This quiz works best with JavaScript enabled. Home > Class 12 > Class 12 Economics (Macro Economics) Chapter 3 Money And Banking – Quiz 16 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 16 (25 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Credit creation by commercial bank will take place when the bank ..... A) Invest on property. B) Print money. C) Grant loans. D) Accept deposit from the public. Show Answer Correct Answer: C) Grant loans. 2. What do we do with money at a store? A) Eat it. B) Spend it. C) Plant it. D) Throw it. Show Answer Correct Answer: B) Spend it. 3. 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. 4. 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. 5. 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. 6. Money must withstand physical wear and tear from being used over and again. A) Uniformity. B) Durability. C) Divisibility. D) Portability. Show Answer Correct Answer: B) Durability. 7. 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. 8. Which of the following is not instrument if monetary policy A) Bank rate. B) Open market operation. C) Selective credit control. D) Government spending. Show Answer Correct Answer: D) Government spending. 9. At the end of the month, the money I haven't spent is ..... A) Spent quickly. B) Income. C) Savings. D) Expenses. Show Answer Correct Answer: C) Savings. 10. 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). 11. 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. 12. '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. 13. Which of the following is NOT a primary function of money? A) Medium of exchange. B) Store of value. C) Unit of account. D) Measure of productivity. Show Answer Correct Answer: D) Measure of productivity. 14. 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. 15. What is an example of a banking service? A) ATM. B) Bartering. C) Buying goods. D) Trading stocks. Show Answer Correct Answer: A) ATM. 16. 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. 17. How do changes in the repo rate influence borrowing? A) Higher repo rates always lead to increased borrowing regardless of other factors. B) Changes in the repo rate only affect government borrowing, not personal loans. C) Lower repo rates have no impact on borrowing behavior. D) Changes in the repo rate influence borrowing by affecting interest rates; higher rates discourage borrowing, while lower rates encourage it. Show Answer Correct Answer: D) Changes in the repo rate influence borrowing by affecting interest rates; higher rates discourage borrowing, while lower rates encourage it. 18. 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. 19. In which year the Reserve Bank of the India was established? A) 1945. B) 1947. C) 1935. D) 1953. Show Answer Correct Answer: C) 1935. 20. 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) Pawnshop. B) Insurance Company. C) Cooperative. D) Stock Exchange. Show Answer Correct Answer: B) Insurance Company. 21. What is the value of money multiplier when initial deposits are Rs 500 crores and LRR is 10%? A) 0.1. B) 0.2. C) 10. D) 20. Show Answer Correct Answer: C) 10. 22. The 'Big Bang Theory' is related to which of the following? A) Continental Drift. B) Origin of Universe. C) Origin of Himalayas. D) Eruption of Volcanoes. Show Answer Correct Answer: B) Origin of Universe. 23. 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. 24. ..... is a bank that can lend money to other banks in times of crisis A) Congress. B) Central Bank. C) Department of the Interior. D) National Bank. Show Answer Correct Answer: B) Central Bank. 25. Government-issued coins and paper notes that may be used to exchange goods and services; essentially, the physical representation of money A) Currency. B) Representative Money. C) Fiat Money. D) Commodity Money. Show Answer Correct Answer: A) Currency. ← 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