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Vidaara.orgClass 12 · Mathematics
CodeVID-M12-WS
Money and Banking — Practice Worksheet
Chapter: Money and Banking
Topic: Money and Banking
Maximum Marks: 35
Time: 30 minutes
Name: ____________________ Roll No.: __________ Date: ____________

General Instructions

  • All questions are compulsory.
  • Choose the correct option (A, B, C or D) for each question.
  • The answer key is at the end — try the paper first!
Section A — Multiple Choice (1 mark each) 15 × 1 = 15 marks
1.
Money is anything generally accepted as a:
  • A.Medium of exchange
  • B.Tax
  • C.Subsidy
  • D.Loan
2.
The primary function of money is as a:
  • A.Store of value
  • B.Medium of exchange
  • C.Measure of value
  • D.Deferred payment
3.
Holding money for everyday payments is the ____ motive.
  • A.Transactions
  • B.Speculative
  • C.Precautionary
  • D.Profit
4.
The supply of money is a:
  • A.Flow
  • B.Stock
  • C.Rate
  • D.Ratio
5.
M1 (narrow money) includes currency with the public plus:
  • A.Time deposits
  • B.Demand deposits and other deposits with RBI
  • C.Gold reserves
  • D.Government cash
6.
Broad money is denoted by:
  • A.M1
  • B.M3
  • C.M0
  • D.M-1
7.
The two primary functions of a commercial bank are accepting deposits and:
  • A.Advancing loans
  • B.Issuing currency
  • C.Collecting taxes
  • D.Printing notes
8.
The money multiplier equals:
  • A.1 ÷ LRR
  • B.LRR × 100
  • C.LRR ÷ 2
  • D.1 − LRR
9.
If LRR = 20%, the money multiplier is:
  • A.2
  • B.5
  • C.20
  • D.0.2
10.
A lower reserve ratio means credit creation:
  • A.Increases
  • B.Decreases
  • C.Stops
  • D.Stays the same
11.
The central bank of India is the:
  • A.SBI
  • B.RBI
  • C.World Bank
  • D.IMF
12.
The sole right to issue currency notes is the RBI's role as:
  • A.Currency authority
  • B.Banker's bank
  • C.Lender of last resort
  • D.Tax collector
13.
The rate at which the RBI lends to banks is the:
  • A.Repo rate
  • B.Reverse repo rate
  • C.SLR
  • D.CRR
14.
The fraction of deposits banks must keep as cash with the RBI is the:
  • A.SLR
  • B.CRR
  • C.Repo rate
  • D.Bank rate
15.
To control inflation, the RBI would:
  • A.Raise the repo rate and CRR
  • B.Lower the repo rate
  • C.Buy securities
  • D.Reduce the SLR
Section B — Challenge / Olympiad (2 marks each) 10 × 2 = 20 marks
16.
With a legal reserve ratio of 25% and an initial deposit of ₹4,000, the maximum total deposits the banking system can create is:
  • A.₹16,000
  • B.₹1,000
  • C.₹4,000
  • D.₹100,000
17.
To fight a recession (slowdown), the RBI should:
  • A.Lower the repo rate and CRR and buy securities
  • B.Raise the repo rate
  • C.Raise the CRR
  • D.Sell securities
18.
Open market operations control the money supply when the RBI:
  • A.Buys securities (injects money) or sells them (absorbs money)
  • B.Prints notes only
  • C.Collects taxes
  • D.Builds banks
19.
Raising the CRR reduces credit because it forces banks to:
  • A.Keep more cash with the RBI, leaving less to lend
  • B.Lend more
  • C.Print money
  • D.Lower interest rates
20.
Banks can create credit only because, in normal times, depositors:
  • A.Do not all withdraw their money at the same time
  • B.Always withdraw together
  • C.Never deposit
  • D.Hold no money
21.
When the RBI raises the repo rate, commercial banks typically respond by:
  • A.Raising their own lending rates, so loans become costlier
  • B.Cutting all interest rates
  • C.Lending more freely
  • D.Issuing currency
22.
The RBI acting as 'lender of last resort' means it:
  • A.Lends to banks in a crisis when they can get funds nowhere else
  • B.Lends to the public
  • C.Prints unlimited notes
  • D.Collects taxes
23.
Margin requirements and moral suasion are examples of ____ measures of monetary policy.
  • A.Qualitative
  • B.Quantitative
  • C.Fiscal
  • D.Trade
24.
Money supply excludes cash held by the government and banks because money supply measures money held by the:
  • A.Public
  • B.Government
  • C.Banks
  • D.RBI
25.
Both monetary policy (RBI) and fiscal policy (government budget) are used to manage the economy. Monetary policy works mainly by changing the:
  • A.Money supply and interest rates
  • B.Tax rates only
  • C.Number of ministries
  • D.Population

Answer Key

Section A — Multiple Choice (1 mark each)
  1. (A) Medium of exchange
  2. (B) Medium of exchange
  3. (A) Transactions
  4. (B) Stock
  5. (B) Demand deposits and other deposits with RBI
  6. (B) M3
  7. (A) Advancing loans
  8. (A) 1 ÷ LRR
  9. (B) 5
  10. (A) Increases
  11. (B) RBI
  12. (A) Currency authority
  13. (A) Repo rate
  14. (B) CRR
  15. (A) Raise the repo rate and CRR
Section B — Challenge / Olympiad (2 marks each)
  1. (A) ₹16,000
  2. (A) Lower the repo rate and CRR and buy securities
  3. (A) Buys securities (injects money) or sells them (absorbs money)
  4. (A) Keep more cash with the RBI, leaving less to lend
  5. (A) Do not all withdraw their money at the same time
  6. (A) Raising their own lending rates, so loans become costlier
  7. (A) Lends to banks in a crisis when they can get funds nowhere else
  8. (A) Qualitative
  9. (A) Public
  10. (A) Money supply and interest rates
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