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Money and Banking 2

Total questions: 132

Worksheet time: 3hrs 6mins

Name
Class
Date
1.

............. is the rate at which commercial banks borrow from central bank in emergency

a)

CRR

b)

SLR

c)

Bank rate

d)

Reverse repo rate

2.

........... is the ratio of deposits which bank keep with the central bank

a)

CRR

b)

SLR

c)

Bank rate

d)

Reverse repo rate

3.

.......... is the rate at which commercial banks borrow short term funds from the central bank by selling their financial securities to the central bank

a)

CRR

b)

SLR

c)

Bank rate

d)

Repo rate

4.

Demand deposit created by the commercial bank are called

a)

High powered money

b)

Money

c)

Bank money

d)

Time deposit

5.

Which of the following is not a function of central bank

a)

Banker's supervisor

b)

Lender of last resort

c)

Money creation

d)

Controller of credit

6.

The currency created by the central bank is called

a)

High powered money

b)

Money

c)

Bank money

d)

Money supply

7.

.......... are called legal tenders

a)

Demand deposit

b)

Time deposits

c)

Inter-bank deposit

d)

currency notes and coins

8.

Deposit creation process comes to an end when

a)

fresh deposit with bank become zero

b)

LRR become zero

c)

money multiplier becomes zero

d)

total reserves equal initial deposits

9.

If an economy is to control recession like most of the Euro-zone nations, which of the following is appropriate

a)

Reducing repo rate

b)

Reducing CRR

c)

Both (a) and (b)

d)

None (a) and (b)

10.

If the total deposit created by commercial banks is Rs 20000 cr and LRR is 20%,then amount of initial deposit will be

a)

Rs 2000 cr

b)

Rs 3000 cr

c)

Rs 4000 cr

d)

Rs 14000 cr

11.

Money which is accepted as a medium of exchange because of the trust between the payer and the payee is called

a)

Full bodied money

b)

credit money

c)

Fiat money

d)

fiduciary money

12.

Electronic transfer of money in terms of credit/debit entries of the account holders in the banks is called

a)

e-marketing

b)

e-business

c)

e-money

d)

e-banking

13.

In case of credit money

a)

money value=commodity value

b)

money value>commodity value

c)

money value<commodity value

d)

none of these

14.

Transfer of value has become easier with

a)

evolution of money

b)

storage of money

c)

measure of value

d)

all of these

15.

The concept of global economy has come into existence due to

a)

store of value

b)

transfer of value

c)

measure of value

d)

none of these

16.

Term deposits are those

a)

against which no cheque can be issued

b)

against which no interest is paid to the depositor

c)

which are fixed deposits

d)

Both (a) and (c)

17.

Which of the following system is followed by RBI for issuing currency?

a)

Proportionate system

b)

Simple deposit system

c)

Minimum reserve system

d)

Fixed fiduciary issue system

18.

............is the rate at which the central bank borrow funds from commercial bank

a)

CRR

b)

SLR

c)

Bank rate

d)

Reverse repo rate

19.

Money is the most liquid of all the asset because

a)

it is a medium of exchange

b)

it is an unit of account

c)

it act as a store of value

d)

it is a standard of deferred payment

20.

which of the following agency is responsible for issuing Rs 1 currency note in India?

a)

RBI

b)

Ministry of commerce

c)

Ministry of finance

d)

Niti aayog

21.

Which among the following is considered to be the most liquid asset?

a)

Gold

b)

Money

c)

Land

d)

Treasury bond

22.

The number of times a unit of money exchanges hands during a unit period of time is known as:

a)

velocity of circulation of money

b)

momentum of circulation of money

c)

count of circulation of money

d)

circulation of money

23.

Currency notes and coins are called as:

a)

FLAT MONEY

b)

FIAT MONEY

c)

LEGAL TENDER MONEY

d)

BOTH 2 AND 3

24.

Direct exchange of goods against goods is called:

a)

CHARTER

b)

MONEY

c)

BARTER

d)

NONE OF THESE

25.

What are the advantages of Barter System ?

a)

Simple System

b)

More Mutual Co-operation

c)

No Economic Disparities

d)

All the above

26.

Which one is included in the primary function of money ?

a)

Medium of Exchange

b)

Measure of Value

c)

Both of the above

d)

Store of value

27.

By supply of money we mean :

a)

Money deposited in bank

b)

Money available with the public

c)

Deposits with post office savings bank

d)

All of these

28.

Who regulates money supply ?

a)

Govt, of India

b)

Reserve Bank of India

c)

Commercial Bank

d)

Planning Commission

29.

