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Understanding money and banking is essential for students studying economics in Class 12. This chapter covers key concepts like the functions of money, types of banking systems, the role of the central bank, and monetary policies. To help students prepare better, practicing money and banking class 12 MCQ questions is important for exams.
For effective revision, students can download money and banking MCQ PDF, which includes multiple-choice questions covering all important topics. These money and banking class 12 MCQ PDF resources provide a clear understanding of the subject while improving problem-solving skills.
Students looking for money and banking MCQ and answers PDF in Hindi can also access study materials in their preferred language. These PDFs include MCQs on money banking MCQ questions with answers, making it easier to practice and check solutions.
Since money and banking class 12 important questions often appear in board exams, solving MCQs can help students strengthen their concepts. These questions are based on the Syllabus Class 12, covering essential topics required for exams. By using money and banking class 12 MCQ PDF and practicing regularly, students can improve their accuracy and confidence while preparing for their economics exam.
Money and Banking Class 12 Economics MCQ Questions with Answers PDF
Looking for Money and Banking Class 12 MCQ questions with answers? This Money and Banking MCQ PDF is perfect for students preparing for exams. It covers important topics like the meaning of money, functions of money, types of banking, credit creation, and more. These Money and Banking Class 12 MCQ PDF questions will help you revise concepts quickly and test your knowledge. Solve these MCQs to improve your understanding and boost your confidence for exams. Download the Money and Banking MCQ PDF now and start practicing to score better in Class 12 Economics!
MCQs Questions on Money and Banking Class 12 Economics with Answer
Ques 1. What is the primary function of money?
a) Store of value
b) Medium of exchange
c) Unit of account
d) All of the above
Answer: b) Medium of exchange
Explanation: The primary function of money is to facilitate transactions by acting as a medium of exchange. It eliminates the difficulties of the barter system.
Ques 2. Which of the following is NOT a characteristic of money?
a) Durability
b) Portability
c) Unlimited supply
d) Divisibility
Answer: c) Unlimited supply
Explanation: Money has a limited supply controlled by the central bank to maintain stability in the economy.
Ques 3. What is the full form of RBI?
a) Reserve Bank of India
b) Rural Banking Institution
c) Regional Bank of India
d) Reserve Banking Industry
Answer: a) Reserve Bank of India
Explanation: The Reserve Bank of India (RBI) is the central bank of India, responsible for monetary policy and financial regulation.
Ques 4. Which of the following is NOT a component of money supply?
a) Currency with the public
b) Demand deposits in banks
c) Government bonds
d) Time deposits
Answer: c) Government bonds
Explanation: Money supply includes currency in circulation and demand deposits, while government bonds are not part of the readily available money.
Ques 5. Who regulates the money supply in India?
a) Ministry of Finance
b) State Bank of India
c) Reserve Bank of India
d) Commercial Banks
Answer: c) Reserve Bank of India
Explanation: The RBI regulates the money supply through monetary policy tools such as CRR, SLR, and repo rate.
Ques 6. Which type of deposit allows immediate withdrawals?
a) Fixed deposit
b) Recurring deposit
c) Demand deposit
d) Savings deposit
Answer: c) Demand deposit
Explanation: Demand deposits, like those in current and savings accounts, can be withdrawn anytime without prior notice.
Ques 7. What is the term for the process by which banks create money?
a) Credit expansion
b) Credit creation
c) Capital formation
d) Inflation
Answer: b) Credit creation
Explanation: Banks create money by lending more than the actual deposits they hold, thus increasing the total money supply.
Ques 8. What is fiat money?
a) Money backed by gold
b) Money issued by the government
c) Commodity money
d) Digital currency
Answer: b) Money issued by the government
Explanation: Fiat money has no intrinsic value but is accepted as a medium of exchange because the government declares it legal tender.
Ques 9. The rate at which RBI lends money to commercial banks is called?
a) Bank Rate
b) Repo Rate
c) Reverse Repo Rate
d) Cash Reserve Ratio
Answer: b) Repo Rate
Explanation:Repo rate is the interest rate at which RBI lends to commercial banks for short-term needs.
