be easily used or converted into cash. B) The asset can be easily traded for water. C) The asset can be a solid or a gas depending on the temperature. D) The asset takes a long time to be converted into cash. Show Answer Correct Answer: A) The asset can be easily used or converted into cash. 9. Where can you go to withdraw money? A) ATM. B) AMT. C) MTA. D) ACT. Show Answer Correct Answer: A) ATM. 10. You will need to provide a lot of paperwork in order to take ..... a mortgage. A) In. B) Out. C) Off. D) None of the above. Show Answer Correct Answer: B) Out. 11. An individual may hold her wealth in the form of landed property, bonds, equity markets.Which is this form of demand of money? A) Transactive motive. B) Medium of exchange. C) Speculative motive. D) Liquidity trap. Show Answer Correct Answer: C) Speculative motive. 12. One cause for people holding money is to pay for unexpected medical bills and other unpredictable expenses. This motive for holding money is called ..... A) Transaction motive. B) Precautionary motive. C) Spending motive. D) Speculative motive. Show Answer Correct Answer: B) Precautionary motive. 13. Goods and services that can increase our quality of life but are not absolutely necessary for our survival A) Value. B) Need. C) Opportunity cost. D) Want. Show Answer Correct Answer: D) Want. 14. Which of the following is an example of money as a unit of account? A) Lending a friend $ 25.00. B) Purchasing a toy for $ 8.99. C) Opening a saving account at a bank. D) Checking the price of a camera at several stores before buying it at the lowest price. Show Answer Correct Answer: D) Checking the price of a camera at several stores before buying it at the lowest price. 15. Money is the most liquid of all the asset because A) It is a medium of exchange. B) It is an unit of account. C) It act as a store of value. D) It is a standard of deferred payment. Show Answer Correct Answer: A) It is a medium of exchange. 16. What is the purpose of money? A) To serve as a medium of exchange, a unit of account, and a store of value. B) To create inequality. C) To control the economy. D) To be used as a form of decoration. Show Answer Correct Answer: A) To serve as a medium of exchange, a unit of account, and a store of value. 17. What do we call money we save for emergencies? A) Pocket money. B) Savings. C) Allowance. D) Change. Show Answer Correct Answer: B) Savings. 18. The demand for money consists of A) M1 plus M2. B) The tools of the Fed. C) Asset demand plus transactions demand. D) Checkable deposits and savings accounts. Show Answer Correct Answer: C) Asset demand plus transactions demand. 19. What is a piggy bank used for? A) Saving money. B) Eating food. C) Drawing pictures. D) Playing games. Show Answer Correct Answer: A) Saving money. 20. What is savings? A) Income not spent on immediate wants. B) Use of money today in a way that earns future benefits. C) Things of economic value that a person or company owns. D) Percentage of the total amount of money loaned or borrowed. Show Answer Correct Answer: A) Income not spent on immediate wants. 21. Can I pay ..... credit card? A) By. B) For. C) With. D) By. Show Answer Correct Answer: A) By. 22. What would happen of a commercial bank decided to hold more than required reserves? A) Decrease in checking accounts. B) Increase the interest rate offered by the bank. C) Decrease the reserve ratio of the banking system. D) Decrease the amount of potential loans made by the bank. Show Answer Correct Answer: D) Decrease the amount of potential loans made by the bank. 23. Currency notes and coins are called as: A) Flat Money. B) Legal tender. C) Fiat money. D) Both legal tender and fiat money. Show Answer Correct Answer: D) Both legal tender and fiat money. 24. If CRR is 5% SLR 20 %, money multiplier is A) 4. B) 5. C) 20. D) None of these. Show Answer Correct Answer: A) 4. 25. What is the purpose of a loan? A) To increase financial burden. B) To provide financial assistance. C) To create debt. D) To hinder financial stability. Show Answer Correct Answer: B) To provide financial assistance. 26. Supply of money refers to quantity of money A) As on any point of time. B) During period of time. C) During fiscal year. D) As on 31st march. Show Answer Correct Answer: A) As on any point of time. 27. Money spent in order to make more money A) Investment. B) Interest. C) Entrepreneur. D) Income. Show Answer Correct Answer: A) Investment. 28. What is one of the primary roles of a central bank? A) Raising taxes. B) Controlling the money supply. C) Deciding on the amount of government expenditure. D) Issuing shares. Show Answer Correct Answer: B) Controlling the money supply. 29. Which of the following is/are the purpose of money demand influenced by the level of income? A) Transaction motive. B) Precautionary motive. C) Speculative motive. D) Transaction and precautionary motive. Show Answer Correct Answer: B) Precautionary motive. 30. In order to reduce credit in the country, RBI may: A) Sell securities in the open market. B) Buy securities in the open market. C) Reduce Repo Rate. D) Reduce cash reserve ratio. Show Answer Correct Answer: A) Sell securities in the open market. 31. ..... refers to objects that have value because the holder can exchange them for something else of value. A) Fiat money. B) Commodity money. C) Barter. D) Representative money. Show Answer Correct Answer: D) Representative money. 32. What were "greenbacks?" A) Paper currency used by the Union during the Civil War. B) Privately issued currency used by the Union during the Civil War. C) Paper currency used by the Confederacy during the Civil War. D) Copper coins used by the Confederacy during the Civil War. Show Answer Correct Answer: A) Paper currency used by the Union during the Civil War. 33. One of the main functions of banks is A) Borrowing money and lending to savers. B) Creating money. C) Ownership of projects in which they invest. D) Maintaining a constant money supply. Show Answer Correct Answer: B) Creating money. 34. Currency should be portable. This means: A) You can carry it easily. B) It was originally designed in a port. C) It is either rectangular or circular. D) It is made out of paper. Show Answer Correct Answer: A) You can carry it easily. 