CBSE Class 12 Economics Money and Banking MCQs Set C

Question: Which one of the following is a quantitative tool of credit control used by RBI?
a) Marginal requirements
b) Direct action
c) Moral suasion
d) Bank rate policy
Answer: d

Question: The creation of ________ is called credit creation.
a) Secondary deposits
b) None of these
c) Primary deposits
d) Time deposits
Answer: a

Question: Who regulates money supply in India?
a) NITI Aayog
b) Government of India
c) Planning Commission
d) Reserve Bank of India
Answer: d

Question: Which of the following is not the function of the Central Bank?
a) Lending to government
b) Banking facilities to public
c) Lending to commercial banks
d) Banking facilities to government
Answer: b

Question: The ratio of total deposits that a commercial bank has to keep with Reserve Bank of India is called
a) Deposit ratio
b) Statutory liquidity ratio
c) Legal reserve ratio
d) Cash reserve ratio
Answer: d

Question: Measuring the value of goods and services refers to which of the following functions of money?
a) Medium of exchange
b) Standard of deferred payments
c) Store of value
d) Unit of value
Answer: d

Question: Which Bank is authorised to issue currency?
a) Central Bank
b) Cooperative Bank
c) Scheduled Bank
d) Commercial Bank
Answer: a

Question: Money supply includes _________
a) Only time deposits in banks
b) Only demand deposits in banks
c) All deposits in banks
d) Currency with the banks
Answer: b

Question: Money supply is a ________ concept.
a) Stock
b) Flow
c) Variable
d) All of these
Answer: a

Question: The rate at which commercial banks borrow from Central Bank is called ________.
a) Bank rate
b) Reverse repo rate
c) Cash reserve ratio
d) Legal reserve ratio
Answer: a

Question: M1 of money supply does not include
a) Other deposits in RBI
b) Currency held by public
c) Demand deposits with the commercial banks
d) Net time deposits with banks
Answer: d

Question: The short-term borrowing rate at which Reserve Bank of India borrows money from Commercial Banks is called ________.
a) Bank rate
b) Reverse repo rate
c) Discount rate
d) Repo rate
Answer: b

Question: Which of the following functions of money simplifies the process of borrowing and lending?
a) Unit of value
b) Standard of deferred payments
c) Store of value
d) Medium of exchange
Answer: b

Question: Which of the following is not included in money supply?
a) Saving deposits with post office banks
b) Inter-bank deposits
c) Currency held by public
d) Demand deposits in banks
Answer: b

Question: What would be the total money creation in the economy if initial fresh deposits with banks = Rs 50,000 and LRR = 20%?
a) Rs 10,00,000
b) Rs 5,00,000
c) Rs 2,50,000
d) Rs 12,00,000
Answer: c

Question: Supply of money refers to quantity of money –
a) As on any point of time
b) During any specified period of time
c) As on 31st March
d) During a fiscal year
Answer: a

Question: ________ refers to the proportion of total deposits which Banks are required to keep in the form of reserves with themselves.
a) Statutory liquidity ratio
b) Bank rate
c) Cash deposit ratio
d) Reserve deposit ratio
Answer: d

Question: ________ is the main source of money supply in an economy.
a) Government
b) Both (a) and (b)
c) Commercial Banks
d) Central Bank
Answer: b

Question: Which one of the following is a qualitative measure of credit control by the Central Bank?
a) Marginal requirements
b) Cash reserve ratio
c) Bank rate
d) Open market operations
Answer: a

Question: Central bank is an apex bank of the country that:
a) Controls the entire banking system of the country
b) Issues currency
c) Acts as a banker to the government
d) All of these
Answer: d

Question: Barter system refers to that system wherein:
a) Goods are exchanged for goods
b) Goods are not exchanged at all
c) Goods are exchanged for domestic currency
d) Goods are exchanged for foreign currency
Answer: a

Question: Full-bodied money is that money whose money value and commodity value are:
a) Different
b) None of these
c) Proportionately equal
d) Equal
Answer: d

Question: Which of the following is not the instrument of credit control?
a) Repo rate
b) Managed floating
c) CRR
d) SLR
Answer: b

Question: Credit control means:
a) Contraction of credit only
b) Extension and contraction of money supply
c) None of these
d) Extension of credit only
Answer: b

Question: High powered money includes –
a) Demand deposits and saving deposits
b) Currency held by public and cash reserves with banks
c) Currency and demand deposits
d) None of these
Answer: b

Question: Limitation of barter system of exchange:
a) Lack of store of value
b) Lack of unit of value
c) Lack of standard of deferred payments
d) All of these
Answer: d

Question: Which of the following leads to increase in AD?
a) Increase in government expenditure
b) Fall in imports
c) All of these
d) Increase in investment expenditure
Answer: c

Question: The minimum percentage of a bank’s total deposits which is required to be kept with the RBI is called:
a) Reverse Repo Rate
b) SLR
c) CRR
d) Repo rate
Answer: c

Question: _________ are called legal tenders.
a) Inter-bank deposits
b) Currency notes and coins
c) Time deposits
d) Demand deposits
Answer: b

Question: Supply of money refers to quantity of money –
a) During a fiscal year
b) As on any point of time
c) As on 31st March
d) During any specified period of time
Answer: b

Question: Money supply includes _________.
a) Only demand deposits in banks
b) Only time deposits in banks
c) Currency with the banks
d) All deposits in bank
Answer: a

Question: The creation of ________ is called credit creation.
a) Time deposits
b) Secondary deposits
c) None of these
d) Primary deposits
Answer: b

Question: _______ is the primary function of money.
a) Store of value
b) Transfer of value
c) Standard of deferred payment
d) Medium of exchange
Answer: d

Question: A commercial bank is a bank that:
a) Creates credit
b) Gives long-term loans
c) All of these
d) Gives short-term loans
Answer: c

Question: Which of the following is the component of M1 measure of money supply?
a) Treasury bill
b) None of these
c) Bill of exchange
d) Time deposit
Answer: b

Question: Which of the following is not concerned with banking organization?
a) Fiscal deficit
b) Bank rate
c) Cash reserve ratio
d) Credit creation
Answer: a

Question: ________ is the main source of money supply in an economy.
a) Central Bank
b) Commercial Banks
c) Government
d) Both a and b
Answer: d

Question: _______ is the primary function of money.
a) Store of value
b) Medium of exchange
c) Standard of deferred payment
d) Transfer of value
Answer: b