Money and Banking Class 12 MCQ. We covered all the Money and Banking Class 12 MCQ in this post for free so that you can practice well for the exam.
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Money and Banking Class 12 MCQ for Students
Which one of the following pairs is correctly matched?
(a) M0- Reserve Money
(b) M1-Broad Money
(c) M2 – Narrow Money
(d) None of the above
Option a – M0- Reserve Money
Foreign currency which has a tendency for quick migration is called
(a) Hot currency
(b) Gold currency
(c) Soft currency
(d) Hard currency
Option a – Hot currency
Which one among the following is the globally traded currency that can serve as a reliable and stable store of value?
(a) Soft currency
(b) Broad currency
(c) Local currency
(d) Hard currency
Option d – Hard currency
Which one among the following is correct about the money whose value comes from a commodity out of which it is made?
(a) Fiat money
(b) Commodity money
(c) Near money
(d) Electronic money
Option b – Commodity money
Which of the following is the correct definition of Hot Money?
(a) This is the fund that is dumped into a country to get the advantage of a favorable interest rate and hence bring high returns.
(b) This is the fund that is provided by a bank in US Dollars at very short notice at a very high rate of interest and for a longer period of repayment.
(c) This is the fund that is pushed into the market through Hawala or some other such illegal method and is sometimes referred to also as Black money.
(d) Both (a) and (c)
Option a – This is the fund that is dumped into a country to get the advantage of a favorable interest rate and hence bring high returns
Consider the following. I. Currency in circulation. II. Banker’s deposits with the RBI. III. Call/term funding from financial institutions. IV. ‘Other’ deposits with the RBI. Which of the components given above is/are included in the calculation of Reserve Money in India?
(a) I and II
(b) II, III, and IV
(c) I, II and
(d) Only Il
Option b – II, III, and IV
Which of the following measures would result in an increase in the money supply in the economy? I. Purchase of government securities from the public by the Central Bank. II. Deposit of currency in commercial banks by the public. III. Borrowing by the government from the Central Bank. IV. Sale of government securities to the public by the Central Bank. Select the correct answer using the codes given below.
(a) Only I
(b) II and IV
(c) I and III
(d) II, III, and IV
Option c – I and III
Legal Tender Money refers to
(a) Currency notes
(b) Bills of exchange
(c) Cheques
(d) Drafts
Option a – Currency notes
1 note released in the country and it bears the signature of
(a) Finance Secretary
(b) RBI Governor
(c) Prime Minister
(d) Speaker
Option a – Finance Secretary
Demonetization of 500 and 1000 currency notes was announced on
(a) 8th November 2016
(b) 1st January 2017
(c) 15th August 2016
(d) 31st March 2017
Option a – 8th November 2016
Consider the following elements. I. Broad Money (M3) II. All deposits with Post Office Savings Banks. III. National Savings Certificates Which of the elements given above are the parts of the M4-Money Supply in the Indian Economy?
(a) I and II
(b) I and III
(c) II and III
(d) All of these
Option a – I and II
With reference to Fiat Money, consider the following statements. I. It is the money declared by a government to be legal tender. II. It is money without intrinsic value. III. It is state-issued money that is neither legally convertible to any other thing, nor fixed value in terms of any objective standard. Which of the statements given above is/are correct?
(a) I and II
(b) Only I
(c) Only Il
(d) All of the above
Option d – All of the above
Which of the following is/are examples of ‘Near Money’? I. Treasury bill II. Credit card III. Savings accounts and small-time deposits. IV. Retail money market mutual funds. Select the correct answer using the codes given below.
(a) Only I
(b) Only Il
(c) I, II, and III
(d) I, III, and IV
Option d – I, III, and IV
Consider the following. I. New Broad Money (NM3) II. New Narrow Money III. All deposits with the Post office savings banks IV. National Savings Certificates Which of the components given above are correctly included in the Liquidity Aggregates in the Indian Economy?
(a) I, II, III and IV
(b) II and III
(c) I and III
(d) II and IV
Option c – I and III
Which one among the following is the source of the Reserve Money in India?
(a) Net foreign exchange assets of RBI.
(b) Governments’ currency liabilities to the public.
(c) Net non-monetary liabilities of the RBI.
(d) All of the above
Option d – All of the above
The money multiplier in an economy increases with which one of the following?
(a) Increase in the cash reserve ratio.
(b) Increase in the banking habit of the population.
