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

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• Reason(R): Demand Deposits are non-withdrawable in nature and cannot be withdrawn against the issue of cheques and other similar instruments of payment.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 agency is responsible for issuing ₹ 1 currency notes in India?

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)

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?

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

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

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 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

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

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)

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

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?

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