35. What is the main difference between Bank Rate and Repo Rate? A) Relationship to credit creation. B) Duration of loans offered. C) Collateral requirement for loans. D) Involvement in government securities. Show Answer Correct Answer: A) Relationship to credit creation. 36. How did the Financial Services Act of 1999 affect the banking industry? A) It ended restrictions on interstate banking and on the number of branches banks could have. B) It led to numerous mergers as banks tried to enter new geographic markets. C) It allowed banks, investment companies, and insurance companies to sell the same products. D) It let banks cut costs by providing fewer services to small customers. Show Answer Correct Answer: C) It allowed banks, investment companies, and insurance companies to sell the same products. 37. Term deposits are those: A) Against which on cheque can be issued. B) Against which no interest is paid to the depositors. C) Which are a part of M1 supply of money. D) None of these. Show Answer Correct Answer: A) Against which on cheque can be issued. 38. Which coin is worth 25 cents? A) Penny. B) Quarter. C) Dime. D) Nickel. Show Answer Correct Answer: B) Quarter. 39. Supply for money:There are several definitions of the supply of money.An even broader measure of the money supply is ..... , which includes all of M2 plus large denomination, long-term time deposits-for example, certificates of deposit (CDs) in amounts over $ 100, 000. A) M1. B) M2. C) M3. D) None of the above. Show Answer Correct Answer: C) M3. 40. If the reserve ratio is 25% and Ray deposits $ 100 in the bank the result will be A) $ 100 in money destruction. B) $ 400 in money creation. C) $ 400 in money destruction. D) $ 100 in money creation. Show Answer Correct Answer: B) $ 400 in money creation. 41. The process of directly exchanging one good or service for another. A) Trade. B) Bartering. C) Market. D) None of the above. Show Answer Correct Answer: B) Bartering. 42. Which of the following is the biggest disadvantage of using sea shells instead of coins as money? A) Portability. B) Durability. C) Value. D) Uniformity. Show Answer Correct Answer: D) Uniformity. 43. Financial experts recommend that before you start investing you should have a ..... in place for emergencies. A) Debt. B) Loan. C) Safery net. D) None of the above. Show Answer Correct Answer: C) Safery net. 44. Functions of Money:Money must serve as a ..... This means that if money is usable today to make purchases, it must also be acceptable to make purchases today that will be paid in the future. A) Medium of exchange. B) Store of value. C) Unit of account. D) Standard of deferred payment. Show Answer Correct Answer: D) Standard of deferred payment. 45. Currency issued by authority is. A) Fiduciary Money. B) Fiat money. C) Both (a) and (b). D) None. Show Answer Correct Answer: B) Fiat money. 46. Which of the following is the function of Central Bank A) Bankers' Bank. B) Giving loans to general public. C) Credit creation. D) Accepting deposits from the general public. Show Answer Correct Answer: A) Bankers' Bank. 47. The Congress of the United States printed Greenbacks to help fund the A) World War I. B) Civil War. C) Spanish-American War. D) Korean War. Show Answer Correct Answer: B) Civil War. 48. Which reserves do banks use to loan out to borrowers? A) Liquid. B) Total. C) Required. D) Excess. Show Answer Correct Answer: D) Excess. 49. How do banks make money from the loans they give? A) They charge interest for the loans. B) They invest the reserves the Fed requires them to keep. C) They charge for storing the loan papers in safe deposit boxes. D) They hold the borrower's property as collateral. Show Answer Correct Answer: A) They charge interest for the loans. 50. The process of credit creation is done by A) Commercial banks. B) World Bank. C) Rural Bank. D) Central Bank. Show Answer Correct Answer: A) Commercial banks. 51. The goal of the Federal Reserve System is to help the economy achieve stable prices, full employment, and economic growth. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 52. Which is the function of commercial bank? A) Lend money to the government. B) Accepting deposits and provide loans. C) Print money. D) Control the interest rate of the banks. Show Answer Correct Answer: B) Accepting deposits and provide loans. 53. Which of these people works at a bank? A) Driver. B) Teller. C) Chef. D) Teacher. Show Answer Correct Answer: B) Teller. 54. Currency held by the public and cash reserves with the banks are included in: A) M1 measure of money supply. B) High powered money. C) Legal tender money. D) None of the above. Show Answer Correct Answer: B) High powered money. 55. Commercial Bank in India includes A) Scheduled bank which have been included in the II schedule of RBI Act 1934. B) Non Scheduled banks which have not been included in the II schedule of RBI. C) Both of the above. D) None of the above. Show Answer Correct Answer: C) Both of the above. 56. Suppose the cash reserve ratio (CRR) mandated by the RBI is 10%, and HDFC Bank receives deposits worth Rs. 1, 000 crore. How much should the bank keep in reserve as per the CRR? A) Rs. 200 crore. B) Rs. 250 crore. C) Rs. 100 crore. D) Rs. 150 crore. Show Answer Correct Answer: C) Rs. 100 crore. 57. What does the M in M-banking stands for? A) Mobile. B) Message. C) Money. D) Mutual fund. Show Answer Correct Answer: A) Mobile. 58. Which of the following is a type of deposit account? A) Investment account. B) Savings account. C) Credit account. D) Loan account. Show Answer Correct Answer: B) Savings account. 59. Credit creation by banks is limited by: A) Technology used. B) CRR set by RBI. C) Prices of commodities. D) Number of customers. Show Answer Correct Answer: B) CRR set by RBI. 60. Bank create credit ..... A) Out of their investment. B) Out of reserves. C) Out of deposits. D) Out of their assets. Show Answer Correct Answer: C) Out of deposits. ← 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 7Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books