(c) Increase in the statutory liquidity ratio.
(d) Increase in the population of the country.
Option b – Increase in the banking habit of the population
Multipliers will be lower with which one of the following?
(a) High marginal propensity to consume.
(b) Low marginal propensity to consume.
(c) High marginal propensity to invest.
(d) Low marginal propensity to save.
Option b – Low marginal propensity to consume
The higher rate of expansion in currency with the public and reserves as compared to that in deposits in an economy leads to
(a) the money multiplier remaining unchanged.
(b) increases at the first then decrease later on.
(c) an increase in the money multiplier.
(d) a decrease in the money multiplier.
Option d – a decrease in the money multiplier
Which one of the following is the major component of the money supply in the Indian Economy?
(a) Currency component
(b) Deposit component
(c) Treasury bills with the public
(d) Both (a) and (b)
Option d – Both (a) and (b)
If you withdraw 1,00,000 in cash from your Demand Deposit Account at your bank, the immediate effect on aggregate money supply in the economy will be
(a) to reduce it by ₹ 1,00,000.
(b) to increase it by 1,00,000.
(c) to increase it by more than 1,00,000
(d) to leave it unchanged.
Option d – to leave it unchanged
Which one of the following money supplies is also known as Narrow Money in the Indian economy?
(a) M1
(b) M2
(c) M3
(d) M4
Option a – M1
Which one of the following agencies of the Indian Government publishes the Narrow Money (M1) and Broad Money (M3) on fortnightly basis?
(a) State Bank of India
(b) Security Exchange Board of India
(c) Reserve Bank of India
(d) Central Statistical Organisation
Option c – Reserve Bank of India
Which one of the following money supplies in the Indian economy consists of the total post office savings?
(a) M1
(b) M2
(c) M3
(d) M4
Option d – M4
The Reserve Bank of India defines Narrow Money as
(a) CU (currency notes + coins) + DD (net demand deposits held by commercial banks).
(b) CU+DD+ saving deposits with post office savings banks.
(c) CU+DD+ net time deposits of commercial banks.
(d) CU+DD+ net time deposits of commercial banks + total deposits of post offices.
Option a – CU (currency notes + coins) + DD (net demand deposits held by commercial banks)
Which one among the following is the total amount of money available in an economy at a specific time?
(a) Near money
(b) Narrow money
(c) Money volume
(d) Money stock
Option d – Money stock
Consider the following statements. I. The printing of notes is the total management of the Reserve Bank of India. II. The volume of rupee coins by the are controlled Minister coins of Finance. Which of the statements given above is/are correct?
(a) Only I
(b) Only II
(c) Both I and II
(d) Neither I nor II
Option a – Only I
Consider the following statements. of India can print and I. Reserve Bank issues currency notes of denominations from two rupee notes to ten-thousand rupee notes. II. Reserve Bank of India maintains a separate issue department to look after currency issues. Which of the statements given above is/are correct?
(a) Only I
(b) Only II
(c) Both I and II
(d) Neither I nor II
Option c – Both I and II
The Government of India and RBI have decided to introduce 1 billion pieces of 10 notes in polymer/plastic on a field trial basis. Which of the following is or are the objectives behind this move? I. Increase of the lifetime of the notes II. Combating counterfeiting III. Reducing the cost of minting currency. Select the correct answer using the codes given below.
(a) I and II
(b) Only II
(c) Only III
(d) All of these
Option d – All of these
In the context of India, which of the following factors is/are contributor/ contributors to reducing the risk of a currency crisis? I. The foreign currency earnings of India’s IT sector. II. Increasing the government expenditure. III. Remittances from Indians abroad. Select the correct answer by using the codes given below.
(a) Only I
(b) I and III
(c) Only II
(d) I, II, and III
Option b – I and III
Which one of the following is not the most likely measure the government/RBI takes to stop the slide of the Indian Rupee?
(a) Curbing imports of non-essential goods and promoting exports.
(b) Encouraging Indian borrowers to issue rupee-denominated Masala Bonds.
(c) Easing conditions relating to external commercial borrowing.
(d) Following an expansionary monetary policy.
Option d – Following an expansionary monetary policy
(a) Only I
(b) Only Il
(c) Both I and II
(d) Neither I nor Il
Option c – Both I and II
Which of the following prints currency notes of the denomination of 100?