The primary function of Commercial Bank is ?

a)

ACCEPTING DEPOSITS

b)

GIVING LOAN

c)

CREATING CREDIT

d)

ALL OF THESE

30.

Which is the Agency Function of Commercial Banks ?

a)

Advancing Loans

b)

Accepting Deposits

c)

Act as Trustee

d)

Locker Facility

31.

During periods of inflation, money does not function well as ___________

a)

Standard of Value

b)

Medium of Exchange

c)

Store of Value

d)

Commodity money

32.

When Mr. Moore gets his paycheck, he knows he doesn't have to spend it all at once because money is

a)

Standard of Value

b)

Medium of Exchange

c)

Store of Value

d)

Representative money

33.

Coins and paper money in people's pockets are ________________.

a)

included in both M1 and M2.

b)

included in M2 but not in M1.

c)

included in M1 but not in M2.

d)

excluded from M1 and M2.

34.
What does ATM stand for
a)
Automatic Teller Machine
b)
Automatic Token Money
c)
Automatic Teller Money
d)
Automatic Teller Man
35.

Which of these are functions of money?

a)

medium of exchange that allows the trade of goods and services

b)

holds value over time

c)

standard of value that allows comparison of the value of goods related to one another

d)

used as the only means of trade between nations

36.

A type of money that is backed by a material, such as gold, is referred to as

a)

certificate money

b)

representative money

c)

fiat money

d)

commodity money

37.

The Federal Reserve controls monetary policy in the United States, trying to control

a)

inflation, or money losing its purchasing power

b)

deflation, or money becoming more valuable

c)

money supply, the amount of money available in the economy

d)

the number of banking institutions in the nation

38.
Expenses that do not change every month, such as rent
a)
Variable Expenses
b)
Static Expenses
c)
Fixed Expenses
d)
Never Change Expenses
39.
Expenses that can or go up or down each month
a)
Merry-go-round Expenses
b)
Fixed Expenses
c)
Shifty Expenses
d)
Variable Expenses
40.
Interest earned on both principal and previous interest earnings
a)
Special Interest
b)
Complex Interest
c)
Complicated Interest
d)
Compound Interest
41.

Money which is accepted as a medium of exchange because of trust between the payer and the payee is called-

a)

full bodied money

b)

fait money

c)

fiduciary money

d)

credit money

42.

Amelia receives a card from her financial institution that allows to her use an ATM for depositing and withdrawing money, checking her account information, and more. Amelia has a what?

a)

ATM Card

b)

Savings Account

c)

Debit Card

d)

Cash Card

e)

Credit Card

43.

Which type of account allows your deposited money to be withdrawn at any time by writing a check?

a)

Savings Account

b)

Certificate of Deposit

c)

Certified Cash Account

d)

Checking Account

44.

A Certificate of Deposit is money deposited for a set period of time that earns a set annual rate of interest.

a)

True

b)

False

45.

A business or financial institution that stores and manages money for individuals and other businesses:

a)

ATM

b)

Bank

c)

Credit Union

d)

Check Cashing Center

46.

It allows us to trade

a)

Legal Tender

b)

Store of Value

c)

Means of Exchange

d)

Unit of Account

47.

The coins and paper bills used as money in a society

a)

Checks

b)

Currency

c)

Bond

d)

Prices

48.

_________ is the privately owned, publicly controlled central bank of the U.S.

a)

The Federal Reserve System

b)

Wells Fargo

c)

JP Morgan Chase

d)

Bank of America

49.

__________ is a U.S. government institution that provides insurance on depositor's accounts.

a)

Department of the Interior

b)

Department of Homeland Security

c)

FDIC

d)

Congress

50.

You can easily carry money in a pocket or a purse. This reflects what characteristics of money?

a)

durability

b)

divisibility

c)

portability

d)

legal tender

51.

________ is money by government decree, has no alternative value

a)

Barter

b)

Specie

c)

Fiat Money

d)

Gold Standard

52.

Money of another country

a)

insurance

b)

refund

c)

bargain

d)

foreign currency

53.

An arrangement by which people borrow money from a bank to buy a house, and pay back the money over a period of years.

a)

mortgage

b)

overdraft

c)

share

d)

refund

54.

A special machine through which you can do bank transactions

a)

Cash dispenser

b)

Automated Teller Machine

c)

Cashpoint

d)

Checkout

55.

One of the equal parts into which the ownership of a company is divided

a)

Mortgage

b)

Refund

c)

Overdraft

d)

Share

56.

A small plastic card that you use to buy goods or services (even if you don't have the amount on your account at the moment).

a)

Debit card

b)

Credit card

c)

Cash card

d)

Transaction card

57.

