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

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Are you ready to test your knowledge of Money and Banking from the Class 12 Economics syllabus? This chapter explains the functions of money, the role of the central bank, and the credit creation process in an economy. Understanding these concepts is crucial for CBSE board exams and competitive exams.

About the Quiz

Chapter Name: Money and Banking
Subject: Economics
Book: NCERT Class 12 Economics
Question Type: Multiple Choice Questions (MCQs)
Leaderboard: Yes (Check Your Rank!)

Why Take This Quiz?

✔ Helps in CBSE board exam revision
✔ Strengthens understanding of monetary policy and banking system
✔ Enhances knowledge of RBI’s role in regulating money supply
✔ Track your progress with the leaderboard

Click Below to Start the Quiz!

Chapter 2 Money and Banking

1 / 15

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

To issue coins and one rupee note

To act as the banker to the Government of India.

To act as the financial advisor to the Government of India

To act as the custodian of the gold reserve of India

2 / 15

Suppose in an economy, the initial deposits of ₹ 400 crores lead to the creation of total deposits worth ₹ 4000 crores.

Under the given situation the value of reserve requirements would be________ (Fill up the blank with the correct alternative)

0.4

0.1

0.01

3 / 15

Which of the following is not a Quantitative Method of credit control?

Open Market Operation

Variable Reserve Ratio

Margin Requirements

Bank Rate Policy

4 / 15

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.

d. Statement 2 is true and Statement 1 is false

c. Statement 1 is true and Statement 2 is false

b. Both statements are false.

a. Both statements are true.

5 / 15

“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:

Means of a standard of deferred payments

Medium of exchange

Store of Value

Unit of account

6 / 15

Supply of money refers to……................. (Choose the correct alternative)

currency held in the government account

currency held by the public

currency held by Reserve Bank of India (RBI)

currency held by the public and demand deposits with commercial banks

7 / 15

A bank ‘run’ occurs when a large number of customers of a bank withdraw their deposits simultaneously. This can cause a bank to become insolvent if it cannot pay back all the depositors. Which of the following facts about a bank make a bank run possible?

Banks have to pay a specific amount to the person in whose name a cheque has been issued.

Banks charge a higher interest rate on loans than what they offer on deposits.

Banks pay an amount to account holders as interest on deposits.

Banks hold only about 15% of their deposits as cash. The rest of the deposits are given out as loans.

8 / 15

What happens to the money multiplier when the Cash Reserve Ratio (CRR) increases?

It becomes zero

It increases

It decreases

It remains unchanged

9 / 15

Read the following statements carefully and choose the correct alternative from the following:

Statement 1 – Demonetization was the step taken by the Government of India in order to tackle the problems of corruption, black money, terrorism, and circulation of fake currency in the Indian Economy.

Statement 2 – Demonetization has ensured improved tax compliance in India over the period of time.

Both statements are true.

Statement 1 is true and Statement 2 is false

Statement 2 is true and Statement 1 is false

Both statements are false.

10 / 15

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.

Assertion (A) is false but Reason (R) is true.

Assertion (A) is true but Reason (R) is false.

Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

11 / 15

Which of the following formulae is INCORRECT?

M1 = currency + net demand deposits

M2 = M1 + savings with post office savings banks

M3 = M2 + net time deposits of commercial banks

M4 = M3 + total deposits with post office savings banks

12 / 15

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

It reduces demand to zero

It has no effect on demand

It increases the demand

It decreases the demand

13 / 15

Which of the following statements about the money supply is correct?

M1 is a narrow measure, and M3 is a broader measure of money supply.

Money supply is measured over a period of time.

M1 is a broader measure, while M3 is a narrower measure of money supply.

Currency notes and coins are not part of the money supply.

14 / 15

If the legal reserve requirement (LRR) is 20%, what is the value of the money multiplier?

15 / 15

Supply of money refers to the quantity of money

As on 31st March

During a fiscal year

As on any point of time

During any specified period of time

Your score is

The average score is 68%

Leaderboard – Top Scorers

Check the top scorers here!

Pos.	Name	Score	Duration	Points
1	rimon	100 %	1 minutes 14 seconds	15
2	sarah	100 %	1 minutes 52 seconds	15
3	vj	93 %	4 minutes 3 seconds	14
4	Bhawna	93 %	7 minutes 43 seconds	14
5	yup	87 %	2 minutes 28 seconds	13
6	sneha	87 %	3 minutes 13 seconds	13
7	Roni	87 %	4 minutes 53 seconds	13
8	Suraj	87 %	5 minutes 34 seconds	13
9	Tushar kumar	80 %	3 minutes 41 seconds	12
10	AP	80 %	4 minutes 48 seconds	12
11	raj	80 %	8 minutes 31 seconds	12
12	jsks	73 %	5 minutes 43 seconds	11
13	anshika	73 %	8 minutes 42 seconds	11
14	cookie	67 %	12 minutes 37 seconds	10
15	Akku	60 %	5 minutes 10 seconds	9
16	abs	60 %	7 minutes 31 seconds	9
17	Mohit	53 %	4 minutes 21 seconds	8
18	preethi	53 %	8 minutes 46 seconds	8
19	Tushar kumar	53 %	18 minutes 11 seconds	8
20	pakhi	47 %	3 minutes 2 seconds	7
21	Xyz	47 %	4 minutes 35 seconds	7
22	ss	47 %	9 minutes 44 seconds	7
23	sarah	47 %	10 minutes 5 seconds	7
24	pakhi	27 %	2 minutes 53 seconds	4
25	Elsa	20 %	1 minutes 47 seconds	3

Key Topics Covered in the Quiz

✔ Functions of Money – Medium of exchange, Store of value, Unit of account
✔ Money Supply & Its Measures (M1, M2, M3, M4)
✔ Functions of Commercial Banks – Credit creation process
✔ Role of the Reserve Bank of India (RBI) – Monetary policy tools (CRR, SLR, Repo Rate, Reverse Repo Rate)
✔ Instruments of Credit Control – Quantitative & Qualitative methods

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Also See: Class 12 English: Application for JOB with Biodata

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

About the Quiz

Why Take This Quiz?

Leaderboard – Top Scorers

Key Topics Covered in the Quiz

More Class 12 Economics MCQ Quizzes

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About the Quiz

Why Take This Quiz?

Leaderboard – Top Scorers

Key Topics Covered in the Quiz

More Class 12 Economics MCQ Quizzes

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