Free Understanding Money 02 Practice Test - 12th Grade - Commerce
Question 1
When the money value of money exceeds the commodity value of money, it is called:
full bodied money
credit money
fiat money
fiduciary money
SOLUTION
Solution : B
Credit money has a face value which is much higher than the commodity value. Credit money consists of credit cards, demand deposits, among others.
Question 2
Money as a standard for deferred payments has led to the emergence of:
Commodity market
Financial market
Both (a) and (b)
None of these
SOLUTION
Solution : B
The financial market has emerged from money being the standard of deferred payments.
Question 3
Which of the following systems is followed by the Reserve Bank of India for issuing currency?
Proportionate system
Simple deposit system
Minimum reserve system
Fixed fiduciary issue system
SOLUTION
Solution : C
The RBI follows the minimum reserve system, wherein it has to maintain a minimum quantity of gold bullion as reserves to issue currency.
Question 4
Which of the following can be some kind of money?
Cigarettes
Clothes
Cows
All of the above
SOLUTION
Solution : D
Anything can be money if it is recognised as money by everybody.
Question 5
Which of the following was one of the most commonly used metals for coinage?
Bronze
Tin
Gold
Carbon
SOLUTION
Solution : C
Gold was among the most commonly used metals.
Question 6
The value of paper money is dependent on:
Intrinsic value
Representative value
Full bodied money value
None of the above
SOLUTION
Solution : B
Value of paper money depends on the value of the metal money it represents, thus called representative money.
Question 7
The cheque is also called:
Far Money
Electronic Money
Near Money
Full-bodied Money
SOLUTION
Solution : C
The cheque is also called “near money”.
Question 8
Which of the following makes cryptocurrency different from other money?
It is illegal
It is legal tender
It is not fiat currency
It is not a unit of exchange
SOLUTION
Solution : C
The value of cryptocurrency is not decreed by the government and thus it is not fiat currency.
Question 9
The situation in which a panic causes several people to withdraw their deposits immediately is called:
Bank walk
Bank run
Bank bolt
Bank scuttle
SOLUTION
Solution : B
A bank run is a situation in which sudden panic leads all depositors to withdraw their funds from their accounts.
Question 10
The system of money and banking relies primarily on:
Loyalty
Speed
Competition
Trust
SOLUTION
Solution : D
The system relies on trust by all the stakeholders in the system.