A special plastic card that you can use to pay things directly from your bank account

a)

Credit card

b)

Cash card

c)

Debit Card

d)

PayPal card

58.

A bank account that pays interest on condition that you keep money there for a particular length of time.

a)

Current account

b)

Deposit account

c)

Personal account

d)

Cash account

59.

The amount of money you owe to the bank when you have taken out more money than you had in your bank account.

a)

Loan

b)

Mortgage

c)

Debt

d)

Overdraft

60.

A piece of paper that shows goods or services have been paid for.

a)

receipt

b)

recipe

c)

bill

d)

account

61.

Money is the most liquid of all asset because

a)

it is a medium of exchange

b)

it is an unit of account

c)

it act as a store of value

d)

it is a standard of deferred payment

62.

In the early 1800s, currency in the U.S. was issued by

a)

the Fed

b)

Congress

c)

banks

d)

a central bank

63.

Which of the following is a DDA

a)

debit card

b)

credit card

c)

savings account

d)

checking account

64.

When did the U.S. Congress print paper currency for the first time?

a)

at the beginning of the Revolutionary War

b)

When the Constitution was ratified

c)

during the Civil War

d)

when the country went on the gold standard

65.

What are M1 and M2

a)

money supplies

b)

specie

c)

fiat monies

d)

currency

66.

During periods of inflation, money does not function well as ___________

a)

Standard of Value

b)

Medium of Exchange

c)

Store of Value

d)

Commodity money

67.

When Mr. Moore gets his paycheck, he knows he doesn't have to spend it all at once because money is

a)

Standard of Value

b)

Medium of Exchange

c)

Store of Value

d)

Representative money

68.

Coins and paper money in people's pockets are ________________.

a)

included in both M1 and M2.

b)

included in M2 but not in M1.

c)

included in M1 but not in M2.

d)

excluded from M1 and M2.

69.
What does ATM stand for
a)
Automatic Teller Machine
b)
Automatic Token Money
c)
Automatic Teller Money
d)
Automatic Teller Man
70.

Which of these are functions of money?

a)

medium of exchange that allows the trade of goods and services

b)

holds value over time

c)

standard of value that allows comparison of the value of goods related to one another

d)

used as the only means of trade between nations

71.

A type of money that is backed by a material, such as gold, is referred to as

a)

certificate money

b)

representative money

c)

fiat money

d)

commodity money

72.

The Federal Reserve controls monetary policy in the United States, trying to control

a)

inflation, or money losing its purchasing power

b)

deflation, or money becoming more valuable

c)

money supply, the amount of money available in the economy

d)

the number of banking institutions in the nation

73.
Expenses that do not change every month, such as rent
a)
Variable Expenses
b)
Static Expenses
c)
Fixed Expenses
d)
Never Change Expenses
74.
Expenses that can or go up or down each month
a)
Merry-go-round Expenses
b)
Fixed Expenses
c)
Shifty Expenses
d)
Variable Expenses
75.
Interest earned on both principal and previous interest earnings
a)
Special Interest
b)
Complex Interest
c)
Complicated Interest
d)
Compound Interest
76.

Money which is accepted as a medium of exchange because of trust between the payer and the payee is called-

a)

full bodied money

b)

fait money

c)

fiduciary money

d)

credit money

77.

Amelia receives a card from her financial institution that allows to her use an ATM for depositing and withdrawing money, checking her account information, and more. Amelia has a what?

a)

ATM Card

b)

Savings Account

c)

Debit Card

d)

Cash Card

e)

Credit Card

78.

Which type of account allows your deposited money to be withdrawn at any time by writing a check?

a)

Savings Account

b)

Certificate of Deposit

c)

Certified Cash Account

d)

Checking Account

79.

A Certificate of Deposit is money deposited for a set period of time that earns a set annual rate of interest.

a)

True

b)

False

80.

A business or financial institution that stores and manages money for individuals and other businesses:

a)

ATM

b)

Bank

c)

Credit Union

d)

Check Cashing Center

81.

Which of the following is a commonly accepted definition of money?

a)

Any good which is commonly uiesd as a store of value

b)

Any good which is exchanged foe gold at a fixed rate.

c)

Any good which is acceptable to a bank

d)

Any good which is commonly accepted as medium of exchange

82.

Money which is accepted as a medium of exchange because of trust between the payer and the payee is called-

a)

full bodied money

b)

fait money

c)

fiduciary money

d)

credit money

83.

Money thai is issued by the authority of the government is called-

a)

full bodied money

b)

fait money

c)

fuduciary money

d)

all the above

84.

supply of money is a

a)

Flow variable

b)

Stock variable

c)

real flow

d)

none of these

85.

