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 9 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 9 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. ..... is something that people accept as payment for goods or services. A) Barter. B) Money. C) All the above. D) None of the above. Show Answer Correct Answer: B) Money. 2. ..... is money that has value because the government has ordered that it is an acceptable means to pay debts. A) Gold standard. B) Commodity money. C) Fiat money. D) Federal Reserve. Show Answer Correct Answer: C) Fiat money. 3. Which of the following systems is followed by Reserve bank of India for issuing currency? A) Minimum reserve system. B) Proportional system. C) Fixed fiduciary issue system. D) Simple deposit system. Show Answer Correct Answer: A) Minimum reserve system. 4. What are the main tools of monetary policy? A) Taxation policies. B) Open market operations, discount rate, reserve requirements. C) Trade tariffs. D) Government spending. Show Answer Correct Answer: B) Open market operations, discount rate, reserve requirements. 5. In the securities market, Lemon's problem arises because: A) Managers only own a fraction of the firm they work for. B) A potential investor cannot distinguish between good firms with high expected profits and bad firms with low expected profits. C) Borrowers tend to take riskier projects than the lenders would like. D) Borrowers default the debt contract. Show Answer Correct Answer: B) A potential investor cannot distinguish between good firms with high expected profits and bad firms with low expected profits. 6. Total deposits created by commercial bank is 10, 000 gross and legal reserve requirement is 40% than the amount of initial deposits will be A) 3000 crore. B) 4000 crore. C) 14000 crore. D) 2000 crores. Show Answer Correct Answer: B) 4000 crore. 7. Which type of bank primarily accepts deposits and provides loans? A) Commercial Bank. B) Central Bank. C) Credit Union. D) Investment Bank. Show Answer Correct Answer: A) Commercial Bank. 8. Which of these is a fiat currency used in the colony of Connecticut in 1645? A) Wigwam. B) Tomtoms. C) Cheese. D) Wampum. Show Answer Correct Answer: D) Wampum. 9. Why is maintaining good credit important? A) Can help you graduate from college. B) Allows you to carry more cash than usual. C) Allows you to buy expensive items and pay over time. D) Might cause your interest rates to be raised. Show Answer Correct Answer: C) Allows you to buy expensive items and pay over time. 10. What condition is necessary for a fiat money system to work? A) The government must control the money supply. B) Money owed must be paid on time. C) Banks must hold sufficient gold to cover any paper money they give out. D) Customers with checking accounts cannot earn interest on those accounts. Show Answer Correct Answer: A) The government must control the money supply. 11. ..... in stock gives a person partial ownership in a company. A) Income. B) Savings. C) Investment. D) None of the above. Show Answer Correct Answer: C) Investment. 12. Money is the medium of A) Exchange. B) Barter. C) Speculation. D) Communication. Show Answer Correct Answer: A) Exchange. 13. In order to reduce credit in the country RBI follow A) Reduce crr. B) Buy the securities in the open market. C) Sell the security in the open market. D) Reduce repo rate. Show Answer Correct Answer: C) Sell the security in the open market. 14. The maximum limit to accept payment in coins A) Rs 250. B) Rs 1000. C) Rs 10, 000. D) Rs 500. Show Answer Correct Answer: B) Rs 1000. 15. What is the purpose of a checking account? A) To save money for long-term goals. B) To invest in stocks and bonds. C) To facilitate daily financial transactions. D) To store money without earning interest. Show Answer Correct Answer: C) To facilitate daily financial transactions. 16. ..... refers to a failure to pay back a loan. A) Currency. B) Default. C) Interest. D) Principal. Show Answer Correct Answer: B) Default. 17. As expected, offering small ..... increased business investment. A) Loans. B) Profitable. C) ATM. D) None of the above. Show Answer Correct Answer: A) Loans. 18. When you put money in the bank, this is called: A) Counting. B) Shopping. C) Spending. D) Depositing. Show Answer Correct Answer: D) Depositing. 19. A Certificate of Deposit is money deposited for a set period of time that earns a set annual rate of interest. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 20. Credit creation by commercial banks is determined by: A) Cash reserve ratio(CRR). B) Statutory liquidity ratio(SLR). C) Initial deposits. D) All the above. Show Answer Correct Answer: D) All the above. 