This quiz works best with JavaScript enabled. Home > Class 12 > Class 12 Economics (Macro Economics) Chapter 3 Money And Banking – Quiz 6 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 6 (25 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which of the statements gives a true picture of the effect of lowering the cash reserve ratio by the central bank of a country? A) The lending capacity of commercial banks will increase. B) The lending capacity of commercial banks will decrease. C) The lending capacity of commercial banks may increase or decrease. D) There is no effect on the lending capacity of commercial banks. Show Answer Correct Answer: A) The lending capacity of commercial banks will increase. 2. Deposit creation process comes to an end when A) Fresh deposit with bank become zero. B) LRR become zero. C) Money multiplier becomes zero. D) Total reserves equal initial deposits. Show Answer Correct Answer: D) Total reserves equal initial deposits. 3. T/F:A commercial bank's role includes acting as the lender of last resort. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 4. ..... is money in the form of gold or silver coins A) Fiat. B) Shilling. C) Specie. D) Pence. Show Answer Correct Answer: C) Specie. 5. Explain Medium of Exchange A) It is a common Yardstick to measure money. B) It eliminates the function of double coincidence of wants. C) The value of money remains constant. D) It will never lose its value. Show Answer Correct Answer: B) It eliminates the function of double coincidence of wants. 6. Money is a medium of exchange because ..... A) It is the same across different country. B) It can be used in barter system. C) It has different market value. D) It is widely recognized and accepted. Show Answer Correct Answer: D) It is widely recognized and accepted. 7. Without money, people must ..... or trade, for goods and services they want or need. A) Borrow. B) Barter. C) Exchange. D) None of the above. Show Answer Correct Answer: B) Barter. 8. Those deposits in which amount is deposited with the bank for a fixed period of time are called ..... A) Saving Deposits. B) Time Deposits. C) Current Deposits. D) Demand Deposits. Show Answer Correct Answer: B) Time Deposits. 9. The monetary policy generally target to ensure ..... A) Price stability in the economy. B) Employment generation in the country. C) Stable foreign relation. D) Greater tax collection for the government. Show Answer Correct Answer: A) Price stability in the economy. 10. Deposits which are payable after the expiry of a fixed period are called- A) Time deposits. B) Demand deposits. C) NONE. D) None of the above. Show Answer Correct Answer: A) Time deposits. 11. Which of the following is the BEST example of representative money? A) A fur coat. B) Diamonds. C) Gold earrings. D) An IOU note. Show Answer Correct Answer: D) An IOU note. 12. Which one is NOT an example of loan provided by a commercial bank? A) Overdraft. B) Hire purchase. C) Mortgage. D) Deposits. Show Answer Correct Answer: D) Deposits. 13. Which of these services do depository institutions offer? A) Financial advice. B) Free money. C) Ability to take more money than you have without penalty. D) None of the above. Show Answer Correct Answer: A) Financial advice. 14. I badgered my dad ..... me a new PlayStation. A) Into buying. B) For buying. C) On buy. D) To buy. Show Answer Correct Answer: A) Into buying. 15. A U.S. government agency that provides insurance on customer's deposits in a bank account. A) Federal Reserve System. B) Credit Union. C) Federal Deposit Insurance Corporation. D) Fractional Reserve Banking. Show Answer Correct Answer: C) Federal Deposit Insurance Corporation. 16. Money creation by the banking system will decrease if A) The velocity of money increases. B) Real interest rates are increase. C) Unemployment is low. D) People keep cash in their mattresses. Show Answer Correct Answer: D) People keep cash in their mattresses. 17. Credit card issued by the bank A) Encourage spending. B) Increase aggregate in the economy. C) Both a and b. D) None of these. Show Answer Correct Answer: C) Both a and b. 18. The delivery of financial services electronically is called: A) E-Business. B) E-Finance. C) E-Commerce. D) None of the above. Show Answer Correct Answer: B) E-Finance. 19. If the inflation rate rises from 3 to 5%, how will it affect the purchasing power of someone typically spending $ 200 on consumer goods? A) Their purchasing power will increase. B) Their purchasing power will remain the same. C) Their purchasing power will decrease. D) Their purchasing power will change unpredictably. Show Answer Correct Answer: C) Their purchasing power will decrease. 20. Financial exchange A) When money can be saved and used at a later date. B) Mechanism a nation uses to provide and manage money for itself. C) Process of transferring money from one individual or organization to another. D) Plastic card that allows the holder to make credit purchases up to an authorized amount. Show Answer Correct Answer: C) Process of transferring money from one individual or organization to another. 21. Divisibility in a barter system means that ..... A) The item must mutually agreed. B) The item can be divided into smaller parts. C) The item has lost its value. D) The item can be easily move to another place. Show Answer Correct Answer: B) The item can be divided into smaller parts. 22. The Fed is focused on two main figures in the economy:the unemployment rate and the rate of ..... A) Taxes. B) Interest rates. C) Inflation. D) Deflation. Show Answer Correct Answer: C) Inflation. 23. The main aim of the commercial bank is: A) Social welfare. B) To earn profits. C) To provide services to people. D) None of these. Show Answer Correct Answer: B) To earn profits. 24. Legal service ratio is equal to, A) CRR/SLR. B) CRR SLR. C) SLR-CLR. D) CRR + SLR. Show Answer Correct Answer: D) CRR + SLR. 25. The central banking system of the United States. A) Federal Deposit Insurance Corporation. B) Federal Reserve System. C) Representative Money. D) Fractional Reserve Banking. Show Answer Correct Answer: B) Federal Reserve System. ← 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 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 10Class 12 Economics (Macro Economics) Chapter 3 Money And Banking Quiz 11 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books