This quiz works best with JavaScript enabled. Home > Class 12 > Class 12 Economics (Macro Economics) Chapter 3 Money And Banking – Quiz 21 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 21 (25 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Credit creation by banks is limited by: A) Number of customers. B) CRR set by RBI. C) Prices of commodities. D) Technology used. Show Answer Correct Answer: B) CRR set by RBI. 2. Bank create credit ..... A) Out of their investment. B) Out of their assets. C) Out of deposits. D) Out of reserves. Show Answer Correct Answer: C) Out of deposits. 3. ..... 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. 4. ..... 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. 5. KYC stands for A) Know your Credentials. B) Know your cash. C) Know your Customer. D) Know your Cashier. Show Answer Correct Answer: C) Know your Customer. 6. Which of the following systems is followed by Reserve bank of India for issuing currency? A) Proportional system. B) Simple deposit system. C) Minimum reserve system. D) Fixed fiduciary issue system. Show Answer Correct Answer: C) Minimum reserve system. 7. What are the main tools of monetary policy? A) Trade tariffs. B) Open market operations, discount rate, reserve requirements. C) Government spending. D) Taxation policies. Show Answer Correct Answer: B) Open market operations, discount rate, reserve requirements. 8. 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. 9. 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) 2000 crores. B) 3000 crore. C) 4000 crore. D) 14000 crore. Show Answer Correct Answer: C) 4000 crore. 10. Which type of bank primarily accepts deposits and provides loans? A) Credit Union. B) Investment Bank. C) Commercial Bank. D) Central Bank. Show Answer Correct Answer: C) Commercial Bank. 11. Which of these is a fiat currency used in the colony of Connecticut in 1645? A) Wigwam. B) Cheese. C) Tomtoms. D) Wampum. Show Answer Correct Answer: D) Wampum. 12. 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. 13. What condition is necessary for a fiat money system to work? A) Money owed must be paid on time. B) The government must control the money supply. 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: B) The government must control the money supply. 14. Jagatheths A) Madras. B) Bengal. C) Patna. D) Surat. Show Answer Correct Answer: B) Bengal. 15. ..... 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. 16. Money is the medium of A) Communication. B) Barter. C) Exchange. D) Speculation. Show Answer Correct Answer: C) Exchange. 17. In order to reduce credit in the country RBI follow A) Buy the securities in the open market. B) Sell the security in the open market. C) Reduce crr. D) Reduce repo rate. Show Answer Correct Answer: B) Sell the security in the open market. 18. The maximum limit to accept payment in coins A) Rs 500. B) Rs 1000. C) Rs 250. D) Rs 10, 000. Show Answer Correct Answer: B) Rs 1000. 19. 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. 20. ..... refers to a failure to pay back a loan. A) Default. B) Interest. C) Principal. D) Currency. Show Answer Correct Answer: A) Default. 21. As expected, offering small ..... increased business investment. A) Loans. B) Profitable. C) ATM. D) None of the above. Show Answer Correct Answer: A) Loans. 22. Which of these is an example of commodity money? A) Polymer banknote. B) Credit card. C) Gold. D) Digital wallet. Show Answer Correct Answer: C) Gold. 23. When you put money in the bank, this is called: A) Spending. B) Depositing. C) Shopping. D) Counting. Show Answer Correct Answer: B) Depositing. 24. 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. 25. 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. ← 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