MCQ of Money and Banking | Macroeconomics | Economics | Class 12 |

MCQ of Money and Banking | Chapter 5 | Macroeconomics | Economics | Class 12 |

Q1. A thing which is commonly accepted as a medium of exchange is called 
a. Money
b. Investment
c. Deposits
d. None of these
Answer : Money

Q2. _____ is a system in which goods are exchanged for goods.
a. Monetary system of exchange
b. Barter system of exchange
c. Charter system of exchange
d. Barter system of exchange
Answer: Barter system of exchange

Q3. C-C economy stands for :
a. Cash for credit exchange economy
b. Cash for cash exchange economy
c. Commodity for commodity exchange economy
d. None of these
Answer: Commodity for commodity exchange economy

Q4. _____ implies that the two individuals are in possession of such goods which they are willing to exchange for the satisfaction of their wants.
a. Fiat money
b. Double coincidence of wants
c. Fiduciary money
d. Credit money
Answer: Double coincidence of wants

Q5. Introduction of money has separated the acts of ____ and ____
a. Sale and purchase
b. Purchase returns and sales returns
c. Cash and credit
d. Fiduciary money and credit money
Answer: Sale and purchase

Q6. Which of the following is a drawback of the barter system of exchange?
a. Absence of both parties
b. Lack of common unit of value
c. Double coincidence of wants
d. Both b and c
Answer: Both b and c

Q7. Fiat money refers to :
a. That money which is issued by order/ authority of the government
b. Money in terms of coins whose commodity value is equal to the money value as and when these are issued
c. That money which is accepted as a medium of exchange because of the trust between the payer and the payee
d. That money of which money value is more than commodity value
Answer: That money which is issued by order/ authority of the government

Q8. Fiduciary money refers to :
a. That money which is issued by order/ authority of the government
b. Money in terms of coins whose commodity value is equal to the money value as and when these are issued
c. That money which is accepted as a medium of exchange because of the trust between the payer and the payee
d. That money of which money value is more than commodity value
Answer: That money which is accepted as a medium of exchange because of the trust between the payer and the payee

Q9. Full bodied money refers to :
a. That money which is issued by order/ authority of the government
b. Money in terms of coins whose commodity value is equal to the money value as and when these are issued
c. That money which is accepted as a medium of exchange because of the trust between the payer and the payee
d. That money of which money value is more than commodity value
Answer: Money in terms of coins whose commodity value is equal to the money value as and when these are issued

Q10. ____ refers to that money wherein money value is more than commodity value
a. Fiat money
b. Fiduciary money
c. Full bodied money
d. Credit money
Answer: Credit money

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Q11. Money is known as full-bodied money when 
a. Money value < commodity value
b. Money value > commodity value
c. Money value = commodity value
d. Money value = 0 = commodity value
Answer: Money value = commodity value

Q12. Money is known as credit money when 
a. Money value < commodity value
b. Money value > commodity value
c. Money value = commodity value
d. Money value = 0 = commodity value
Answer: Money value > commodity value

Q13. Money plays no role in a situation when there is no ____
a. Government
b. Cash policy
c. Exchange
d. Both a and b
Answer: Exchange

Q14. ____ refers to total stock of money held by the people of a country at a point of time.
a. Fiat money
b. Demand of money
c. Supply of money
d. Cash reserve
Answer: Supply of money

Q15. Supply of money doesn’t include stock of money held by the ________ of a country.
a. People
b. Politicians
c. Government
d. Foreign investors
Answer : Government

Q16. The stock of money held by the suppliers of money is ____ treated as a part of the supply of money in the country.
a. Always
b. Compulsory
c. Often
d. Never
Answer: Never

Q17. The government and the banking system of a country are the _____
a. Enemy of money
b. Producers of money
c. Owner of money
d. All of these
Answer: Producers of money

Q18. According to M1 measurement , money supply includes the :
M1 = ___ + ___ + ___
a. C + CD + DD
b. C + DD + OC
c. D + DD + OD
d. C + DD + OD
Answer: C + DD + OD

Q19. In M1 = C + DD + OD , C stands for :
a. Currency
b. Capital
c. Cash
d. Credit
Answer: Currency

Q20. In M1 = C + DD + OD , DD stands for:
a. Demand Draft
b. Demand Deposits
c. Draft Deposit
d. None of these
Answer: Demand Deposits

Q21. Term deposits are for ____ period of time.
a. Long
b. Specific
c. 12 years
d. Unspecified
Answer: Specific

Q22. Who supplies money ?
a. Opposition party
b. Commercial banks
c. RBI
d. Both b and c
Answer: Both b and c

Q23. Money credit by the commercial banks by way of demand deposits is called ____
a. Credit Money
b. Cash pay
c. Bank money
d. Bill payable
Answer: Bank money

Q24. The credit money includes :
a. Cheque and draft
b. Promissory note
c. Exchange note
d. All of these
Answer: All of these

Q25. The near money includes :
a. Bonds
b. Insurance policy
c. Securities
d. All of these
Answer : All of these

Q26. Which of the following is the feature of money?
a. General acceptability
b. Homogeneous unit
c. Liquid asset
d. All of these
Answer : All of these

Q27. In order to encourage investment in the economy, the Central Bank may ________
a. Reduce Cash Reserve Ratio
b. Increase Cash Reserve Ratio
c. Sell Government securities in the open market
d. Increase Bank Rate
Answer: Reduce Cash Reserve Ratio

Q28. Institution that accepts deposits for lending purpose is known as __________
a. Commercial Bank
b. Central Bank
c. Government
d. Public
Answer: Commercial Bank

Q29. Functions of a commercial bank include :
a. Accepting deposits
b. Credit creation
c. Agency function
d. All of these
Answer: All of these

Q30. Which of the following is a narrow measure of the money supply?
a. M2
b. M3
c. M1
d. M4
Answer: M1

Q31. When was the minimum reserve system started in India?
a. 1947
b. 1948
c. 1951
d. 1957
Answer : 1957

Q32. High Powered Money includes:
a. C + DD + OD
b. C + R + OD
c. C + R + TD
d. C + DD + TD
Answer: C + R + OD

Q33. Indian Monetary System is based on ________
a. Paper Standard
b. Metallic Standard
c. Gold Standard
d. Credit Money Standard
Answer: Paper Standard

Q34. _____ is the apex bank of India
a. RBI
b. SBI
c. SBP
d. PNB
Answer: RBI

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