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

Supply of money refers to the quantity of money

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 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.

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

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 formulae is INCORRECT?

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.

“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:

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

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)

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 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

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

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

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