{"id":17630,"date":"2022-05-25T18:00:49","date_gmt":"2022-05-25T12:30:49","guid":{"rendered":"https:\/\/mcq-questions.com\/?p=17630"},"modified":"2022-05-17T11:05:26","modified_gmt":"2022-05-17T05:35:26","slug":"mcq-questions-for-class-12-economics-chapter-3-part-a","status":"publish","type":"post","link":"https:\/\/mcq-questions.com\/mcq-questions-for-class-12-economics-chapter-3-part-a\/","title":{"rendered":"MCQ Questions for Class 12 Economics Chapter 3 Money and Banking with Answers"},"content":{"rendered":"

Students who are searching for NCERT MCQ Questions for Class 12 Economics Chapter 3 Money and Banking with Answers Pdf free download are compiled here to get good practice on all fundamentals. Know your preparation level on MCQ Questions for Class 12 Economics with Answers<\/a>. You can also verify your answers from our provided Money and Banking Class 12 MCQs Questions with Answers. So, ace up your preparation with MCQ on Money and Banking Class 12 Objective Questions.<\/p>\n

Money and Banking Class 12 MCQs Questions with Answers<\/h2>\n

Choose the correct alternative.<\/span><\/p>\n

Question 1.
\n_______ is the primary function of money.
\n(a) Transfer of value
\n(b) Medium of exchange
\n(c) Standard of deferred payment
\n(d) Store of value<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: (b) Medium of exchange<\/p>\n<\/details>\n

\n

Question 2.
\nInitial deposits made by the people from their own resources are called
\n(a) time deposits
\n(b) secondary deposits
\n(c) primary deposits
\n(d) term deposits<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: (c) primary deposits<\/p>\n<\/details>\n

\n

Question 3.
\nThe monetary policy generally targets to ensure _______
\n(a) Price stability in the economy
\n(b) employment generation in the country
\n(c) stable foreign relations
\n(d) greater tax collections for the government<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: (a) Price stability in the economy<\/p>\n<\/details>\n

\n

Question 4.
\nIn order to encourage investment in the economy, the Central Bank may ________
\n(a) Reduce Cash Reserve Ratio
\n(b) Increase Cash Reserve Ratio
\n(c) Sell Government securities in the open market
\n(d) Increase Bank Rate<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: (a) Reduce Cash Reserve Ratio<\/p>\n<\/details>\n

\n

Question 5.
\nBanks are able to create credit many times more than initial deposits through
\n(a) secondary deposits
\n(b) providing overdraft facilities
\n(c) accepting deposits
\n(d) advancing loans<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: (a) secondary deposits<\/p>\n<\/details>\n

\n

Question 6.
\nThe creation is called credit creation.
\n(a) time deposits
\n(b) primary deposits
\n(c) secondary deposits
\n(d) None of these<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: (c) secondary deposits<\/p>\n<\/details>\n

\n

Question 7.
\nThe ratio of total deposit that a commercial bank has to keep with the Reserve Bank of India is called
\n(a) Statutory Liquidity Ratio
\n(b) Deposit Ratio
\n(c) Cash Reserve Ratio
\n(d) Legal Reserve Ratio<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: (c) Cash Reserve Ratio<\/p>\n<\/details>\n

\n

Question 8.
\nCredit creation by the commercial bank is determined by
\n(a) Cash Reserve Ratio
\n(b) Statutory Liquidity Ratio
\n(c) Initial Deposits
\n(d) all of the above<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: (d) all of the above<\/p>\n<\/details>\n

\n

Question 9.
\n______ is the rate of interest charged by the central bank on loans given to the commercial bank.
\n(a) Bank Rate
\n(b) Cash Reserve Ratio
\n(c) Statutory Liquidity Ratio
\n(d) Reverse Repo Rate<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: (a) Bank Rate<\/p>\n<\/details>\n

\n

Question 10.
\n_______ is the main function of Central Bank.
\n(a) Notes issue
\n(b) Credit creation
\n(c) Accepting deposits from the public
\n(d) Advancing loans to public<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: (a) Notes issue<\/p>\n<\/details>\n

\n

Fill in the blanks with the correct word.<\/span><\/p>\n

Question 11.
\nThe exchange of goods for goods is called _______ exchange.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: barter<\/p>\n<\/details>\n

\n

Question 12.
\nCheque, draft, etc. are _______ money.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: credit<\/p>\n<\/details>\n

\n

Question 13.
\nBond, insurance, securities, etc. are examples of _______ money.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: near<\/p>\n<\/details>\n

\n

Question 14.
\nIndian monetary system is based on ______ standard.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: paper currency<\/p>\n<\/details>\n

\n

Question 15.
\nSupply of money is a _________ concept.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: stock<\/p>\n<\/details>\n

\n

Question 16.
\n______ is the Central Bank of India.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: RBI<\/p>\n<\/details>\n

\n

Question 17.
\nCommercial banks are an important source of ________ in the economy.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: money supply<\/p>\n<\/details>\n

\n

Question 18.
\nA ________ bank is a financial institution which accepts deposits from the people and gives loans for the purpose of consumption and investment.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: commercial<\/p>\n<\/details>\n

\n

Question 19.
\nValue of money multiplier _______ with an increase in Cash Reserve Ratio.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: decreases<\/p>\n<\/details>\n

\n

Question 20.
\nQuantitative instruments are also known as ______ instruments.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: general<\/p>\n<\/details>\n

\n

Question 21.
\nQualitative instruments are also known as _______ instruments.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: selective<\/p>\n<\/details>\n

