12th Class Economics Money And Banking Question Bank

done Case Based MCQs - Money and Banking Total Questions - 15

• question_answer1)

  Direction: Q. 1 to 5

  Read the following case study and answer the questions.

  In November 2016, the Government of India declared that old currency notes of Rs. 500 and Rs. 1,000 were no longer legal tender. New currency notes of Rs. 500 and Rs. 2,000 were launched.

  The public were advised to deposit old currency notes in their bank accounts till 31st December, 2016 without any declaration and upto 31st March, 2017 with the RBI with declaration. The government also allowed exchange of Rs. 4,000 old currency by new currency per person per day. Also, upto 12th December, 2016, old currency was acceptable at petrol pumps, government hospitals and to pay government dues.

  Which of the following is/are true about money?
  A)
  It is a legal tender done clear
  B)
  It is a medium of exchange done clear
  C)
  Both [a] and [b] done clear
  D)
  Neither [a] nor [b] done clear
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• question_answer2)
  Government removed the legal tender status of Rs. 500 and Rs. 1,000 currency notes during the demonetisation. These currency notes are also known as …….. .
  A)
  Limited Legal Tender done clear
  B)
  Unlimited Legal Tender done clear
  C)
  Commodity Money done clear
  D)
  None of these done clear
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• question_answer3)

  Assertion [A] Demonetisation removes the legal tender status of currency malang it unacceptable mode of payment.

  Reason [R] The intrinsic value of currency notes is very less than the actual denominated value.

  Choose from the options below.

  A)
  Assertion [A] is true and Reason [R] is a correct reason of Assertion [A] done clear
  B)
  Assertion [A] is true and Reason [R] is not a correct reason of Assertion [A] done clear
  C)
  Assertion [A] is false, but Reason [R] is true done clear
  D)
  Both are false done clear
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• question_answer4)
  With the help of which of the following authorities, demonetisation was implemented?
  A)
  Commercial Banks done clear
  B)
  State Government done clear
  C)
  Central Bank done clear
  D)
  All of these done clear
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• question_answer5)
  Which of the following notes are not in circulation post demonetisation?
  A)
  Rs. 500  done clear
  B)
  Rs. 1,000 done clear
  C)
  Rs. 2,000  done clear
  D)
  None of these done clear
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• question_answer6)

  Direction: Q. 6 to 10

  Read the following case study article and answer the questions.

  Source The Economic Times/New Delhi/ September 25, 2012, P.2.

  What was the form of money used immediately after barter system?
  A)
  Commodity money done clear
  B)
  Precious metals done clear
  C)
  Coinage done clear
  D)
  Currency notes done clear
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• question_answer7)
  Evolution of money has ......... the size of market.
  A)
  Expanded done clear
  B)
  Contracted done clear
  C)
  Eliminated done clear
  D)
  None of these done clear
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• question_answer8)
  Which of the following is not a component of quantitative instrument of RBI?
  A)
  Marginal requirement done clear
  B)
  Cash reserve ratio done clear
  C)
  Reporate done clear
  D)
  Bank rate done clear
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• question_answer9)
  How the domestic money supply will change if there is an increase in foreign investment?
  A)
  Increase done clear
  B)
  Decrease done clear
  C)
  Remain constant done clear
  D)
  None of these done clear
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• question_answer10)
  Central Banks Monetary Mechanism is comprised of
  A)
  Qualitative tools done clear
  B)
  Quantitative tools done clear
  C)
  Both [a] and [b] done clear
  D)
  Neither [a] nor [b] done clear
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• question_answer11)

  Direction: Q. 11 to 15

  Read the following case study and answer the questions.

  The Central Bank of India i.e. Reserve Bank of India, is the apex institution that control the entire financial market. Its one of the major functions is to maintain the reserve of foreign exchange. Also, it intervenes in the foreign exchange market to stabilise the excessive fluctuations in the foreign exchange rate.

  In other words, it is the central bank's job to control a country's economy through monetary policy; if the economy is moving slowly or going backward, there are steps that central bank can take to boost the economy. These steps, whether they are asset purchases or printing more money, all involve injecting more cash into the economy. The simple supply and demand economic projection occur and currency will devalue.

  When the opposite occurs, and the economy is growing, the central bank will use various methods to keep that growth steady and in-line with other economic factors such as wages and prices. Whatever the central bank does or infact don't do, will affect the currency of that country. Sometimes, it is within the central bank's interest to purposefully effect the value of a currency. For example, if the economy is heavily reliant on exports and their currency value becomes too high, importers of that country's commodities will seek cheaper supply; hence directly effecting the economy.

  Who has the responsibility to balance the flow of credit and economic growth in the economy?
  A)
  Commercial Banks done clear
  B)
  Central Bank done clear
  C)
  Government  done clear
  D)
  Both [b] and [c] done clear
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• question_answer12)
  The apex banking institution in the country is known as ......... .
  A)
  Commercial Bank done clear
  B)
  General Government done clear
  C)
  Central Bank done clear
  D)
  None of these done clear
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• question_answer13)
  Which of the following is known as the creator currency in the country?
  A)
  Commercial Bank done clear
  B)
  General Government done clear
  C)
  Central Bank done clear
  D)
  None of these done clear
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• question_answer14)

  Assertion [A] As the economy grows overtime, the demand for money in hand also increase proportionately

  Reason [R] Supply of money in the economy and economic growth are directly related

  A)
  Assertion [A] is true and Reason [R] is a correct reason of Assertion [A] done clear
  B)
  Assertion [A] is true and Reason [R] is not a correct reason of Assertion [A] done clear
  C)
  Assertion [A] is false, but Reason [R] is true done clear
  D)
  Both are false done clear
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• question_answer15)
  Which of the following functions is not performed by Central bank in the country?
  A)
  Lender of last resort done clear
  B)
  Credit creation done clear
  C)
  Issue of currency done clear
  D)
  All of these done clear
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