Worksheet: Money and Banking - 2 | Economics Class 12 - Commerce PDF Download

Fill in the Blanks

Q1: Money is generally accepted as a medium of ________________.

Q2: Money helps in measuring the value of goods and services, which is often referred to as ________________.

Q3: Money acts as a store of value because it is ___________________.

Q4: Standard of deferred payments refers to payments to be made in the ___________________.

Q5: Money has overcome the drawbacks of the ___________________ system.

Q6: Money multiplier can be calculated as ___________________.

Q7: Central Bank is responsible for stabilizing the external value of ________________.

Q8: The Central Bank increases the bank rate during ___________________.

Q9: Cash Reserve Ratio (CRR) is the minimum percentage of ___________________.

Q10: Qualitative instruments include margin requirements and ___________________.

Assertion and Reason Based

Q1: Assertion: Money serves as a medium of exchange.
Reason: Money helps in measuring the value of goods and services.
(a) Both Assertion and Reason are true, and Reason is the correct explanation of Assertion.
(b) Both Assertion and Reason are true, but Reason is not the correct explanation of Assertion.
(c) Assertion is true, but Reason is false.
(d) Both Assertion and Reason are false.

Q2: Assertion: Money acts as a store of value.
Reason: Money is easy and economical to store.
(a) Both Assertion and Reason are true, and Reason is the correct explanation of Assertion.
(b) Both Assertion and Reason are true, but Reason is not the correct explanation of Assertion.
(c) Assertion is true, but Reason is false.
(d) Both Assertion and Reason are false

Q3: Assertion: Central Bank is a sole authority to issue currency in the country.
Reason: Central Bank backs the currency with assets of equal value.
(a) Both Assertion and Reason are true, and Reason is the correct explanation of Assertion.
(b) Both Assertion and Reason are true, but Reason is not the correct explanation of Assertion.
(c) Assertion is true, but Reason is false.
(d) Both Assertion and Reason are false 

Q4: Assertion: Central Bank acts as a banker to other banks in the country.
Reason: It serves as a clearing house for commercial banks.
(a) Both Assertion and Reason are true, and Reason is the correct explanation of Assertion.
(b) Both Assertion and Reason are true, but Reason is not the correct explanation of Assertion.
(c) Assertion is true, but Reason is false.
(d) Both Assertion and Reason are false

Q5: Assertion: Qualitative instruments include margin requirements.
Reason: Margin requirements are increased during inflation.
(a) Both Assertion and Reason are true, and Reason is the correct explanation of Assertion.
(b) Both Assertion and Reason are true, but Reason is not the correct explanation of Assertion.
(c) Assertion is true, but Reason is false.
(d) Both Assertion and Reason are false

Very Short Answer Type  Questions

Q1: List the primary functions of money.

Q2: Explain the secondary function of money as a store of value.

Q3: Define the term "Standard of deferred payments."

Q4: What is the purpose of the Money Multiplier?

Q5: Why is only a fraction of deposits kept as Cash Reserve by commercial banks?

Q6: What is the primary function of the Central Bank?

Q7: Mention two advantages of the sole authority of note issue by the Central Bank.

Q8: Explain the role of Central Bank as a "banker's bank."

Q9: Name one quantitative instrument used by the Central Bank.

Q10: Provide an example of a qualitative instrument used by the Central Bank.

Short Answer Type Questions

Q1: Describe the process of credit creation by commercial banks using an example.

Q2: Explain the significance of the Central Bank in controlling money supply during economic fluctuations.

Q3: List and briefly explain three quantitative instruments used by the Central Bank to influence credit and money supply.

Q4: Define Margin Requirements and explain how they are used during inflation and deflation.

Q5: What is Moral Suasion, and how does the Central Bank use it to influence other banks?

Q6: Briefly discuss the role of the Central Bank as the custodian of foreign exchange reserves.

Q7: Explain the significance of Statutory Liquidity Ratio (SLR) and how it is adjusted during economic fluctuations.

Long Answer Type Questions

Q1: Discuss the primary and secondary functions of money, highlighting their importance in the modern economy.

Q2: Explain the role of the Central Bank as a currency authority and the advantages of having the sole authority of note issue.

Q3: Describe the quantitative and qualitative instruments used by the Central Bank to control money supply and influence credit in the economy.

Q4: Analyze the impact of Central Bank's policies on the stability of the internal and external value of a country's currency.