This quiz works best with JavaScript enabled. Home > Class 12 > Class 12 Economics (Macro Economics) Chapter 3 Money And Banking – Quiz 27 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 27 (25 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. How does inflation impact the value of money? A) Inflation decreases the value of money by reducing its purchasing power. B) Inflation has no impact on the value of money. C) Inflation stabilizes the value of money. D) Inflation increases the value of money by boosting its purchasing power. Show Answer Correct Answer: A) Inflation decreases the value of money by reducing its purchasing power. 2. The primary liabilities of a commercial bank are A) Bonds. B) Mortgages. C) Deposits. D) None of the above. Show Answer Correct Answer: C) Deposits. 3. What is money if it is available but only in a limited supply? A) Portable. B) Durable. C) Divisible. D) Scarce. Show Answer Correct Answer: D) Scarce. 4. The Fed's key function is to A) Make sure the nation's banking system is sound and safe. B) Maintain an effective payment system for banks and government. C) Promote a healthy economy by using monetary policy. D) All of the above. Show Answer Correct Answer: D) All of the above. 5. How does diversification help reduce risk in an investment portfolio? A) Putting all investments in one industry ensures safety. B) Diversification spreads investments across different asset classes, industries, and regions to minimize the impact of poor performance. C) Diversification only focuses on one asset class, which limits risk. D) Investing in a single company is the best way to reduce risk. Show Answer Correct Answer: B) Diversification spreads investments across different asset classes, industries, and regions to minimize the impact of poor performance. 6. Early colonists in Virginia used tobacco as A) Specie. B) Fiat money. C) Commodity money. D) Wampum. Show Answer Correct Answer: C) Commodity money. 7. Which of the following is not a function performed by the Central Bank A) Banker's Bank. B) Issue of currency. C) Credit creation. D) None of the above. Show Answer Correct Answer: C) Credit creation. 8. Two units of the same type of money must be the same in terms of what they will buy. A) Durability. B) Limited Supply. C) Portability. D) Uniformity. Show Answer Correct Answer: D) Uniformity. 9. How does the Bank Rate impact the economy? A) Buying government securities. B) Regulating the margin requirement. C) Controlling the supply of money in the economy. D) Offering short-term loans to commercial banks. Show Answer Correct Answer: C) Controlling the supply of money in the economy. 10. Which of the following is one of the three functions of money? A) Scarcity. B) Portability. C) Divisibility. D) Store of value. Show Answer Correct Answer: D) Store of value. 11. ..... is the function of money that allows people to measure the relative costs of goods and services. A) Medium of exchange. B) Unit of account. C) All the above. D) None of the above. Show Answer Correct Answer: B) Unit of account. 12. Explain the function of money as a medium of exchange. A) Money is used for personal savings only. B) Money is primarily used for bartering goods. C) Money functions as a universally accepted intermediary in transactions, simplifying trade and promoting economic efficiency. D) Money has no impact on economic transactions. Show Answer Correct Answer: C) Money functions as a universally accepted intermediary in transactions, simplifying trade and promoting economic efficiency. 13. The lender of last resort is a function of A) Rural bank. B) Post office. C) Commercial bank. D) Central bank. Show Answer Correct Answer: D) Central bank. 14. A good that is used as a medium of exchange but also has intrinsic worth because it has other uses. Gold or silver coins are commodity money. A) Currency. B) Representative Money. C) Fiat Money. D) Commodity Money. Show Answer Correct Answer: D) Commodity Money. 15. Which does NOT describe a role of the Federal Reserve? A) Provide special financial services to banks. B) To regulate & watch US banks. C) Keep the economy stable & healthy through Monetary Policy. D) Decide whether or not to raise or lower US taxes. Show Answer Correct Answer: D) Decide whether or not to raise or lower US taxes. 16. Which measure of money supply is considered the narrowest? A) M2. B) M4. C) M1. D) M3. Show Answer Correct Answer: C) M1. 17. Commodity money is something you can use or eat and also trade. Which is commodity money? A) Shells with value. B) Paper drawings. C) Plastic blocks. D) None of the above. Show Answer Correct Answer: A) Shells with value. 18. Which is the wrong example of money? A) Central bank reserves. B) Coin & banknotes. C) Asset. D) Gold & bank deposits. Show Answer Correct Answer: C) Asset. 19. Which of the following is a typical characteristic of the barter system? A) A common medium of exchange. B) Double coincidence of wants. C) A common unit of account. D) A standard for deferred payments. Show Answer Correct Answer: B) Double coincidence of wants. 20. Anything that is used to determine value during an exchange of goods and services is known as a(n) ..... A) Portability. B) Acceptability. C) Barter. D) Medium of exchange. Show Answer Correct Answer: D) Medium of exchange. 21. A common denominator that can be used to express worth in terms that most individuals understand A) Money. B) Medium of exchange. C) Measure of value. D) Fiat money. E) Specie. Show Answer Correct Answer: C) Measure of value. 22. Money supply in a modern economy consists of: A) Only coins. B) Only paper currency. C) Cash and bank deposits. D) Only bank loans. Show Answer Correct Answer: C) Cash and bank deposits. 23. M1 plus funds that cannot be used for cash directly, but can be converted fairly easily A) M2. B) M1. C) Fiat money. D) Medium of exchange. Show Answer Correct Answer: A) M2. 24. We go to the ..... to ..... money A) Cashpoint / withdraw. B) Cashpoint / take. C) Bankomat / make. D) Bankomat / take. Show Answer Correct Answer: A) Cashpoint / withdraw. 25. Nonprofit service cooperative that is owned by, and operated for, the benefit of its members A) Federal Reserve System. B) Thrift institution. C) Mutual savings bank. D) Credit union. E) Savings and loan association. Show Answer Correct Answer: D) Credit union. ← 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