MCQs For NCERT Class 12 Economics Chapter 9 National Money and Banking

Please refer to the MCQ Questions for Class 12 Economics Chapter 9 National Money and Banking with Answers. The following National Money and Banking Class 12 Economics MCQ Questions have been designed based on the latest syllabus and examination pattern for Class 12. Our experts have designed MCQ Questions for Class 12 Economics with Answers for all chapters in your NCERT Class 12 Economics book.

National Money and Banking Class 12 MCQ Questions with Answers

See below National Money and Banking Class 12 Economics MCQ Questions, solve the questions and compare your answers with the solutions provided below.

Question. A system in which commodities are exchanged for commodities is called:
(a) barter system of exchange
(b) monetary system of exchange
(c) commodity for commodity exchange economy
(d) both (a) and (c)

Question. Which of the following is the basic characteristic of the barter system of exchange?
(a) Medium of exchange
(b) Double coincidence of wants
(c) Store of value
(d) Both (a) and (c)

Question. Those deposits against which money cannot be withdrawn any time are called:     
(a) fixed deposits
(b) term deposits
(c) non-chequeable deposits
(d) all of these

Question. Commercial banks advance loans:       
(a) only to the extent of their term deposits
(b) only to the extent of their gold reserves
(c) only to the extent of their demand deposits
(d) multiple times of their required cash reserves with the RBI

Question. Primary deposits are:   
(a) cash deposits with the commercial banks
(b) gold reserves with the commercial banks
(c) reserves of foreign exchange
(d) none of these

Question. C-C economy refers to that system where:
(a) goods are exchanged for goods
(b) goods are exchanged for domestic currency
(c) goods are exchanged for foreign currency
(d) goods are not exchanged at all

Question. A system in which commodities are exchanged for commodities is called:
(a) barter system of exchange
(b) monetary system of exchange
(c) commodity for commodity exchange economy
(d) both (a) and (c)

Question. Which of the following is the basic characteristic of the barter system of exchange?
(a) Medium of exchange
(b) Double coincidence of wants
(c) Store of value
(d) Both (a) and (c)

Question. C-C economy refers to that system where:
(a) gooAds are exchanged for goods
(b) goods are exchanged for domestic currency
(c) goods are exchanged for foreign currency
(d) goods are not exchanged at all

Question. Electronic transfer of money in terms of credit/debit entries of the account-holders in the banks is called:
(a) e-marketing
(b) money value > commodity value
(c) e-money
(d) none of these

Question. In case of credit money:
(b) e-business
(d) e-banking
(a) money value = commodity value
(c) money value < commodity value

Question. e-money functions as a medium of exchange by way of:
(a) transfer of value from one account to the other
(b) cash payments
(c) payments through cheques
(d) all of these

Question . Money is a: 
(a) static factor
(c) contingent factor
(b) dynamic factor
(d) all of these

Question. Which of the following is correct?   
(a) Supply of money is a stock concept
(b) Supply of money does not include stock of money held by the government
(c) Supply of money does not include stock of money held by the banking system of a country

(d) All of these

Question. Which of the following is not a component of M1 measurement of money supply?   
(a) Demand deposits
(b) Currency
(c) Other deposits
(d) Term deposits

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

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

Question. Term deposits are those:   
(a) against which no cheque can be issued
(b) against which no interest is paid to the depositors
(c) which are fixed deposits
(d) both (a) and (c)

Question. A commercial bank is that financial institution:     
(a) which only accepts deposits from the people
(b) which only offers loans to the people
(c) which accepts deposits from the people as well as offers loans to them
(d) which only deals in foreign exchange transactions

Question. For the commercial banks, the source of profit is:   
(a) unclaimed deposits
(b) grants by the government
(c) spread: the difference between the interest they charge and the interest they pay
(d) none of these

Question. Money which is accepted as a medium of exchange because of the trust between the payer and the payee is called:
(a) full bodied money
(b) credit money
(c) fiat money
(d) fiduciary money

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

Question. Money value is equal to commodity value in case of:
(a) fiat money
(b) full bodied money
(c) fiduciary money
(d) credit money

Question. Which is associated with reforms in the banking sector ?
(a) Year 1991
(b) Narsimham Committee
(c) Y.V. Reddy Committee
(d) Only (a) and (b)

Question. Which one is the Bank of the Public ?
(a) Commercial Bank
(b) Central Bank
(c) Both (a) and (b)
(d) None of the above

Question. The ratio of total deposit that a commercial bank has to keep with the Reserve Bank of India is called
(a) Statutory Liquidity Ratio
(b) Deposit Ratio
(c) Cash Reserve Ratio
(d) Legal Reserve Ratio

Question. Deposits accepted by the Commercial Banks:
(a) Current Deposits
(b) Saving Deposits
(c) Time Deposits
(d) All of these

