Get ready viably for the test-taking the assistance of the Class 12 Macroeconomics MCQ Questions of Money and Banking with Answers liberated from cost from here. Students additionally can rehearse Multiple Choice Questions of Money and Banking. Each question has four alternatives followed by the right answer. MCQ Questions get ready to assist students with understanding the idea well overall. 

Banks are coordinated organizations that acknowledge stores from investors and advance credits to borrowers. Then again, cash is the mode of trade that permits the exchange of responsibility from one individual to the next. 

Students additionally can step through a free examination of the Multiple Choice Questions of Class 12 Economics. Each question has four alternatives followed by the right answer. This might help you to understand and check your insight about the chapters.

1. What is the defect of the barter system?

(A) Lack of double coincidence of wants
(B) Difficulty in the measurement of value
(C) Difficulty in store of value
(D) All of these

2. Which of the following is the credit money?

(A) Cheque and draft
(B) Promissory note
(C) Exchange note
(D) All of these

3. Which among the following is the near money?

(A) Bonds
(B) Insurance policy
(C) Securities
(D) All of these

4. Which of the following is the feature of money?

(A) General acceptability
(B) Homogeneous unit
(C) Liquid asset
(D) All of these

5. 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

6. Institution that accepts deposits for lending purpose is known as __________

(A) Commercial Bank
(B) Central Bank
(C) Government
(D) Public

7. Which of the following makes a financial institution a bank?

a) Accepting borrowings
b) Lending
c) Accepting demand deposits
d) Accepting time deposits

8. Creation of money by commercial banks refers to:

a) Creation of bank deposits
b) Issuing currency
c) Both a) and b)
d) Neither a) nor b)

9. How much money are banks able to create is determined by:-

a) Initial deposits
b) SLR
c) CRR
d) All of these

10. The Value of Money Multiplier equal:-

a) 1/SLR
b) 1/CRR
c) 1/(SLR + CRR)
d) None of these

11. Given CRR = 4% and SLR = 16%, the value of money multiplier is:-

a) 25
b) 6.25
c) 5
d) 8.33

12. When the central bank sells securities in the market, the credit creation capacity of the commercial banks is likely to:-

a) Rise
b) Fall
c) May rise or may fall
d) No effect

13. Supply of money refers to ___________

(a) currency held by the public 
(b) currency held by Reserve Bank of India (RBI) 
(c) currency held by the public and demand deposits with commercial banks 
(d) currency held in the government 

14. _________ is the main source of money supply in an economy 

(a) Central Bank
(b) Commercial banks 
(c) Both (a) and (b)   
(d) Government 

15. Demand deposit include:

(a) saving account deposit and fixed deposit 
(b) saving account deposit and current account deposits 
(c) current account deposit and fixed deposits 
(d) all type of deposits

16. Who regulate money supply in India 

(a) Government of India 
(b) Reserve Bank of India 
(c) Commercial banks
(d) Planning Commission 

17. Which of the following statements is true 

(a) M1 is the most liquid measure of money supply 
(b) M2 is the most liquid measure of money supply 
(c) M3 is the most liquid measure of money supply 
(d) All the statement are true 

18. Which of the following statements is/are correct ?

(a) ₹1 note is issued by the RBI 
(b) Coins are issued by the government of India 
(c) Both statements are true 
(d) Both statements are false

19.The system, wherein trade can be carried out through the exchange of goods and services is called the: –

a) Barter system
b) Monetary system
c) Goods system
d) None of the above

20. Aman, a vegetable seller, exchanged 4 apples with Rahul, a cloth dealer for 1 meter of cloth. This is an example of: –

a) Barter system
b) Monetary system
c) Goods system
d) None of the above

21. Which of the following, solves the problem of “Double coincidence of wants”?

a) Goods
b) Banks
c) Money
d) All of the above

22. The problem of “Double coincidence of wants” is solved by which of the following: –

a) Goods
b) Money
c) Banks
d) All of the above

23. Double coincidence of wants refers to the ____ fulfillment of _____ wants of the buyer and seller: –

a) Simultaneous; Mutual –
b) Sequential; Mutual
c) Mutual; simultaneous
d) Mutual; Sequential

24. A owns a camel that he wants to trade for a goat. However, there are no sellers of goats in the market. This is an example of: –

a) Lack of Double coincidence of wants
b) Existence of Double coincidence of wants
c) Simultaneous coincidence of wants
d) Sequential coincidence of wants

25. Which of the following is a function of money?

a) Medium of exchange
b) Store of value
c) Measure of vale
d) All of the above

Answer:

1. Answer (D) All of these

2. Answer (D) All of these

3. Answer (D) All of these

4. Answer (D) All of these

5. Answer (A) Reduce Cash Reserve Ratio

6. Answer (A) Commercial Bank

7. Answer c) Accepting demand deposits

Explanation: It is only the bank which accepts the demand deposits. The Depositor is free to withdraw money out of it on demand through checque, ATM and online banking. The savings and current account are the examples of demand deposits.

8. Answer a) Creation of bank deposits

Explanation:  The commercial bank provides loan out of the bank deposits it receive from depositors. When bank releases a loan it does not give cash. A demand deposit account is opened with the name of borrower and the loan amount is deposited into it. The borrower is free to make payment from this demand deposits through cheque, ATM, and online Banking.

9. Answer d) All of these

Explanation:  How much money banks are able to create depends upon initial deposits and LRR. LRR consists of SLR and CRR.

10. Answer c) 1/(SLR + CRR)

Explanation:  The Value of Money Multiplier equal to 1/LRR. LRR consists of SLR + CRR.

11. Answer c) 5

Explanation: Money Multiplier equals to 1/LRR. LRR equalt to SLR + CRR. Hence Money Multiplier equals to 1/20%. After solving it comes to 5.

12. Answer b) Fall

Explanation: When central bank sells securities in the market. The general public purchase such securities because of trustworthy investment. They make payment through cheque from their bank account in commercial bank. The Amount in bank deposits fall. It further reduces the credit creation capacity of the commercial bank.

13. Answer (c) currency held by the public and demand deposits with commercial banks 

14. Answer (c) Both (a) and (b)   

15. Answer (b) saving account deposit and current account deposits 

Explanation: Demand deposits includes saving account deposits and current account deposits because these are the liquid and and be used immediately to purchase goods and services 

16. Answer (b) Reserve Bank of India 

Explanation: RBI is the top Monetary Authority in the country who print currency and regulations money supply through the monetary policy.

17. Answer (a) M1 is the most liquid measure of money supply

Explanation: M1 includes all forms of assets that are easily exchangeable as payment for goods and services. It consists of coin and currency in circulation and demand deposits as payment for goods and services.

18. Answer (b) Coins are issued by the government of India 

Explanation: Coins in India are issued by the government of India. It is the sole responsibility of the Government of India to mint coins of all denominations.

19. Answer (a) Barter system

20. Answer (a) Barter system

21. Answer (c) Money

22. Answer (b) Money

23. Answer (a) Simultaneous; Mutual –

24. Answer (a) Lack of Double coincidence of wants

25. Answer (d) All of the above