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:

$\frac{1}{SLR}$

$\frac{1}{CRR} \times \frac{1}{Cash Reserves with the RBI}$

$\frac{1}{CRR} \times Total deposits$

$\frac{1}{CRR} \times Cash reserves with the RBI$

SOLUTION

Solution : C

$\frac{1}{CRR} \times Total deposits$ is the total amount of credit banks can create.

Question 5

How many major motives exist to hold money with oneself?

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?

$M_{1}$

$M_{2}$

$M_{3}$

$M_{4}$

SOLUTION

Solution : A

$M_{1}$ is most liquid.

Free The Banking System 02 Practice Test - 12th Grade - Commerce

Question 1

SOLUTION

Question 2

SOLUTION

Question 3

SOLUTION

Question 4

SOLUTION

Question 5

SOLUTION

Question 6

SOLUTION

Question 7

SOLUTION

Question 8

SOLUTION

Question 9

SOLUTION

Question 10

SOLUTION

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Fiscal Policy 02
The Banking System 03