In India there are four alternative measures of money supply: M1,M2, M3, and M4 of these M1=

a)

Currency with people

b)

Currency with people+ Demand deposdit

c)

Currency with people+ Demand deposdit+ Other deposit with RBI

d)

none of these

86.

commercial bank creat credit money by way of --

a)

Time deposit

b)

Treasury Bill

c)

Bill of Exchange

d)

demand deposit

87.

Maximum credit that commercial bank can legally creat depends on their

a)

Gold Reserve

b)

legal reserve ratio( LRR)

c)

CRR

d)

SLR

88.

SLR requires the commercial bank to build their liquid assets by way of

a)

Reserve of cash

b)

Reserve of gold

c)

resurve of unencumbered secirities

d)

all of these

89.

Credit control means-

a)

Contraction of credit only

b)

Extention of credit only

c)

Extention and contraction of money supply

d)

none of these

90.

Which of the following is not a tools of credit control?

a)

CRR

b)

SLR

c)

Moral suasions

d)

Managed floting

91.

Inflation is to be combated the RBI-

a)

Raise in CRR and lower SLR

b)

Lower CRR and raise SLR

c)

Raise both CRR and SLR

d)

none of these

92.

Open market operation as an instrument of credit control are performed by

a)

Central bank of country

b)

the commercial bank pof country

c)

Both a and b

d)

none of these

93.

commercial bank contribute to the supply of mioney by the way of

(a)  

94.

Rationing of credit is the ------------ methods of control money supply in the economy.

(a)  

95.

------------- relate the instant loan requirement of the commercial bank.

(a)  

96.
The fact that money must withstand the wear and tear that comes from being used over and over again is a measure of its
a)
Portability
b)
Currency
c)
Durability
d)
Age
97.
Money that can be easily divided into smaller units of value has the characteristic of
a)
Divisibility
b)
Denominations
c)
Exchange
d)
Durability
98.

If Takeoff withdraws a $100 bill from his checking account and Quavo deposits another $100 bill in his savings account, by how much will M1 and M2 change?

a)

M1 will increase, and M2 will increase.

b)

Both M1 and M2 will remain the same.

c)

M1 will decrease, but M2 will remain the same.

d)

M2 will decrease by $100.

e)

M1 will remain the same, and M2 will increase.

99.
Which of the following is an example of money as a unit of account?
a)
Purchasing a toy for $8.99
b)
Lending a friend $25.00
c)
Opening a savings account at a bank
d)
Checking the price of a camera at several stores before buying it at the lowest price
100.
The coins and paper bills used as money in a society
a)
Prices
b)
Currency
c)
Bond
d)
Checks
101.
An institution for receiving, keeping and lending money
a)
Bank
b)
Bond
c)
Stock
d)
Company
102.
What is the price paid for the use of borrowed money?
a)
Principal
b)
Interest
c)
Default
d)
FDIC
103.

When money is used to acquire goods and services, it is functioning as a

a)

Medium of exchange.

b)

Store of value.

c)

Standard of account.

d)

Equation of value.

104.

Bradley digs out $50 from his cookie jar and deposits it in his checking account. The immediate result of this transaction is that M1 has

a)

Increased by $50.

b)

Increased by more than $50.

c)

Increased by less than $50.

d)

Not changed.

105.

1/required reserve ratio determines the

a)

required reserves

b)

excess reserves

c)

lending capacity

d)

money multiplier

106.
Our current money is _______ money. Meaning that it has value because the government has ordered that it is an acceptable means to pay debts.
a)
Commodity
b)
Fiat
c)
Representative
d)
Funny
107.

Suppose the required reserve ratio is 20% and there is no currency drain. Then a $100 increase in the monetary base results in the banking system increasing the quantity of money by

a)

$80.

b)

$400.

c)

$1,000.

d)

$500.

e)

$100.

108.
Money creation by the banking system will decrease if
a)
the velocity of money increases
b)
real interest rates are increase
c)
unemployment is low
d)
people keep cash in their mattresses
109.
Which of the following statements describes a function of money?
I. Money is a medium of exchange.
II. Money is a store of value.
III. Money is a unit of account.
IV. Money is a factor of production.
a)
I and IV only.
b)
I, II and IV only.
c)
II, III and IV only.
d)
I, III, and IV only.
110.

The required reserve ratio is 20% and banks have no excess reserves. Fergie deposits $10,000 in her bank. What is the maximum amount Fergie's bank can now loan?

a)

$9,800

b)

$10,000

c)

$9,000

d)

$8,000

e)

$2,000

111.
The federal funds rate is the rate:
a)
a private borrower would pay a bank for a loan.
b)
one bank would pay another bank for a loan.
c)
a bank would pay the Federal Reserve for a loan.
d)
the Federal Reserve would pay to borrow money from government.
112.

