Money and Banking Class 12 MCQ Quiz – Test Your Understanding!

“The value of all goods and services can be expressed in monetary units.” On the basis of the given statement, identify the function performed by money:

Supply of money refers to the quantity of money

Money supply in India may increase if, ________________(Choose the correct alternative)

1. Reserve Bank of India(RBI) injects more money into circulation
2. Commercial banks expand their credit operation
3. Tax rates are reduced by the Central Government
4. Reserve Bank of India increases the Bank Rate

Credit cards are excluded from all measures of the quantity of money because they are not really a method of payment, but a method of deferring payment. When you buy a meal with a credit card, the bank that issued the card pays the restaurant the amount that is due. At a later date, you will have to repay the bank, perhaps with interest. For this, you might use the money in your demand deposits, and that money is included in the economy's stock of money.

Which of the following can happen with an increased use of credit cards in an economy?

Demand Deposits include______ and _________. (Fill up the blank with the correct alternative)

1. Saving account deposits
2. Fixed deposits
3. Current Account Deposits
4. Post Office Savings

Read the following statements carefully and choose the correct alternatives given below:

• Statement 1 – The value of the money multiplier is determined by the reserve ratio prevailing in the monetary system.
• Statement 2 – The process of credit creation directly relates to the value of the reserve ratio.

Which of the following formulae is INCORRECT?

In a hypothetical economy, Mr. Neeraj has deposited ₹100 in the bank. If it is assumed that there is no other currency circulation in the economy, then the total money supply in the economy will be ________________. (Fill up the blank with the correct alternative)

Which of these do not fall under the purview of the Central Bank?

1. controlling money supply
2. providing loans to citizens
3. issuing currency
4. holding foreign exchange reserves

_________ is an institution that accepts deposits for lending purposes. (Fill up the blank with the correct alternative)

Money can be used to transfer purchasing power from the present to the future. Which specific function of money is this called?

Read the following statements -Assertion (A) and Reason(R). Choose one of the correct alternatives given below:

• Assertion (A): Demand Deposits are considered a convenient mode of payment for the execution of even high-value transactions.
• Reason(R): Demand Deposits are non-withdrawable in nature and cannot be withdrawn against the issue of cheques and other similar instruments of payment.

How does a cut in the Repo rate by RBI affect the demand for goods and services?

Identify which of the following bank does not interact directly with the general public? (Choose the correct alternative)v

Identify which of the following is not a function of the Reserve Bank of India? (Choose the correct alternative)