CBSE 12 | MACROECONOMICS TEST NADKARNI ACADEMY
MONEY AND BANKING 30 Marks | 1.5 Hours
Question 1: Objective Type Questions (10)
1. “The value of all goods and services can be expressed in monetary units.”
Identify the function performed by money
a. Medium of Exchange c. Store of Value
b. Unit of Account d. Standard of Deferred Payments
2. Which agency is responsible for issuing Rs.1 currency note in India?
a. Reserve Bank of India c. Ministry of finance
b. Ministry of Commerce d. NITI Aayog
3. M1 Money Supply Includes _____________
a. All Deposits in Bank c. Only Demand Deposits
b. Only Time Deposits d. Vault Cash
4. If an economy is to control recession like most of the Euro-Zone nations,
which of the following can be appropriate:
a. Reducing Repo Rate c. Both (a) and (b)
b. Reducing CRR d. None of these
5. Which of the following is considered Unlimited Legal Tender?
a. Coins b. Currency Notes c. Both (a) & (b) d. None
6. Assertion: Currency held with the government is not included in Money
Supply
Reason: Currency can be legally used to make payments of debts
7. Commercial Banks create money by ________________.
8. Other Demand Deposits with RBI does not include
a. Demand Deposits of Public Financial Institutions
b. Demand Deposits of IMF and World Bank
c. Demand Deposits of Foreign Bank and Foreign Governments
d. Demand Deposits with Post Office Savings Deposit Scheme
9. ____________ in Reverse Repo Rate will encourage banks to create
addition credit in the economy.
10. If Reserve Ratio is 20% and Primary Deposits are Rs.2,000 then the
Total Deposits created in the economy will be
a. Rs.5,000 b. Rs.10,000 c. Rs.15,000 d. Rs.20,000
Question 2: Subjective Type Questions (20)
1. What is meant by Repo Rate? How does the Central Bank use this
measure to control inflationary conditions in an economy? (2)
2. What is meant by Margin Requirement? How does the Central Bank use
this measure to control deflationary conditions in an economy? (2)
3. Explain what is included and excluded in the M1 Money Supply. (3)
4. Differentiate between Commercial Banks and Central Banks (3)
CBSE 12 | MACROECONOMICS TEST NADKARNI ACADEMY
MONEY AND BANKING 30 Marks | 1.5 Hours
Question 1: Objective Type Questions (10)
1. “The value of all goods and services can be expressed in monetary units.”
Identify the function performed by money
a. Medium of Exchange c. Store of Value
b. Unit of Account d. Standard of Deferred Payments
2. Which agency is responsible for issuing Rs.1 currency note in India?
a. Reserve Bank of India c. Ministry of finance
b. Ministry of Commerce d. NITI Aayog
3. M1 Money Supply Includes _____________
a. All Deposits in Bank c. Only Demand Deposits
b. Only Time Deposits d. Vault Cash
4. If an economy is to control recession like most of the Euro-Zone nations,
which of the following can be appropriate:
a. Reducing Repo Rate c. Both (a) and (b)
b. Reducing CRR d. None of these
5. Which of the following is considered Unlimited Legal Tender?
a. Coins b. Currency Notes c. Both (a) & (b) d. None
6. Assertion: Currency held with the government is not included in Money
Supply
Reason: Currency can be legally used to make payments of debts
7. Commercial Banks create money by ________________.
8. Other Demand Deposits with RBI does not include
a. Demand Deposits of Public Financial Institutions
b. Demand Deposits of IMF and World Bank
c. Demand Deposits of Foreign Bank and Foreign Governments
d. Demand Deposits with Post Office Savings Deposit Scheme
9. ____________ in Reverse Repo Rate will encourage banks to create
addition credit in the economy.
10. If Reserve Ratio is 20% and Primary Deposits are Rs.2,000 then the
Total Deposits created in the economy will be
a. Rs.5,000 b. Rs.10,000 c. Rs.15,000 d. Rs.20,000
Question 2: Subjective Type Questions (20)
1. What is meant by Repo Rate? How does the Central Bank use this
measure to control inflationary conditions in an economy? (2)
2. What is meant by Margin Requirement? How does the Central Bank use
this measure to control deflationary conditions in an economy? (2)
3. Explain what is included and excluded in the M1 Money Supply. (3)
4. Differentiate between Commercial Banks and Central Banks (3)
5. Explain the following terms (5)
a. Full Bodied Money d. Statutory Liquidity Ratio
b. Open Market Operations e. Cash Reserve Ratio
c. Fiat Money
OR
Explain the Functions of Central Bank of a Country.
6. Explain the process of Credit Creation by the Commercial Banks. (5)
OR
What is the Monetary Policy of RBI? Explain its Qualitative Instruments
in detail.
5. Explain the following terms (5)
a. Full Bodied Money d. Statutory Liquidity Ratio
b. Open Market Operations e. Cash Reserve Ratio
c. Fiat Money
OR
Explain the Functions of Central Bank of a Country.
6. Explain the process of Credit Creation by the Commercial Banks. (5)
OR
What is the Monetary Policy of RBI? Explain its Qualitative Instruments
in detail.
