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

Ms. Sakshi, an economics teacher, was explaining the concept of a ‘minimum percentage of the total deposits to be kept by any commercial bank with the Central Bank of the country, as per norms and statute prevailing in the country’. From the following, choose the correct alternative which specifies the concept explained by her.

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?

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

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)

Find the missing figures and choose the correct alternative:

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.

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

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

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

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

The Reserve Bank of India can increase the money supply in the economy by ____________. (Choose the correct alternative)

Which of the following formulae is INCORRECT?

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

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

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?