If Timberlake Bank has a required reserve ration of 10%, loans of $15,000 deposits of $100,000, vault cash of $15,000, and reserves at the Fed of $70,000, then the bank

a)

does not have enough reserves to meet its requirement.

b)

has excess reserves of $75,000.

c)

has excess reserves of $85,000.

d)

has no remaining capacity to make loans.

e)

has excess reserves of $60,000.

113.
A reserve ratio is the:
a)
proportion of cash and security reserves the bank needs to hold.
b)
fraction of deposits that the bank is required to hold.
c)
loan to deposit ratio in the bank's balance sheet.
d)
money belonging to the bank's largest depositors.
114.
If on receiving a $300 deposit, the banks excess reserves increase by $255, the current reserve requirement must be:
a)
15%
b)
10%
c)
5%
d)
12%
115.
Which of the following would be the initial effect of an individual making a $10,000 cash deposit in a bank?
a)
The money supply would rise by $10,000.
b)
The money supply would fall by $10,000.
c)
The money supply would not be affected by the deposit.
d)
The money supply would fall, but by less than the $10,000 deposit.
116.

If Beyonce' deposits $3,000 in currency into her savings account at Bank of America,

a)

M1 does not change.

b)

M1 decreases.

c)

M2 decreases.

d)

M2 increases.

e)

M1 and M2 both increase.

117.
What is the multiplier if the reserve requirement is 25%?
a)
4
b)
5
c)
40
d)
.4
118.

Which of the following financial institutions does NOT have to meet minimum reserve ratios?

i. the Fed

ii. commercial banks

iii. credit unions

a)

iii only

b)

i, ii, and iii

c)

i only

d)

ii and iii

e)

ii only

119.
Assume that the reserve requirement is 20 percent, but banks voluntarily keep some excess reserves.  A $1 million increase in new reserves will result in
a)
an increase in the money supply of $5 million
b)
an increase in the money supply of less than $5 million
c)
a decrease in the money supply of $5 million
d)
a decrease in the money supply of more than $5 million
120.
Penny is an artist, and John is a carpenter. Penny agrees to paint a portrait of John’s family in exchange for a handmade table created by John. How do Penny and John pay for their goods in their transaction? 
a)
using a store of value
b)
through credit
c)
through bartering
d)
with currency
121.

Checks are not money because they

a)

can bounce when there are not enough funds to cash them.

b)

are just instruments to transfer money between banks.

c)

are not always accepted when trying to purchase goods or services.

d)

are not issued by the government.

e)

are not guaranteed by banks.

122.

Credit cards are:

i. a generally accepted form of payment and therefore part of M1.

ii. are included in M1 because you write a check to pay your monthly bill.

iii. a means of borrowing money.

a)

i only

b)

i and iii

c)

ii only

d)

i and ii

e)

iii only

123.

Which among the following is considered to be the most liquid asset?

a)

Gold

b)

Money

c)

Land

d)

Treasury bond

124.

The number of times a unit of money exchanges hands during a unit period of time is known as:

a)

velocity of circulation of money

b)

momentum of circulation of money

c)

count of circulation of money

d)

circulation of money

125.

Currency notes and coins are called as:

a)

FLAT MONEY

b)

FIAT MONEY

c)

LEGAL TENDER MONEY

d)

BOTH 2 AND 3

126.

Direct exchange of goods against goods is called:

a)

CHARTER

b)

MONEY

c)

BARTER

d)

NONE OF THESE

127.

What are the advantages of Barter System ?

a)

Simple System

b)

More Mutual Co-operation

c)

No Economic Disparities

d)

All the above

128.

Which one is included in the primary function of money ?

a)

Medium of Exchange

b)

Measure of Value

c)

Both of the above

d)

Store of value

129.

By supply of money we mean :

a)

Money deposited in bank

b)

Money available with the public

c)

Deposits with post office savings bank

d)

All of these

130.

Who regulates money supply ?

a)

Govt, of India

b)

Reserve Bank of India

c)

Commercial Bank

d)

Planning Commission

131.

The primary function of Commercial Bank is ?

a)

ACCEPTING DEPOSITS

b)

GIVING LOAN

c)

CREATING CREDIT

d)

ALL OF THESE

132.

Which is the Agency Function of Commercial Banks ?

a)

Advancing Loans

b)

Accepting Deposits

c)

Act as Trustee

d)

Locker Facility