\n

Question 22.
\nThe design and control of India\u2019s monetary policy is the main responsibility of the ________<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: central bank<\/p>\n<\/details>\n

\n

Question 23.
\nTwo essential functions of a bank are accepting deposit and _________<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: advancing loan<\/p>\n<\/details>\n

\n

Question 24.
\n_________ means buying and selling of government securities in the market.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: Open market operations<\/p>\n<\/details>\n

\n

Question 25.
\nBank rate is the ________ instrument of Central Bank.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: quantitative<\/p>\n<\/details>\n

\n

State whether the following statements are true or false. Give reasons.<\/span><\/p>\n

Question 26.
\nMoney as a medium of exchange solves the problem of lack of double coincidence of want.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: True
\nGoods can be sold for money to whoever wants it and from whoever wants to sell it.<\/p>\n<\/details>\n

\n

Question 27.
\nLegal tender money has a legal sanction behind it by the government.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: True
\nNo one can refuse to accept it as non-acceptance is an offense.<\/p>\n<\/details>\n

\n

Question 28.
\nM1 includes saving deposits of post office savings banks.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: False
\nSaving deposits with the post office are a part of M2.<\/p>\n<\/details>\n

\n

Question 29.
\nThe money supply is a flow variable.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: False
\nThe money supply is a stock variable as it is measured at a particular point in time.<\/p>\n<\/details>\n

\n

Question 30.
\nCommercial Banks play no role in the stock of money supply in the economy.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: False
\nCommercial banks add to the stock of money supply by creating credit.<\/p>\n<\/details>\n

\n

Question 31.
\nCredit money is money received as credit from banks.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: False
\nCredit money is money whose face value is more than its intrinsic (commodity) value.<\/p>\n<\/details>\n

\n

Question 32.
\nCommercial banks do not create money.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: False
\nCommercial banks add to the money supply by creating demand deposits.<\/p>\n<\/details>\n

\n

Question 33.
\nBank rate is a qualitative method of credit control.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: False
\nBank rate is a quantitative method of credit control as it aims at influencing the volume of credit.<\/p>\n<\/details>\n

\n

Question 34.
\nThere is an inverse relation between LRR and the size of the money multiplier.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: True
\nHigher the LRR, the lower is the money multiplier and vice-versa.<\/p>\n<\/details>\n

\n

Match the alternatives given in Column II with respective terms in Column I.<\/span><\/p>\n

Question 35.<\/p>\n\n\n\n\n\n\n\n\n\n
Column I<\/td>\nColumn II<\/td>\n<\/tr>\n
(i) M1 + Deposit with post office saving bank account<\/td>\n(a) Open Market Operations<\/td>\n<\/tr>\n
(ii) M1 + Time deposits with the bank<\/td>\n(b) Advancing Loans<\/td>\n<\/tr>\n
(iii) Quantitative Instrument of monetary policy<\/td>\n(c) Lender of the Last Resort<\/td>\n<\/tr>\n
(iv) Qualitative Instrument of monetary policy<\/td>\n(d) M2<\/td>\n<\/tr>\n
(v) Function of commercial bank<\/td>\n(e) M3<\/td>\n<\/tr>\n
(vi) Function of the central bank<\/td>\n(f) Margin Requirement<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
\nAnswer<\/span><\/summary>\n

Answer:<\/p>\n\n\n\n\n\n\n\n\n\n
Column I<\/td>\nColumn II<\/td>\n<\/tr>\n
(i) M1 + Deposit with post office saving bank account<\/td>\n(d) M2<\/td>\n<\/tr>\n
(ii) M1 + Time deposits with bank<\/td>\n(e) M3<\/td>\n<\/tr>\n
(iii) Quantitative Instrument of monetary policy<\/td>\n(a) Open Market Operations<\/td>\n<\/tr>\n
(iv) Qualitative Instrument of monetary policy<\/td>\n(f) Margin Requirement<\/td>\n<\/tr>\n
(v) Function of commercial bank<\/td>\n(b) Advancing Loans<\/td>\n<\/tr>\n
(vi) Function of the central bank<\/td>\n(c) Lender of the Last Resort<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/details>\n
\n

Use the above-provided NCERT MCQ Questions for Class 12 Economics Chapter 3 Money and Banking with Answers Pdf free download and get a good grip on the fundamentals. Need any support from our end during the preparation of CBSE Class 12 Economics Money and Banking MCQs Multiple Choice Questions with Answers then leave your comments below. We’ll revert back to you soon.<\/p>\n","protected":false},"excerpt":{"rendered":"

Students who are searching for NCERT MCQ Questions for Class 12 Economics Chapter 3 Money and Banking with Answers Pdf free download are compiled here to get good practice on all fundamentals. Know your preparation level on MCQ Questions for Class 12 Economics with Answers. You can also verify your answers from our provided Money …<\/p>\n

MCQ Questions for Class 12 Economics Chapter 3 Money and Banking with Answers<\/span> Read More »<\/a><\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"default","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"default","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","spay_email":""},"categories":[35],"tags":[],"yoast_head":"\nMCQ Questions for Class 12 Economics Chapter 3 Money and Banking with Answers - MCQ Questions<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/mcq-questions.com\/mcq-questions-for-class-12-economics-chapter-3-part-a\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"MCQ Questions for Class 12 Economics Chapter 3 Money and Banking with Answers - MCQ Questions\" \/>\n<meta property=\"og:description\" content=\"Students who are searching for NCERT MCQ Questions for Class 12 Economics Chapter 3 Money and Banking with Answers Pdf free download are compiled here to get good practice on all fundamentals. 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