CBSE Class 12 Economics Money and Banking MCQs Set 05

Objective Type Questions (Remembering & Understanding based Questions)

A. Multiple Choice Questions

Question. Money that is issued by the authority of the government is called:
(a) full bodied money
(b) credit money
(c) fiat money
(d) fiduciary money
Answer: (c) fiat money

Question. When money value of money exceeds commodity value of money, it is called:
(a) full bodied money
(b) credit money
(c) fiat money
(d) fiduciary money
Answer: (b) credit money

Question. Money as a standard for deferred payments has led to the emergence of:
(a) commodity market
(b) financial market
(c) both (a) and (b)
(d) None of the options
Answer: (b) financial market

Question. Which of the following is the component of \( M_1 \) measure of money supply?
(a) Term deposit
(b) Demand deposits
(c) Cash reserves of the commercial banks
(d) None of the options
Answer: (b) Demand deposits

Question. Bank money is that money which is:
(a) printed by RBI
(b) printed by the government
(c) generated in the form of credit creation
(d) None of the options
Answer: (c) generated in the form of credit creation

Question. Who supplies money in India?
(a) The RBI
(b) The commercial banks
(c) The government
(d) All of the options
Answer: (d) All of the options

Question. Demand deposits include:
(a) chequeable deposits
(b) deposits which can be withdrawn on demand
(c) fixed deposits for a period of time
(d) both (a) and (b)
Answer: (d) both (a) and (b)

Question. In India, there are four alternative measures of money supply: \( M_1 \), \( M_2 \), \( M_3 \) and \( M_4 \), of these \( M_1 \) =
(a) Currency with people
(b) Currency with people + Demand deposits
(c) Currency with people + Demand deposits + Other deposits with the Reserve Bank
(d) None of the options
Answer: (c) Currency with people + Demand deposits + Other deposits with the Reserve Bank

Question. Supply of money is a:
(a) flow variable
(b) stock variable
(c) real flow
(d) None of the options
Answer: (b) stock variable

Question. In India, coins are issued by:
(a) State Bank of India
(b) Reserve Bank of India
(c) Ministry of Finance
(d) Ministry of Urban Development
Answer: (c) Ministry of Finance

Question. Introduction of money has:
(a) separated the acts of sale and purchase of an individual
(b) combined the acts of sale and purchase of an individual
(c) expanded the scope of sale and purchase
(d) both (a) and (c)
Answer: (d) both (a) and (c)

Question. Which of the following systems is followed by Reserve Bank of India for issuing currency?
(a) Proportionate system
(b) Simple deposit system
(c) Minimum reserve system
(d) Fixed fiduciary issue system
Answer: (c) Minimum reserve system

Question. High powered money is equal to:
(a) money supplied by the RBI only
(b) total supply of money in the economy
(c) notes and coins held by the people
(d) money (notes and coins) held by the people, vault cash of the commercial banks as well as cash reserves of the commercial banks with the RBI
Answer: (d) money (notes and coins) held by the people, vault cash of the commercial banks as well as cash reserves of the commercial banks with the RBI