Ques 10. What is the Cash Reserve Ratio (CRR)?
a) The amount banks keep with customers
b) The amount banks keep in their vault
c) The percentage of total deposits that banks must keep with RBI
d) The amount banks lend to customers
Answer: c) The percentage of total deposits that banks must keep with RBI
Explanation:CRR is a tool used by RBI to control liquidity and inflation in the economy.
Ques 11. What is the main function of a commercial bank?
a) Printing currency
b) Issuing loans and accepting deposits
c) Formulating monetary policy
d) Controlling fiscal deficit
Answer: b) Issuing loans and accepting deposits
Explanation: Commercial banks accept deposits and provide loans, thereby facilitating financial transactions.
Ques 12. Which of the following is NOT a type of money?
a) Commodity money
b) Fiat money
c) Barter money
d) Token money
Answer: c) Barter money
Explanation:Barter money does not exist because barter involves direct exchange of goods and services without money.
Ques 13. What is high-powered money?
a) Money created by commercial banks
b) Money created by the central bank
c) Digital currency
d) Foreign exchange reserves
Answer: b) Money created by the central bank
Explanation: High-powered money includes currency issued by the central bank and reserves held by commercial banks.
Ques 14. Open market operations refer to?
a) Government borrowing
b) Buying and selling of government securities by RBI
c) Inflation control
d) Issuing of new currency
Answer: b) Buying and selling of government securities by RBI
Explanation: RBI uses open market operations to control liquidity in the economy.
Ques 15. What is the main advantage of credit creation by banks?
a) Reduces inflation
b) Increases money supply
c) Reduces money supply
d) Decreases economic growth
Answer: b) Increases money supply
Explanation: Banks create credit by lending, which increases the overall money supply in the economy.
Ques 16. What is the monetary policy tool used to control inflation?
a) Open Market Operations
b) Cash Reserve Ratio
c) Statutory Liquidity Ratio
d) Foreign Exchange Reserve
Correct Answers: a) Open Market Operations, b) Cash Reserve Ratio, c) Statutory Liquidity Ratio
Explanation: The Reserve Bank of India (RBI) controls inflation using various monetary tools. Open Market Operations (OMO) involve buying or selling government securities to control liquidity. The Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) regulate the amount of funds banks must maintain as reserves, influencing credit availability in the economy.
Ques 17. Which institution issues currency in India?
a) Reserve Bank of India
b) Ministry of Finance
c) State Bank of India
d) Securities and Exchange Board of India
Correct Answer: a) Reserve Bank of India
Explanation: The Reserve Bank of India (RBI) is the sole authority responsible for issuing currency notes in India, except for one-rupee notes and coins, which are issued by the Ministry of Finance.
Ques 18. What is the full form of SLR?
a) Special Loan Rate
b) Statutory Lending Rate
c) Statutory Liquidity Ratio
d) Securities and Loan Reserve
Correct Answer: c) Statutory Liquidity Ratio
Explanation: Statutory Liquidity Ratio (SLR) refers to the minimum percentage of a commercial bank’s net demand and time liabilities (NDTL) that it must maintain in the form of liquid assets like cash, gold, or approved government securities before offering credit to customers.
Ques 19. Which of the following is NOT a function of money?
a) Medium of Exchange
b) Store of Value
c) Regulating Imports
d) Unit of Account
Correct Answer: c) Regulating Imports
Explanation: Money performs various functions such as serving as a medium of exchange, a store of value, a unit of account, and a standard for deferred payments. However, regulating imports is a function of government policies, not money.
Ques 20. Who prints currency notes in India?
a) Reserve Bank of India
b) Ministry of Finance
c) Nationalized Banks
d) Indian Government Mint
Correct Answer: a) Reserve Bank of India
Explanation: The Reserve Bank of India prints and manages the supply of currency notes in India, except for one-rupee notes and coins, which are issued by the Ministry of Finance.
Ques 21. Which instrument is used for short-term borrowing?
a) Treasury Bills
b) Bonds
c) Fixed Deposits
d) Mutual Funds
Correct Answer: a) Treasury Bills
Explanation: Treasury Bills (T-Bills) are short-term debt instruments issued by the government to meet its short-term financial needs. These are sold at a discount and redeemed at face value.
