Chapter: Money — 30 MCQs
1. Which of the following is not a function of money?
A) Medium of exchange
B) Measure of value
C) Investment in stock market
D) Store of value
2. Barter system requires:
A) Money
B) Double coincidence of wants
C) Banking system
D) Technology
3. Money removes the problem of:
A) Inflation
B) Double coincidence of wants
C) Monopoly
D) Unemployment
4. In the absence of money, the economy operates on:
A) Credit system
B) Barter system
C) Monetary system
D) Banking system
5. Which one is a secondary function of money?
A) Store of value
B) Medium of exchange
C) Measure of value
D) Standard of deferred payment
6. Paper money is generally issued by:
A) Commercial banks
B) Central bank
C) Private moneylenders
D) Cooperative banks
7. Which of the following is an example of near money?
A) Currency notes
B) Fixed deposits
C) Demand deposits
D) Coins
8. Durability of money means:
A) Money can be easily transported
B) Money should last long
C) Money should be divisible
D) Money must have same appearance
9. Which of the following is the most liquid form of money?
A) Fixed deposits
B) Savings deposits
C) Cash
D) Mutual fund investments
10. Legal tender money refers to:
A) Money that can be refused in payment
B) Money that cannot be refused in payment
C) Money for investment
D) Illegal money
11. Which is an example of fiat money?
A) Gold
B) Cheques
C) Currency notes
D) Bonds
12. Money supply includes:
A) Physical cash only
B) Cash + demand deposits
C) Fixed deposits only
D) Coins only
13. Value of money and price level are:
A) Directly related
B) Inversely related
C) Not related
D) Constantly the same
14. In barter system, the main challenge was:
A) Inflation
B) Need for double coincidence of wants
C) Surplus production
D) Monopoly creation
15. Which quality is necessary for money to serve as a standard of deferred payment?
A) Portability
B) Durability
C) Stability in value
D) Limited acceptability
16. Money functions as a unit of account because:
A) It can be invested
B) It can be saved
C) It provides a common measure for valuing goods
D) It is physically durable
17. In modern economy, money is considered as:
A) Commodity
B) Medium of exchange
C) Investment instrument
D) Unit of labor
18. Fiduciary money refers to money:
A) Backed by gold
B) Issued on trust
C) Printed by private firms
D) Created by barter system
19. In India, coins are issued by:
A) RBI only
B) Government of India only
C) Commercial banks
D) State governments
20. M1 measure of money supply includes:
A) Currency with public
B) Demand deposits
C) Other deposits with RBI
D) All of these
21. Credit money is:
A) Fully backed by reserves
B) Partially backed or not backed by reserves
C) Only gold
D) Only silver
22. Primary function of money does not include:
A) Medium of exchange
B) Measure of value
C) Store of wealth
D) Standard of deferred payments
23. Portability of money means:
A) Money can be divided
B) Money can be easily carried
C) Money is costly
D) Money earns interest
24. Acceptability of money means:
A) It is durable
B) It is portable
C) It is recognized as a medium of exchange
D) It is made of metal
25. Money acts as a standard of deferred payment by:
A) Providing a means for future payments
B) Acting as a store of value
C) Making goods exchangeable
D) Increasing liquidity
26. The store of value function means:
A) Goods stored in warehouses
B) Holding purchasing power for future use
C) Depositing goods in banks
D) Consuming immediately
27. Representative money is:
A) Money with no intrinsic value
B) Money backed by commodities like gold
C) Money accepted only locally
D) Credit notes
28. Stability of value of money is important for:
A) Inflation control
B) Unemployment
C) Industrial disputes
D) Literacy
29. Which form of money is issued against securities?
A) Fiduciary money
B) Credit money
C) Metallic money
D) Commodity money
30. Durability of money helps in:
A) Higher exchange rate
B) Long-term use without losing value
C) Instant consumption
D) Excessive spending
Chapter: Banking — 30 MCQs
1. Commercial banks accept:
A) Deposits only
B) Deposits and provide loans
C) Deposits and print money
D) Deposits for RBI
2. CRR refers to:
A) Cash Reserve Requirement
B) Central Reserve Ratio
C) Cash Reserve Ratio
D) Cash Retention Requirement
3. Which is not a function of commercial banks?
A) Accepting deposits
B) Issuing currency
C) Granting loans
D) Credit creation
4. Credit creation means:
A) Creating new money by RBI
B) Creating money through lending
C) Creating coins
D) Printing notes
5. Which of the following is a qualitative method of credit control?
A) Bank Rate Policy
B) Moral Suasion
C) CRR
D) SLR
6. When CRR increases, bank lending capacity:
A) Increases
B) Decreases
C) Remains same
D) Doubles
7. Repo rate is the rate at which:
A) RBI borrows from commercial banks
B) Banks borrow from RBI
C) Public borrows from banks
D) Government borrows from RBI
8. Which one is a component of Legal Reserve Ratio?
A) SLR
B) Repo Rate
C) Reverse Repo Rate
D) Base Rate
9. Open Market Operations refer to:
A) Sale and purchase of government securities by RBI
B) Sale of shares in open market
C) Opening new bank accounts
D) Opening new bank branches
10. The central bank is also known as:
A) Lender of last resort
B) Borrower of first resort
C) Issuer of loans
D) Depositor of government money
11. Commercial banks are called financial intermediaries because they:
A) Help RBI
B) Mobilize savings and lend to investors
C) Accept only government deposits
D) Print currency
12. Who issues currency in India?
A) Ministry of Finance
B) RBI
C) SBI
D) ICICI
13. Term deposits are also called:
A) Demand deposits
B) Fixed deposits
C) Current deposits
D) Savings deposits
14. Current deposits are mainly used by:
A) Students
B) Households
C) Business firms
D) Pensioners
15. Primary function of commercial banks includes:
A) Credit creation
B) Portfolio management
C) Project consultancy
D) Accepting deposits
16. Secondary function of commercial banks includes:
A) Accepting deposits
B) Providing locker facilities
C) Issuing currency notes
D) Creating credit
17. Which is a liability of a commercial bank?
A) Loans given
B) Cash reserves
C) Deposits accepted
D) Investments made
18. Money market is a market for:
A) Long-term funds
B) Short-term funds
C) Equity funds
D) Mutual funds
19. Fixed deposits are generally withdrawn:
A) Anytime without notice
B) Only after a maturity period
C) Without interest
D) With penalty always
20. Increase in bank rate will lead to:
A) Increase in lending by banks
B) Decrease in lending by banks
C) No effect on lending
D) Double the lending
21. Which of the following are demand deposits?
A) Savings account
B) Current account
C) Fixed deposit
D) Both A and B
22. Commercial banks are required to keep certain reserves with:
A) Public
B) Other banks
C) Government of India
D) RBI
23. Which bank is known as apex bank of India?
A) SBI
B) RBI
C) ICICI
D) HDFC
24. Reverse repo rate is the rate at which:
A) RBI lends to banks
B) Banks lend to RBI
C) Public lends to RBI
D) Public lends to banks
25. Margin requirement is a tool of:
A) Quantitative credit control
B) Qualitative credit control
C) Liquidity management
D) Inflation control only
26. In India, monetary policy is formulated by:
A) Ministry of Finance
B) RBI
C) SBI
D) ICICI Bank
27. Moral suasion means:
A) Compelling banks by law
B) Requesting banks to follow policies
C) Penalizing banks
D) Issuing licenses
28. Which is a credit instrument?
A) Cheque
B) Cash
C) Gold
D) Bonds only
29. SLR is to be maintained by commercial banks in the form of:
A) Cash only
B) Cash, gold, or government securities
C) Loans
D) Buildings
30. Decrease in SLR leads to:
A) Increase in lending capacity
B) Decrease in lending capacity
C) No change in lending
D) Stoppage of lending