21. Which is not a use of money? A) A store of value. B) Medium of exchange. C) To start a fire. D) Unit of account. Show Answer Correct Answer: C) To start a fire. 22. If LRR is 25%, then money multiplier will be ..... A) 4 times. B) 10 times. C) 25 times. D) 0.25 times. Show Answer Correct Answer: A) 4 times. 23. How many curve in money demand? A) 1. B) 4. C) 2. D) 3. Show Answer Correct Answer: D) 3. 24. Fee charged to borrow money A) Inflation. B) Reserve requirement. C) Interest. D) Discount rate. Show Answer Correct Answer: C) Interest. 25. For which function, money is accepted as a unit of account? A) Measure of value,. B) Medium of exchange. C) Standard of deferred payment. D) Store of value. Show Answer Correct Answer: A) Measure of value,. 26. What is the role of interest rates in banking? A) Interest rates are solely determined by the stock market. B) Interest rates determine the cost of loans and the return on deposits, influencing borrowing, saving, and overall economic activity. C) Interest rates only affect government spending. D) Interest rates have no impact on savings accounts. Show Answer Correct Answer: B) Interest rates determine the cost of loans and the return on deposits, influencing borrowing, saving, and overall economic activity. 27. Expenses that do not change every month, such as rent A) Static Expenses. B) Fixed Expenses. C) Never Change Expenses. D) Variable Expenses. Show Answer Correct Answer: B) Fixed Expenses. 28. Credit multiplier is equal to A) 1/MRR* initial cash deposit. B) 1/CRR* initial cash deposit. C) 1/SLR* initial cash deposit. D) 1/LRR* initial cash deposit. Show Answer Correct Answer: D) 1/LRR* initial cash deposit. 29. Deposit creation by banks comes to an end when ..... A) Legal reserve ratio becomes zero. B) Money multiplier becomes zero. C) Fresh deposits with bank become zero. D) Total reserves equal initial deposits. Show Answer Correct Answer: D) Total reserves equal initial deposits. 30. Where is the safest place to keep your money? A) Under your pillow. B) In your pocket. C) In a piggy bank. D) In a bank. Show Answer Correct Answer: D) In a bank. 31. Short term loan designed to take advantage of people with harsh interest rates that YOU SHOULD NEVER USE is called? A) Mortgage. B) Car Loan. C) Bank Loan. D) PAYDAY LOAN. Show Answer Correct Answer: D) PAYDAY LOAN. 32. The receipts which neither create any liability nor lead to any reduction in assets are called A) Revenue receipts. B) Capital receipts. C) Both (a) and (b). D) None of these. Show Answer Correct Answer: A) Revenue receipts. 33. An important financial institution that assists in the initial sale of securities in the primary market is the A) Investment Bank. B) Commercial Bank. C) Stock Exchange. D) None of the above. Show Answer Correct Answer: A) Investment Bank. 34. Demand deposit created by the commercial bank are called A) Time deposit. B) High powered money. C) Bank money. D) Money. Show Answer Correct Answer: C) Bank money. 35. Where does fiat money get its value? A) From the commodity money found in storage. B) From gold reserves in vaults. C) From the U.S government. D) From the Bureau of Engraving and the U.S Mint. Show Answer Correct Answer: C) From the U.S government. 36. ..... refers to that portion of the total deposit of a commercial bank which it has to keep with itself in the form of liquid assets. A) Cash Reserve Ratio. B) Statutory Liquidity Ratio. C) Bank Rate. D) Repo Rate. Show Answer Correct Answer: B) Statutory Liquidity Ratio. 37. Which of the following is a step that the central bank will take to increase the overall availability of credit? A) It will sell the government securities in the market. B) It will raise the reverse repo rate. C) It will raise the repo rate. D) It will buy more government securities from the market. Show Answer Correct Answer: A) It will sell the government securities in the market. 38. All of the following were used as money before, except: A) Copper. B) Whale teeth. C) Salt. D) Mirrors. Show Answer Correct Answer: D) Mirrors. 39. Why does the Federal Reserve adjust loan interest rates? A) To control the number of loans taken by the public. B) To manage the supply of "stuff" and prevent excessive inflation. C) To ensure that the economy grows as fast as possible. D) To increase the amount of money in circulation. Show Answer Correct Answer: B) To manage the supply of "stuff" and prevent excessive inflation. 40. How does the RBI regulate the banking sector? A) By controlling interest rates only. B) By providing loans to all individuals directly. C) By managing foreign exchange rates exclusively. D) The RBI regulates the banking sector by setting monetary policy, issuing operational guidelines, conducting audits, and ensuring compliance. Show Answer Correct Answer: D) The RBI regulates the banking sector by setting monetary policy, issuing operational guidelines, conducting audits, and ensuring compliance. 