Ques 22. Which rate is used for long-term lending by RBI?
a) Bank Rate
b) Repo Rate
c) Reverse Repo Rate
d) Base Rate
Correct Answer: a) Bank Rate
Explanation: The Bank Rate is the interest rate at which the RBI lends money to commercial banks for long-term purposes without any collateral. It is used to control credit expansion in the economy.
Ques 23. Which is a qualitative credit control measure?
a) Repo Rate
b) Margin Requirement
c) Cash Reserve Ratio
d) Open Market Operations
Correct Answer: b) Margin Requirement
Explanation: Qualitative credit control measures regulate specific types of credit. Margin Requirement refers to the difference between the market value of a security and the loan amount granted against it. This tool is used to curb excessive credit expansion.
Ques 24. Which bank is known as the banker to the government?
a) Reserve Bank of India
b) State Bank of India
c) ICICI Bank
d) World Bank
Correct Answer: a) Reserve Bank of India
Explanation: The RBI acts as a banker to the government by managing public debt, issuing currency, and maintaining accounts of government departments. It also facilitates transactions between the government and the public.
Ques 25. Which is NOT a method of credit control?
a) Cash Reserve Ratio
b) Statutory Liquidity Ratio
c) Direct Taxation
d) Open Market Operations
Correct Answer: c) Direct Taxation
Explanation: Direct taxation is a fiscal policy tool used by the government, not a method of credit control. The RBI controls credit through CRR, SLR, and Open Market Operations.
Ques 26. Which type of money is issued by private institutions?
a) Fiat Money
b) Fiduciary Money
c) Cryptocurrency
d) Token Money
Correct Answer: c) Cryptocurrency
Explanation: Cryptocurrency is a digital form of money issued by private institutions or decentralized networks, unlike fiat money, which is issued by central banks.
Ques 27. Which bank regulates monetary policy in India?
a) Reserve Bank of India
b) State Bank of India
c) Ministry of Finance
d) SEBI
Correct Answer: a) Reserve Bank of India
Explanation: The RBI formulates and implements India’s monetary policy to regulate money supply, control inflation, and stabilize the economy.
Ques 28. Which is the highest denomination currency note issued in India?
a) ₹500
b) ₹2000
c) ₹1000
d) ₹10,000
Correct Answer: b) ₹2000
Explanation: The ₹2000 note was the highest denomination currency in circulation before it was discontinued in 2023.
Ques 29. Which term describes an increase in money supply?
a) Deflation
b) Inflation
c) Recession
d) Depression
Correct Answer: b) Inflation
Explanation: Inflation occurs when there is an excessive increase in the money supply, leading to a rise in the prices of goods and services.
Ques 30. Which is a quantitative method of monetary policy?
a) Repo Rate
b) Selective Credit Control
c) Moral Suasion
d) Margin Requirement
Correct Answer: a) Repo Rate
Explanation: Quantitative measures of monetary policy regulate the overall money supply. The Repo Rate, which is the rate at which RBI lends to banks, is a key quantitative tool used to manage liquidity.
MCQs on Questions on Money and Banking Class 12 FAQs
Where can I download Money and Banking MCQ PDF for Class 12?
You can download the Money and Banking MCQ PDF from educational websites or reference books. This Money and Banking Class 12 MCQ PDF includes multiple-choice questions with answers, covering key concepts like functions of money, the role of banks, and monetary policy.
What type of multiple-choice questions on money are included in the MCQ PDF?
Money and Banking MCQ PDF includes multiple-choice questions on money covering topics such as the functions of money, types of banking, monetary policy, credit creation, and the role of RBI. These questions are designed to test conceptual knowledge and application skills.
How can I practice banking MCQ questions with answers?
To practice banking MCQ questions with answers, download the Money and Banking Class 12 MCQ PDF. It contains topic-wise MCQs, including the money and banking MCQ and answers PDF in Hindi, helping students prepare effectively for exams.
Are these MCQs helpful for board exams?
Yes, these Money and Banking MCQ PDF questions are designed as per the latest syllabus. Practicing money and banking class 12 MCQ helps students understand core concepts, improve problem-solving skills, and score well in board exams.