Question. The monetary policy generally targets to ensure _______
(a) Price stability in the economy
(b) employment generation in the country
(c) stable foreign relations
(d) greater tax collections for the government

Question. Capacities of RBI reaches to;
(a) Hold of foreign exchange reserves
(b) Holding foreign trade
(c) Holding Country’s economy
(d) All of the above

Question. Which of the following is not a problem of barter system of exchange?
(a) Store of value
(b) Double Coincidence of wants
(c) Unit of Account
(d) Unemployment

Question. Repo rate is the rate at which:-
(a) Commercial Banks purchase government securities from the central bank
(b) Commercial banks can take loans from the central bank
(c) Commercial banks can keep their deposits with the central bank
(d) Short term loans are given by commercial banks

Question. Credit Creation by commercial banks is determined by:-
(a) Cash Reserve Ratio (CRR)
(b) Statutory Liquidity Ratio (SLR)
(c) Initial deposits
(d) All of the above

Question. What happens where there is an increase in the margin requirements.
(a) It reduces the borrowing capacity and money supply
(b) Encourages people to borrow more and money supply rise
(c) No change in money supply
(d) None of these

Question. _______refers to that portion of total deposits of a commercial bank which it has to keep with itself in the form of liquid assets.
(a) Cash Reserve Ratio
(b) Statutory Liquidity Ratio
(c) Bank Rate
(d) Repo Rate

Question. Giving permission to withdraw money by an amount more than deposited to is known as _________
(a) Advance
(b) Overdraft
(c) Loan
(d) None of these

Question. The functions of money include:
(a) Value determination
(b) Store of value
(c) Means of exchange
(d) All of these

Question. Which committee was constituted for suggesting consumer service improvements in banks?
(a) Raja Chelliah Committee
(b) Goiporia Committee
(c) Verma Committee
(d) Chakrabarty Committee

Question. The full form of ATM is:
(a) Automated Teller Machine 
(b) All Time Money
(c) Any Time Money
(d) Both (a) and (b)

Question. If initial deposits are Rs. 500 and LRR is 10%, what is money multiplier?
(a) 10
(b) 20
(c) 2 
(d) 1

Question. RBI uses which of the following tools to maintain the flow of money in domestic economy
(a) Quantitative measures
(b) Qualitative measures
(c) Fiscal measure
(d) Both (a) and (b)

Question. Which one is true?
(a) Bank rate is a rate at which Central Bank is ready to give credit to commercial banks
(b) Bank rate and interest rates are different
(c) Bank rate is the discount rate of the Central Bank
(d) All the above

Question. What is the Central Bank of India:
(a) Commercial Banks
(b) Central Bank
(c) Private Bank
(d) None of these

Question. 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

Question. . Read the following statement given below and choose the correct alternative
Statement 1- Bank is a financial institution which performs only one function i.e. To grant loans and advances
Statement 2- Bank is only commercial in nature.
(a) Both are correct
(b) Both are wrong
(c) Only 1 is correct
(d) Only 2 is correct

Question. Assertion (A): Money supply includes the least liquid measure of the Money supply.
Reason (R): Money supply includes the currency with public outside banks and demand deposits with banks.
Alternatives:-
(a) Bothe Assertions (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A)
(b) Bothe Assertion (A) and Reason (R) ar True and Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is True but Reason (R) is False
(d) Assertion (A) is False but Reason (R) is True

Question. Assertion (A): Currency Money is also termed as Fiat Money.
Reason (R): Under the law, the currency must be accepted for payment of all debts.
Alternatives:-
(a) Both Assertions (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is True but Reason (R) is False
(d) Assertion (A) is False but Reason (R) is True

Question. Assertion (A): Demand Deposits are not legal tenders.
Reason (R): They are with the bank, so only can be used as a legal tender when cheques are issued for the transfer.
Alternatives:-
(a) Both Assertions (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is True but Reason (R) is False
(d) Assertion (A) is False but Reason (R) is True

Question. Assertion (A): Currency notes and coins are called legal tenders.
Reason (R): They can not be refused by any citizen of the country for settlement of any kind of transaction.
Alternatives:-
(a) Both Assertions (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is True but Reason (R) is False
(d) Assertion (A) is False but Reason (R) is True

Question. Assertion (R): Money supply is a flow variable.
Reason (R): Money supply is the total stock of money in circulation among the public at a particular point of time.
Alternatives:-
(a) Both Assertions (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) ar True and Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is True but Reason (R) is False
(d) Assertion (A) is False but Reason (R) is True

Question. Assertion (A): To increase the money supply in the economy Central Bank reduces the margin requirement.
Reason (R): Decrease in margin requirements enhance the borrowing capacity of the public, which raises the money supply in the economy.
Alternatives:-
(a) Both Assertions (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is True but Reason (R) is False
(d) Assertion (A) is False but Reason (R) is True