Test: Money And Banking - 1


10 Questions MCQ Test Economics Class 12 | Test: Money And Banking - 1


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This mock test of Test: Money And Banking - 1 for Commerce helps you for every Commerce entrance exam. This contains 10 Multiple Choice Questions for Commerce Test: Money And Banking - 1 (mcq) to study with solutions a complete question bank. The solved questions answers in this Test: Money And Banking - 1 quiz give you a good mix of easy questions and tough questions. Commerce students definitely take this Test: Money And Banking - 1 exercise for a better result in the exam. You can find other Test: Money And Banking - 1 extra questions, long questions & short questions for Commerce on EduRev as well by searching above.
QUESTION: 1

Q  Central Bank is a/an

Solution:

Apex is the top or highest part of something, especially one forming a point.  An apex institution is a second-tier or wholesale organization that channels funding (grants, loans, guarantees) to multiple microfinance institutions (MFIs) in a single country or region. Funding may be provided with or without supporting technical services.

The Central Bank is the Apex Bank in India because of the following functions:

  • Monetary authority, issue of currency. Banker and debt manager to government, banker to banks, regulation of banking system, manager of foreign exchange, regulator and supervisor of the payment and the settlement systems and maintaining financial stability
QUESTION: 2

Money is a medium of

Solution:

Money is often defined in terms of the three functions or services that it provides. Money serves as a medium of exchange, as a store of value, and as a unit of account.

QUESTION: 3

The function of money is that it is a

Solution:

Well in an easy way to understand this, we can say that  the primary function of money as a store of value is that it can be used to transfer purchasing power from present to future.The main reason behind this is that it is most economical and convenient way to store money as its storage does not require much space. Basically, money as a store of value provides security to individuals.

 

QUESTION: 4

The most liquid asset among the following is?

Solution:

Cash is a highly liquid asset followed by the banking accounts, checkable account, short-term promissory notes, treasury bills and other government bonds.

QUESTION: 5

One of the measures of money supply is

Solution:

There are several standard measures of the money supply, including the monetary base, M1, and M2. The monetary base is defined as the sum of currency in circulation and reserve balances (deposits held by banks and other depository institutions in their accounts at the Federal Reserve).

QUESTION: 6

The process of money creation or credit creation is done by

Solution:

The process of money creation, commercial banks are able to create credit, which is in far excess of the initial deposits.

QUESTION: 7

Money is anything that is

Solution:

Money to be used as a medium of exchange must be universally acceptable. All people must accept a thing as money. Or the government should give it legal sanction. And for performing the other two functions—that is, to be used as a store of value and standard of deferred payment—money should have stability of value. In other words, the value of money should not change often.

QUESTION: 8

Barter system is

Solution:

The system of exchange where goods or services are directly exchanged for other goods or services without saying a medium of exchange, such as money is known as the Barter system

QUESTION: 9

One drawback of barter exchange is

Solution:

The functioning of the barter system requires a double coincidence of wants on the part of those who want to exchange goods or services. It is necessary for a person who wishes to trade his good or service to find some other person who is not only willing to buy his good or service, but also possesses that good which the former wants.

QUESTION: 10

What do you mean by credit creation by commercial banks?

Solution:

The CREATION of CREDIT or DEPOSITS is one of the most vital operations of the COMMERCIAL BANKS.

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