This quiz works best with JavaScript enabled. Home > Class 12 > Class 12 Economics (Macro Economics) Chapter 3 Money And Banking – Quiz 11 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 11 (25 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. How do banks make profits from loans according to the text? A) By charging a fee for borrowing that is higher than the interest paid to savers. B) By investing in high-return stocks and shares. C) By keeping all the money in reserve and not lending it. D) By insuring the deposits with the federal government. Show Answer Correct Answer: A) By charging a fee for borrowing that is higher than the interest paid to savers. 2. The value of all goods and services can be expressed in monetary units.It means money has A) Store of value. B) Unit of Account. C) Value of deferred payment. D) Value of medium of exchange. Show Answer Correct Answer: B) Unit of Account. 3. 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. 4. The ..... District Federal Reserve Bank serves Gurnee. A) Memphis. B) Richmond. C) Columbia. D) Chicago. Show Answer Correct Answer: D) Chicago. 5. 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. 6. Which of the following is actually a loan given to banks from consumers? A) Checking accounts. B) Certificates of deposit. C) Savings accounts. D) Savings bonds. Show Answer Correct Answer: B) Certificates of deposit. 7. 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. 8. 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. 9. A bank that can lend to other banks in times of need A) City bank. B) State bank. C) Central Bank. D) Specie. Show Answer Correct Answer: C) Central Bank. 10. 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. 11. 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. 12. 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. 13. Which function of money encourages people to save money? A) Medium of Exchange. B) Store of Value. C) Unit of Account. D) Acceptability. Show Answer Correct Answer: B) Store of Value. 14. 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. 15. Which is qualitative credit control policy A) CRR. B) SLR. C) OMO. D) Moral suasion. Show Answer Correct Answer: D) Moral suasion. 16. 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). 17. Which monetary policy tool involves the buying and selling of government securities in the open market? A) Cash reserve ratio (CRR). B) Open market operations (OMO). C) Statutory liquidity ratio (SLR). D) Bank rate. Show Answer Correct Answer: B) Open market operations (OMO). 18. 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) Fait money. C) Fiduciary money. D) Credit money. Show Answer Correct Answer: D) Credit money. 19. 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. 20. 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. 21. Which term describes the act of swapping items in exchange for other items in the absence of money? A) Bartering. B) Double coincidence of wants. C) Negotiation. D) Unit of account. Show Answer Correct Answer: A) Bartering. 22. Objects that have value because the holder can exchange them for something else of value A) Representative money. B) Commodity money. C) Fiat money. D) Interest. Show Answer Correct Answer: A) Representative money. 23. 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. 24. What is the direct exchange of goods without using money called? A) Negotiation. B) Bartering. C) Trading. D) Auctioning. Show Answer Correct Answer: B) Bartering. 25. Central banks ..... the interest of depositors A) Increase. B) Decrease. C) Protect. D) Steal. Show Answer Correct Answer: C) Protect. ← PreviousNext →Related 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 8Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 9Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books