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

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

Which of the following formulae is INCORRECT?

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

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)

_________ is an institution that accepts deposits for lending purposes. (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?

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• Reason(R): Demand Deposits are non-withdrawable in nature and cannot be withdrawn against the issue of cheques and other similar instruments of payment.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

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.

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

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?

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.

“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:

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