41. What is another word for money that starts with "c" ? A) Cash. B) Dollars. C) Wallet. D) Purse. Show Answer Correct Answer: A) Cash. 42. Non-depository institution A) Money placed into an account. B) Nonprofit financial institution that is privately owned and provides banking services for its members. C) Financial institution that offers savings and loan services. D) Financial institution that does not accept deposits. Show Answer Correct Answer: D) Financial institution that does not accept deposits. 43. Money is demanded for speculative motives in order to ..... A) Generate profit from the change in price of bonds and speculated change in interest. B) Overcome any uncertainty in the price of goods and services. C) Purchase goods and services that are difficult to obtain in the market. D) Avoid the risk of a drop in the value of money. Show Answer Correct Answer: A) Generate profit from the change in price of bonds and speculated change in interest. 44. A plastic card that can only be used at an ATM for banking transactions and not at point of sale A) Cash card. B) ATM card. C) Debit card. D) Credit card. Show Answer Correct Answer: B) ATM card. 45. Define currency and give an example. A) Euro (EUR). B) US Dollar (USD). C) Japanese Yen (JPY). D) British Pound (GBP). Show Answer Correct Answer: B) US Dollar (USD). 46. What is the role of Repo Rate in credit control? A) Offering short-term loans to commercial banks. B) Regulating the margin requirement. C) Buying government securities. D) Controlling the supply of money in the economy. Show Answer Correct Answer: D) Controlling the supply of money in the economy. 47. What is the purpose of the Cash Reserve Ratio (CRR)? A) To stabilize the economy. B) To encourage savings. C) To limit the amount of credit creation by banks. D) To control inflation. Show Answer Correct Answer: C) To limit the amount of credit creation by banks. 48. Money supply is a concept A) Stock. B) Flow. C) Both a and b. D) Neither a nor b. Show Answer Correct Answer: A) Stock. 49. What role does the federal government play alongside the Federal Reserve according to the document? A) No role is specified in the document. B) It competes with the Federal Reserve. C) It also helps ensure economic stability. D) It focuses solely on healthcare. Show Answer Correct Answer: C) It also helps ensure economic stability. 50. Suppose you transfer RM10 000 from your current account to your savings account. How does this section affect the M1 and M2 money supplies? A) M1 and M2 are both exchanged. B) M1 falls by RM10 000 and M2 rises by RM10 000. C) M1 is unchanged and M2 rises by RM10 000. D) M1 is falls by RM10 000 and M2 is unchanged. Show Answer Correct Answer: B) M1 falls by RM10 000 and M2 rises by RM10 000. 51. Money that is issued by the authority of the government is called- A) Full bodied money. B) Fait money. C) Fuduciary money. D) All the above. Show Answer Correct Answer: B) Fait money. 52. Which is the central in Malaysia? A) Bank Negara. B) Maybank. C) Public Bank. D) Hong Leong Bank. Show Answer Correct Answer: A) Bank Negara. 53. Credit creation process is done by- A) Central bank. B) Commercial bank. C) Any of the above. D) None of the above. Show Answer Correct Answer: B) Commercial bank. 54. Which coin is brown? A) Nickel. B) Quarter. C) Dime. D) Penny. Show Answer Correct Answer: D) Penny. 55. ..... is a bank that, among other things, can lend money to other banks. A) National Bank. B) Department of the Interior. C) Congress. D) Central Bank. Show Answer Correct Answer: D) Central Bank. 56. Central bank must sell government bonds during inflation A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 57. Which of the following statements describes a function of money?I. Money is a medium of exchange.II. Money is a store of value.III. Money is a unit of account.IV. Money is a factor of production. A) I and IV only. B) I, II and IV only. C) II, III and IV only. D) I, III, and IV only. Show Answer Correct Answer: D) I, III, and IV only. 58. A ..... (thrift) is another type of deposit-taking bank, usually specialized in issuing home loans. A) Savings and Loan. B) Commercial. C) Investment. D) Central. Show Answer Correct Answer: A) Savings and Loan. 59. 'which function is performed by both commercial and central banks? A) Giving loan to people. B) Printing money. C) Operating monetary policy. D) Dealing with foreign currency. Show Answer Correct Answer: D) Dealing with foreign currency. 60. Which of the following is not concerned with banking organization? A) Fiscal deficit. B) Bank rate. C) Cash reserve ratio. D) Credit creation. Show Answer Correct Answer: A) Fiscal deficit. ← 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 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books