Bihar Board Class 12 (Commerce) Money and Banking — practice questions
70 free MCQs with worked solutions. Tap any question for the answer + explanation, or practice them all in the app.
Practice Bihar Board Class 12 (Commerce) Money and Banking in the app →Money overcomes the difficulty of the barter system known as the:The function of money by which it is universally accepted in exchange for goods and services is the:Using money as a common measuring rod to express the value of all goods is its function as a:Money that the law makes obligatory to accept in settlement of debt is called:The bank that controls the money supply and acts as the banker to the government in India is the:The minimum percentage of deposits that commercial banks must keep with the central bank is the:The rate at which the central bank lends short-term funds to commercial banks is the:Deposits that can be withdrawn on demand, such as in a current or savings account, are called:The currency held by the public plus the reserves of commercial banks together form the:Commercial banks are able to create credit primarily on the basis of their:In a barter economy, exchange requires that each party wants exactly what the other offers, which is the problActing as the 'lender of the last resort' to commercial banks is a function performed by the:The total stock of money in circulation among the public at a point of time is called:Which difficulty makes barter hard in a large economy?What is the principal role of money in an economy?Expressing a wristwatch's value as Rs 500 shows money as aA pencil costs Rs 2 and a pen Rs 10. How many pencils is one pen worth?If the general price level rises, the purchasing power of moneyWhich function lets a person carry wealth to a future date using money?Money performs the store of value function well only if its value isDemand for money rises when which variable rises?When interest rates go up, the quantity of money demandedIn a modern economy, money supply comprises cash andWhich institutions together form the money-creating system?In which year did India get its central bank?Currency issued by the central bank and held by banks or the public is calledWhich is NOT a function of the central bank?The difference between loan and deposit interest rates of a bank is calledHow do commercial banks earn their profit?Banks can safely lend part of deposits because they expect thatA balance sheet is a record of a firm'sFor a bank, assets are equal toThe main liability of a bank is itsNet Worth of a bank is calculated asBank reserves are the bank's cash and its deposits withM1 is defined asThe legal percentage of deposits banks must hold as cash with the RBI is theWhy does the RBI fix a reserve ratio for banks?SLR in banking stands forA deposit of Rs 100 with 20 per cent reserve ratio. Total deposits finally reachWith a 20 per cent reserve ratio, the money multiplier equalsA 20 per cent reserve ratio turns reserves of Rs 100 into deposits ofIf the reserve ratio is raised to 25 per cent, Rs 100 of reserves supports deposits ofIf the RBI raises the reserve ratio, money supply willThe RBI is called the lender of last resort because itOpen market operations refer to buying and selling ofA sale of a bond by the RBI to private institutions leads toWhich open market operations are permanent in nature?A purchase of securities with an agreed date and price of resale is calledAn increase in the bank rate makes borrowing by banks dearer, so money supplyWhich operations are now the main tool of RBI monetary policy?Money is the most liquid asset because it isThe opportunity cost of holding money is theDemand for money balances is often referred to asSomeone earns Rs 100 monthly and spends it evenly. The average cash holding isIn the transaction demand equation MdT = k.T, k isThe number of times a unit of money changes hands in a period is itsA firm and a worker use Rs 100 to make transactions of Rs 200 monthly. Velocity isIf velocity v = 1/k, and k = 0.25, velocity equalsIn MdT = kPY, transaction demand depends positively on real income and theA bond that pays Rs 10 yearly and returns Rs 100 principal in two years has face valueA Rs 100 bond paying Rs 10 a year has a coupon rate ofWhen the market interest rate rises, the price of an existing bondSpeculative demand for money is inversely related to theWhen everyone expects interest rates to rise and holds only money, the economy is in aIn a liquidity trap, speculative demand for money isTotal money demand is the sum of transaction demand andFixed deposits are an example ofWhich of these is the narrowest RBI measure of money?Interbank deposits are excluded from money supply because only deposits of the