(a) The Indian Security Press, Nasik Road
(b) The Bank Note Press, Dewas
(c) The Security Printing Press, Hyderabad
(d) All of the above
Option b – The Bank Note Press, Dewas
The 100 Rupee Currency Note in India is signed by
(a) Governor, the Reserve Bank of India
(b) the Secretary, the Ministry of Finance
(c) the Finance Minister of India
(d) the Prime Minister of India
Option a – Governor, the Reserve Bank of India
Which among the following currencies is the costliest?
(a) French Franc
(b) Swiss Franc
(c) Euro
(d) Pound sterling
Option d – Pound sterling
Money for public utility is issued by the government through the consolidated fund of India through
(a) Finance Minister
(b) RBI Governor
(c) Finance Secretary
(d) None of the above
Option a – Finance Minister
Where is India’s modernized currency notes press situated?
(a) Nasik
(b) Mysore
(c) Hoshangabad
(d) Hyderabad
Option b – Mysore
Financial inclusion as per RBI means
(a) greater consumer protection for newly included customers.
(b) an easily accessed and speedy grievance redressal process.
(c) expanded efforts on financial literacy.
(d) All of the above
Option d – All of the above
Gilt-edged means
(a) bullion market
(b) the market of Government securities
(c) market of guns
(d) the market of pure metals
Option b – the market of Government securities
PCA stands for
(a) Public Current Account
(b) Principles of Corporate Accounting
(c) Prompt Corrective Action
(d) Public Channel Agency
Option c – Prompt Corrective Action
Which of the following is called a Banker’s Cheque?
(a) Demand Draft
(b) Debit Card
(c) Pay Order
(d) Fixed Deposit
Option a – Demand Draft
Which one of the following is the mechanism used by the Reserve Bank of India (RBI) under its credit policy which provides the states banking with it to help them to tide over temporary mismatches in the cash flow of their receipts and payments?
(a) State Liquidity Adjustment Facility
(b) Cash Reserve Requirement
(c) Liquidity Adjustment Facility
(d) Ways and means advances
Option d – Ways and means advances
Which of the following statements best describes the term ‘Scheme for Sustainable Structuring of Stressed Asset’s (S4A), recently seen in the news?
(a) It is a procedure for considering the ecological costs of developmental schemes formulated by the government.
(b) It is a scheme of RBI for reworking the financial structure of big corporate entities facing genuine difficulties.
(c) It is a disinvestment plan of the government regarding Central Public Sector Undertakings.
(d) It is a recently implemented provision of ‘The Insolvency and Bankruptcy Code’.
Option b – It is a scheme of RBI for reworking the financial structure of big corporate entities facing genuine difficulties
Consider the following statements I. The Reserve Bank of India was nationalized in the year 1955. II. Reserve Bank of India is a member bank of the Asian Clearing Union. Which of the statements given above is/are correct?
(a) Only I
(b) Only Il
(c) Both I and II
(d) Neither I nor II
Option b – Only II
Consider the following statements. The price of any currency in the international market is decided by the I. World Bank. II. demand for goods/services provided by the country concerned. III. stability of the government of the concerned country. IV. the economic potential of the country in question. Which of the statements given above is correct?
(a) I, II, III and IV
(b) II and III
(c) III and IV
(d) I and IV
Option b – II and III
The Reserve Bank of India was established in the year
(a) 1930
(b) 1935
(c) 1947
(d) 1951
Option b – 1935
The RBI was established on 1st April 1935 on the recommendation of
(a) the Khandwal Commission
(b) Narasimham Commission
(c) Nachiket Mor Commission
(d) Hilton Young Commission
Option d – Hilton Young Commission
When was RBI nationalized?
(a) 1935
(b) 1949
(c) 1929
(d) 1914
Option b – 1949
Who was the first Governor of RBI?
(a) CD Deshmukh
(b) Sir James Taylor
(c) PC Bhattacharya
(d) Sir Osborne Smith
Option d – Sir Osborne Smith
To lower interest rates, the RBI should ( Money and Banking MCQs )
(a) purchase securities.
(b) decrease the money supply.
(c) raise the treasury bill rate.
(d) raise the reserve requirement.
Option a – purchase securities
If the interest rate is decreased in an economy, it will ( Money and Banking MCQs )
(a) decrease consumption expenditure in the economy.
(b) increase the tax collection of the government.
(c) increase the investment expenditure of the economy.
(d) increase in the total savings of the economy.
Option c – increase the investment expenditure of the economy
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