Free The Banking System 03 Practice Test - 12th Grade - Commerce

Question 1

Which of the following is not concerned with banking organisations?

Bank rate

Fiscal deficit

Credit creation

Cash reserve ratio

SOLUTION

Solution : B

Bank rate, CRR and credit creation are directly linked to the banking system.

Question 2

The percentage of demand deposits which the commercial banks are legally required to maintain as their liquid assets is called:

CRR

Repo rate

SLR

Reverse repo rate

SOLUTION

Solution : C

Statutory Liquidity Ratio (SLR) is the percentage of demand deposits which the commercial banks are legally required to maintain as their liquid assets.

Question 3

The number of times a rupee is used in transactions is called:

Speed

Velocity

Change

Force

SOLUTION

Solution : B

Velocity of circulation of money is the number of times a rupee is used in transactions.

Question 4

The act of holding money as insurance against cases of emergency gives rise to ______________ demand.

Transaction

Speculative

Precautionary

Liquidity

SOLUTION

Solution : C

The act of holding money as insurance against cases of emergency gives rise to precautionary demand.

Question 5

Loans from the bank are:

Assets of the bank

Assets of the borrowers

Liabilities of the individuals

Liabilities of the bank

SOLUTION

Solution : A and C

Loans form both assets of the bank and liabilities of the individuals.

Question 6

Savings are:

Leakage from the CFD

Injection into the CFD

Flow from firms to households

Flow from households to firms

SOLUTION

Solution : A

Savings are a leakage from the CFD.

Question 7

Narrow money comprises of:

$M_{1}$

$M_{2}$

$M_{3}$

$M_{4}$

SOLUTION

Solution : A and B

Narrow money includes $M_{1}$ and $M_{2}$ .

Question 8

The narrowest section of money supply is:

Monetary Base

Narrow Money

Broad Money

$M_{1} + M_{3}$

SOLUTION

Solution : A

The monetary base is the narrowest form of money.

Question 9

If currency held is 300 and deposits in the bank are 400, what is the currency deposit ratio?

$1$

$\frac{3}{4}$

$\frac{4}{3}$

$\frac{7}{3}$

SOLUTION

Solution : B

The cdr is $\frac{3}{4}$ .

Question 10

If money supply is 5,00,000 and high-powered money is 2,00,000, what is the value of the multiplier?

0.4

2.5

SOLUTION

Solution : B

The multiplier is $\frac{M}{H} = \frac{5, 00, 000}{2, 00, 000} = 2.5$

Free The Banking System 03 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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Indian Economy till Independence 03
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