Money and Banking Class 12 MCQ Quiz – Test Your Understanding!

Are you ready to test your knowledge of Money and Banking from the Class 12 Economics syllabus? This chapter explains the functions of money, the role of the central bank, and the credit creation process in an economy. Understanding these concepts is crucial for CBSE board exams and competitive exams.

About the Quiz

Chapter Name: Money and Banking
Subject: Economics
Book: NCERT Class 12 Economics
Question Type: Multiple Choice Questions (MCQs)
Leaderboard: Yes (Check Your Rank!)

Why Take This Quiz?

✔ Helps in CBSE board exam revision
✔ Strengthens understanding of monetary policy and banking system
✔ Enhances knowledge of RBI’s role in regulating money supply
✔ Track your progress with the leaderboard

Click Below to Start the Quiz!

Chapter 2 Money and Banking

1 / 15

Money supply in India may increase if, ________________(Choose the correct alternative)

Reserve Bank of India(RBI) injects more money into circulation

Commercial banks expand their credit operation

Tax rates are reduced by the Central Government

Reserve Bank of India increases the Bank Rate

1, 2, and 4 are correct

1, 2, and 3 are correct

2, 3, and 4 are correct

1, 3, and 4 are correct

2 / 15

What happens to the money multiplier when the Cash Reserve Ratio (CRR) increases?

It remains unchanged

It increases

It becomes zero

It decreases

3 / 15

The Reserve Bank of India can increase the money supply in the economy by ____________. (Choose the correct alternative)

persuading banks to discourage loans

buying government bonds

demonetization of currency

increasing the cash reserve ratio

4 / 15

Identify which of the following bank does not interact directly with the general public? (Choose the correct alternative)v

Central Bank of India

State Bank of India

Reserve Bank of India

Bank of India

5 / 15

Credit cards are excluded from all measures of the quantity of money because they are not really a method of payment, but a method of deferring payment. When you buy a meal with a credit card, the bank that issued the card pays the restaurant the amount that is due. At a later date, you will have to repay the bank, perhaps with interest. For this, you might use the money in your demand deposits, and that money is included in the economy's stock of money.

Which of the following can happen with an increased use of credit cards in an economy?

decrease in money supply

increase in money demand

decrease in money demand

increase in money supply

6 / 15

Read the following statements -Assertion (A) and Reason(R). Choose one of the correct alternatives given below:

Assertion (A): Demand Deposits are considered a convenient mode of payment for the execution of even high-value transactions.

Reason(R): Demand Deposits are non-withdrawable in nature and cannot be withdrawn against the issue of cheques and other similar instruments of payment.

Assertion (A) is true but Reason (R) is false.

Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

Assertion (A) is false but Reason (R) is true.

7 / 15

“The value of all goods and services can be expressed in monetary units.” On the basis of the given statement, identify the function performed by money:

Store of Value

Unit of account

Means of a standard of deferred payments

Medium of exchange

8 / 15

Supply of money refers to the quantity of money

During any specified period of time

As on any point of time

As on 31st March

During a fiscal year

9 / 15

Which of the following agency is responsible for issuing ₹ 1 currency notes in India?

Ministry of Finance

Ministry of Commerce

Niti Aayog

Reserve Bank of India.

10 / 15

Read the following statements carefully and choose the correct alternatives given below:

Statement 1 – The value of the money multiplier is determined by the reserve ratio prevailing in the monetary system.

Statement 2 – The process of credit creation directly relates to the value of the reserve ratio.

a. Both statements are true.

c. Statement 1 is true and Statement 2 is false

b. Both statements are false.

d. Statement 2 is true and Statement 1 is false

11 / 15

If the legal reserve requirement (LRR) is 20%, what is the value of the money multiplier?

12 / 15

Which of these do not fall under the purview of the Central Bank?

controlling money supply

providing loans to citizens

issuing currency

holding foreign exchange reserves

only 4

only 2

1 and 3

2 and 4

13 / 15

Demand Deposits include______ and _________. (Fill up the blank with the correct alternative)

Saving account deposits

Fixed deposits

Current Account Deposits

Post Office Savings

2 and 3

1 and 2

1 and 3

1 and 4

14 / 15

Which of the following statements about the money supply is correct?

Currency notes and coins are not part of the money supply.

Money supply is measured over a period of time.

M1 is a broader measure, while M3 is a narrower measure of money supply.

M1 is a narrow measure, and M3 is a broader measure of money supply.

15 / 15

Find the missing figures and choose the correct alternative:

Round	Deposits	Loans (80%)	Reserve Ratio (20%)
I	1,000	800	200
II	800	...(i)...	160


Total	...(ii)...	...(iii)...	...(iv)...

640, 1000, 4000, 5000

640, 5000, 4000, 1000

960, 5000, 4000, 1000

640, 4000, 1000, 5000

Your score is

The average score is 71%

Leaderboard – Top Scorers

Check the top scorers here!

Pos.	Name	Score	Duration	Points
1	..b	93 %	2 minutes 20 seconds	14
2	Harshit pandey	87 %	3 minutes 34 seconds	13
3	harshit pandey	87 %	4 minutes 35 seconds	13
4	Devashree	87 %	4 minutes 42 seconds	13
5	R	80 %	3 minutes 31 seconds	12
6	hemi	80 %	4 minutes 22 seconds	12
7	Ananyah	80 %	4 minutes 43 seconds	12
8	harshit pandey	80 %	5 minutes 43 seconds	12
9	Maggi	73 %	3 minutes 47 seconds	11
10	jnv jammu 2	73 %	4 minutes 24 seconds	11
11	Atul	73 %	7 minutes 17 seconds	11
12	Aparna	67 %	7 minutes 15 seconds	10
13	Amrin shaji	60 %	4 minutes 59 seconds	9
14	mani sir	60 %	6 minutes 43 seconds	9
15	Shreya	60 %	6 minutes 51 seconds	9
16	Sharfraz khan	60 %	3 hours 10 minutes 42 seconds	9
17	raja	53 %	3 minutes 13 seconds	8
18	Zzz	53 %	4 minutes 17 seconds	8
19	Saumyasingh	40 %	8 minutes 2 seconds	6

Key Topics Covered in the Quiz

✔ Functions of Money – Medium of exchange, Store of value, Unit of account
✔ Money Supply & Its Measures (M1, M2, M3, M4)
✔ Functions of Commercial Banks – Credit creation process
✔ Role of the Reserve Bank of India (RBI) – Monetary policy tools (CRR, SLR, Repo Rate, Reverse Repo Rate)
✔ Instruments of Credit Control – Quantitative & Qualitative methods

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About the Quiz

Why Take This Quiz?

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Key Topics Covered in the Quiz

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