Free Understanding Money 01 Practice Test - 12th Grade - Commerce 

Question 1

Money that is issued by the authority of the government is called:

A.

Full bodied money

B.

Credit money

C.

Fiat money

D.

Fiduciary money

SOLUTION

Solution : C

Fiat money refers to money whose value has been decreed by the government. 

Question 2

Who supplies money in India?

A.

The RBI

B.

The commercial banks

C.

The government

D.

All of these

SOLUTION

Solution : D

All of these are suppliers of money because money supply includes currency, deposits, liquid government securities, and bonds, among others. 

Question 3

Demand deposits are:

A.

Chequeable deposits

B.

Non-chequeable deposits

C.

Deposits which can be withdrawn on demand 

D.

Both (a) and (c)

SOLUTION

Solution : D

Demand deposits are chequeable and can be withdrawn at any time. 

Question 4

Introduction of money has:

A.

separated the acts of sale and purchase of an individual

B.

combined the acts of sale and purchase of an individual

C.

expanded the scope of sale and purchase

D.

both (a) and (c)

SOLUTION

Solution : D

Money has both separated the acts of purchase and sale, and expanded their scope. 

Question 5

Dynamic functions of money are related to:

A.

exchange of goods and services

B.

valuation of goods and services

C.

transfer of wealth across different parts of the economy

D.

stability and growth of the economy

SOLUTION

Solution : D

In a dynamic role, money plays an important part in the life of citizens and the economic system. 

Question 6

The ability of money to be moved easily is called:

A.

Uniformity

B.

Fungibility

C.

Portability

D.

Statis

SOLUTION

Solution : C

Portability is a key characteristic of money describing that money can be easily carried around.

Question 7

Which of the following defines fiat currency?

A.

Their value is fixed by the government.

B.

The intrinsic value is different from the face value.

C.

It is declared legal tender.

D.

None of the above

SOLUTION

Solution : A, B, and C

All the given properties define fiat currency.

Question 8

Which of the following is the correct order in the evolution of money?

A.

Gold, notes, credit cards, salt

B.

Salt, credit cards, gold, notes

C.

Salt, gold, notes, credit cards

D.

Gold, salt, notes, credit cards

SOLUTION

Solution : C

Money evolved in the order of Salt-gold-notes-credit cards.

Question 9

Which of the following are advantages of using electronic money?

A.

Lesser theft

B.

More convenient

C.

Faster transactions

D.

All of the above

SOLUTION

Solution : D

All of the above are advantages of using electronic money.

Question 10

The most important quality for coins to be used well these days is:

A.

Uniformity

B.

Divisibility

C.

Durability

D.

Light-weight

SOLUTION

Solution : C

To be used as change, coins need to be durable.

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