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

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.

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• Reason(R): Demand Deposits are non-withdrawable in nature and cannot be withdrawn against the issue of cheques and other similar instruments of payment.

Which of the following formulae is INCORRECT?

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.

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)

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

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)

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.

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

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

Which of the following agency is responsible for issuing ₹ 1 currency notes in India?

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?

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

“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:

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