MONEY AND BANKING MCQs With Solved Answers

1. The total quantity of money held by the public in various forms at any point of time in an economy, is known as: 

(a) Money
(b) Supply
(c) Money Supply
(d) Bank

2. What items are not included in M1, a measure of supply: 

(a) Currency and Coin with public
(b) Inter-Corporate deposits
(c) Other deposits with RBI
(d) Net-demand deposits with Banks

3. High-powered Money consists of: 

(a) Currency and coins held by public
(b) Currency, Cash reserve with bank, and demand deposits
(c) Currency held by public and cash reserves with banks
(d) Currency and demand deposits

4. Money Supply refers to: 

(a) Total Volume of money held by the public at a particular point of time
(b) Total volume of money held by the public over a period of time
(c) Total volume of money held by the government
(d) Both (a) and (b)

5. Which bank controls the banking and monetary structure of India? 

(a) RBI
(b) SBI
(c) World bank
(d) Axis Bank

Note: Answers are given below at the end.

ISC ACCOUNTS 12 Final Accounts of Companies MCQs With Solved Answer 

MONEY AND BANKING MCQs With Solved Answers (question 6 to 10)

6. Which one of these is a limitation of barter exchange?

(a) Lack of double coincidence of wants
(b) Lack of store value 
(c) Lack of common measure of value
(d) Lack of Standard of deferred payment
(e) All of these

7. Who regulates money supply? 

(a) Government of India
(b) Reserve Bank of India
(c) Commercial Banks
(d) NITI AYOG

8. Which of the following is not a problem of barter system of exchange? 

(a) Store value
(b) Double coincidence wants
(c) Unit of account
(d) Poverty

9. Name the institution which performs the function of accepting deposits, granting loans, and making investments with the aim of earning profit: 

(a) Commercial banks
(b) Central Banks
(c) Neither (a) or (b)
(d) Both (a) and (b)

10. This function of the Central Bank involves buying and selling of government securities from or to the public and commercial banks: 

(a) Selective Credit Controls
(b) Legal Reserve Requirements
(c) One market operations
(d) None of these

Note: Answers are given below at the end.

MONEY AND BANKING MCQs With Solved Answers (question 11 to 15)

11. The bank operates in public interest without any profit motive: 

(a) Reserve Bank of India
(b) State Bank of India
(c) Canara Bank
(d) Allahabad Bank

12. Through the process of ____, Commercial Banks are able to create credit which is far excess of the initial deposits: 

(a) Advancing Loans
(b) Money Creations
(c) Accepting Deposits
(d) None of these

13. Primary functions of commercial banks are:

(a) Acceptance of deposits
(b) Advancing of loans
(c) a and b both
(d) Nither a nor b

14. The ——– rate refers to the interest paid by the Commercial Banks to RBI against the loans & advances taken by them from RBI to meet the short-term needs.

(a) Repo
(b) Reverse Repo Rate
(c) Cash Reverse Repo Rate
(d) Legal Reverse Repo Rate

15. ……….. Rate refers to the interest received by the Commercial Banks from the Central banks against the parking of funds by the commercial banks.

(a) Repo
(b) Reverse Repo Rate
(c) Cash Reverse Repo Rate
(d) Legal Reverse Repo Rate

Note: Answers are given below at the end.

MONEY AND BANKING MCQs With Solved Answers (question 16 to 20)

16. The one rupee notes and coins are issued by?

(a) RBI
(b) Commercial Bank
(c) Ministry of Finance
(d) State and Central Government

17. Which of these is not the function of a RBI( CENTRAL BANK) ? 

(a) Accepting deposits of general public
(b) Custodian of Foreign Exchange Reserve
(c) Banker’s Bank
(d) Currency Authority

18. Which of the following function is not performed by the Central Bank? 

(a) Banker to the Bank
(b) Overdraft Facility
(c) Controller of Money Supply
(d) Banker’s bank

19. Money supply is a _____ concept: 

(a) Stock
(b) Flow
(c) Both (a) and (b)
(d) None of these

20. Which of these conditions is needed for a financial institution to become a bank? 

(a) Accepting Deposits
(b) Advancing Loans
(c) Both (a) and (b) 
(d) Neither (a) and (b)

Note: Answers are given below at the end.

MONEY AND BANKING MCQs With Solved Answers (question 21 to 25)

21. Which of the following agency if responsible for issuing ₹1 currency note in India? 

(a) Reserve Bank of India
(b) Ministry of Commerce
(c) Ministry of finance
(d) Niti Aayog

22. The ………………… is a financial institution that is primarily concerned with accepting deposits from the public and lending to the public, the business firms, and government, and making investments, with the object of earning profits.

(a) RBI
(b) Commercial Bank
(c) Ministry of Finance
(d) State and Central Government

23. Credit creation is also known as: 

(a) Money creation
(b) Deposit creation
(c) a and b both
(d) None of these

24. —————is anything that is generally accepted as a means of exchange, a measure and store of value, and which also acts as a standard of deferred payments.

(a) Money 
(b) Deposit 
(c) Cash
(d) Bank

25. Which of the following is correct: 

(a) M1 = Currency (notes and coins) with the public + Demand deposits of Commercial Banks + other deposits held with the Reserve Bank of India.
(b) M2 = Currency (notes and coins) with the public + Demand deposits of Commercial Banks + other deposits held with the Reserve Bank of India+ Saving deposits with Post Office saving Banks.
(c) M3 = M1 + Time deposits of all commercial banks and co-operative banks (excluding interbank time deposits).
(d) All of these

.

Answer – Question Number 1 To 5

1. Answer- (c) Money Supply

2. Answer- (b) Inter-Corporate deposits

3. Answer- (c) Currency held by public and cash reserves with banks

4. Answer- (a) Total Volume of money held by the public at a particular point of time

5. Answer- (a) RBI

Answer – Question Number 6 To 10

ISC Economics 12 Demand MCQs With Solved Answer

6. Answer- (e) All of these

7. Answer-  (b) Reserve Bank of India

8. Answer-  (d) Poverty

9. Answer- (a) Commercial banks

10. Answer- (c) One market operations 

Answer – Question Number 11 To 15

11. Answer- (a) Reserve Bank of India

12. Answer- (b) Money Creations 

13. Answer- (c) a and b both

14. Answer (a) Repo

15. Answer (b) Reverse Repo Rate

Answer – Question Number 15 To 20

16. Answer-  (c) Ministry of Finance

17. Answer- (a) Accepting deposits of general public

18. Answer- (b) Overdraft Facility

19. Answer – (a) Stock

20. Answer -(c) Both (a) and (b) 

Answer – Question Number 21 To 25

21. Answer -(c) Ministry of finance

22. Answer-  (b) Commercial Bank

23. Answer -(c) a and b both

24. Answer- (a) Money 

25. Answer- (d) All of these