Free The Banking System 02 Practice Test - 12th Grade - Commerce
Question 1
Commercial banks accept deposits from the public in the form of:
Chequeable deposits
Non-chequeable deposits
Both (a) and (b)
Gold deposits
SOLUTION
Solution : C
Banks accept deposits as chequeable deposits and non-chequeable deposits.
Question 2
Maximum credit that the commercial banks can legally create depends on their:
Gold reserves
Cash reserves with the RBI
Statutory liquidity ratio
Term deposits
SOLUTION
Solution : B
Cash reserves with the RBI determine the amount of credit banks can create.
Question 3
Central bank is an apex bank of the country that:
Controls the entire banking system of the country
Issues currency
Acts as a banker to the government
All of these
SOLUTION
Solution : D
The central bank performs all of these functions.
Question 4
Maximum credit that the commercial banks can legally create is indicated by:
1SLR
1CRR×1Cash Reserves with the RBI
1CRR×Total deposits
1CRR×Cash reserves with the RBI
SOLUTION
Solution : C
1CRR×Total deposits is the total amount of credit banks can create.
Question 5
How many major motives exist to hold money with oneself?
1
2
3
4
SOLUTION
Solution : C
There are 3 major motives to hold money.
Question 6
When interest rates are high, speculative demand for money is
High
Low
Independent of interest rates
Invariable
SOLUTION
Solution : B
Speculative demand for money is low when interest rates are high as people convert their money to bonds and stocks.
Question 7
If the availability of credit is low, the precautionary demand for money will be:
Low
High
Independent of credit
Cannot be determined
SOLUTION
Solution : B
If credit is highly unavailable, people will hold more money as precaution.
Question 8
Deposits in the banks are:
Assets of the bank
Liabilities of the bank
Liabilities of the depositors
None of the above
SOLUTION
Solution : B
Deposits are part of the liabilities of the bank.
Question 9
The goal of a public sector bank is:
Profit
Welfare
Financial inclusion
All of the above
SOLUTION
Solution : D
A public sector bank has all three goals.
Question 10
Which of the following is the most liquid measure of money supply?
M1
M2
M3
M4
SOLUTION
Solution : A
M1 is most liquid.