This quiz works best with JavaScript enabled. Home > Class 12 > Class 12 Economics (Macro Economics) Chapter 3 Money And Banking – Quiz 39 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 39 (25 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Finance company A) Financial institution that is involved in trading securities in financial markets. B) Financial institution that provides services for businesses. C) Financial institution that makes money by issuing loans. D) Bank account that allows the account owner to make deposits, write checks, and withdraw money. Show Answer Correct Answer: C) Financial institution that makes money by issuing loans. 2. As commercial banks keep more excess reserves, money creation A) Increases. B) Decreases. C) Remains the same. D) Could either increase or decrease. Show Answer Correct Answer: B) Decreases. 3. What are the primary functions of banks? A) Manage government policies. B) The primary functions of banks are to accept deposits, provide loans, facilitate payments, and offer financial services. C) Provide insurance services. D) Invest in real estate. Show Answer Correct Answer: B) The primary functions of banks are to accept deposits, provide loans, facilitate payments, and offer financial services. 4. Which of the following is NOT a type of deposit accepted by commercial banks? A) Fixed Deposits. B) Current Account Deposits. C) Savings Account Deposits. D) Investment Deposits. Show Answer Correct Answer: D) Investment Deposits. 5. Which picture money is modern legal tender used today? A) Gold bar. B) Paper currency and coins. C) Shell necklace. D) None of the above. Show Answer Correct Answer: B) Paper currency and coins. 6. The rate at which commercial banks take short term loans from the central bank is called A) Bank Rate. B) Reverse Repo Rate. C) Repo Rate. D) Cash Reserve Ratio. Show Answer Correct Answer: C) Repo Rate. 7. When budget receipts are greater than budget expenditure such type of budget is called: A) Balanced budget. B) Deficit budget. C) Surplus budget. D) None of these. Show Answer Correct Answer: C) Surplus budget. 8. Bank that can lend to other banks in times of need, a "bankers' bank" . A) Liquidity. B) Central Bank. C) Member Bank. D) Default. Show Answer Correct Answer: B) Central Bank. 9. What is the difference between a savings account and a checking account? A) A savings account is for long-term investments, while a checking account is for daily transactions. B) A savings account can't be used for daily transactions, while a checking account can. C) A savings account has a higher interest rate, while a checking account has a lower interest rate. D) All of the above. Show Answer Correct Answer: D) All of the above. 10. Which term best describes the function of money when a company calculates its profit by subtracting total costs from total revenue, all measured in rupees? A) Medium of Exchange. B) Store of Value. C) Unit of Account. D) Standard of Deferred Payment. Show Answer Correct Answer: C) Unit of Account. 11. Which of the four characteristics of money can be defined as "long-lasting, strong" ? A) Uniformity. B) Durability. C) Portability. D) Divisibility. Show Answer Correct Answer: B) Durability. 12. According to Keynes Preference Liquidity Theory, which one is NOT the purpose of demand for money? A) Purchase goods and services such as car and house. B) Generate profit from exchange in the price of bonds and speculated change in interest. C) Donate the money to welfare institution. D) Pay unexpected expenses, for example hospital bill. Show Answer Correct Answer: C) Donate the money to welfare institution. 13. Which of the following is a disadvantage of of the barter systemI The rate of exchangeII Storage of wealthIII Acquisition of goods A) I and II only. B) III only. C) I and III only. D) I, II and III. Show Answer Correct Answer: D) I, II and III. 14. Typically, a person must be a member of a credit union to use its financial services. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 15. An increase in Legal Reserve Deposit Ratio increases the credit creation of the commercial banks. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 16. Which of the following is NOT an example of a store of value? A) Gold. B) Land. C) Fresh fruits. D) Bonds. Show Answer Correct Answer: C) Fresh fruits. 17. What is included in money supply. A) Currency with public. B) Demand deposits. C) Both a and b. D) None of the above. Show Answer Correct Answer: C) Both a and b. 18. What are the main components of a balance sheet for a bank? A) Cash, Inventory, Debt. B) Profit, Loss, Revenue. C) Income, Expenses, Revenue. D) Assets, Liabilities, Equity. Show Answer Correct Answer: D) Assets, Liabilities, Equity. 19. What is a budget and why is it important? A) A budget is a plan for investing in stocks and bonds only. B) A budget is a list of all the things you want to buy without any financial planning. C) A budget is a document that only tracks expenses without considering income. D) A budget is a financial plan that outlines expected income and expenses, and it is important for resource allocation, tracking spending, and achieving financial goals. Show Answer Correct Answer: D) A budget is a financial plan that outlines expected income and expenses, and it is important for resource allocation, tracking spending, and achieving financial goals. 20. The balance in savings, or current account deposits, held by the public in commercial banks is also considered money since cheques drawn on these accounts are used to settle transactions. Such deposits are called demand deposits A) Time deposit. B) Fixed Deposit. C) Demand deposit. D) Supply of money. Show Answer Correct Answer: C) Demand deposit. 21. T/F:In a barter system, the double coincidence of wants makes trading efficient. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 22. What is the primary purpose of a commercial bank? A) To accept deposits and provide loans. B) To manage government funds and assets. C) To issue currency and control monetary policy. D) To provide investment advice to clients. Show Answer Correct Answer: A) To accept deposits and provide loans. 23. Which of the following statements is true about credit creation by banks? A) Banks create credit on the basis of their total assets. B) Banks create credit on the basis of their total deposits. C) Banks create credit on the basis of their total securities. D) Banks create credit out of nothing. Show Answer Correct Answer: B) Banks create credit on the basis of their total deposits. 24. Which of the following is not non tax revenue receipts of government? A) Excise duty. B) Escheat. C) Special assessment. D) Fees and fines. Show Answer Correct Answer: A) Excise duty. 25. ..... is the rate at which the central bank borrow funds from commercial bank A) CRR. B) SLR. C) Bank rate. D) Reverse repo rate. Show Answer Correct Answer: D) Reverse repo rate. ← 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