High-powered money (money created by the central bank) is correctly expressed as the sum of:

Currency held by the public and cash reserves of commercial banks

Cash reserves of banks and net time deposits with banks

Currency held by the public and demand deposits of commercial banks

Demand deposits and time deposits of commercial banks

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CBSE Class 12 Humanities Economics · Ch 3: Money and Banking

CBSE Class 12 Humanities Economics · Ch 3: Money and Banking is an online chapter test in the CBSE Class 12 Humanities pattern, covering Money and Banking. Attempt it on SeatBeat with a timer like the real exam, then see a detailed solution for every question and your score and weak-topic analysis.

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Topics in this test

Topic	Subject	Questions
Money and Banking	Economics	30

Difficulty: 7 medium · 23 hard

Money and Banking MCQ questions with answers

The first 3 of 30 questions. Unlock the series for the rest, each with a solution.

Q1. High-powered money (money created by the central bank) is correctly expressed as the sum of:
उच्च-शक्ति मुद्रा (केंद्रीय बैंक द्वारा सृजित मुद्रा) को सही रूप में किसके योग के रूप में व्यक्त किया जाता है:
- A. Cash reserves of banks and net time deposits with banks / बैंकों के नकद आरक्षित और बैंकों के पास शुद्ध सावधि जमाएँ
- B. Currency held by the public and demand deposits of commercial banks / जनता के पास रखी करेंसी और वाणिज्यिक बैंकों की माँग जमाएँ
- C. Currency held by the public and cash reserves of commercial banks / जनता के पास रखी करेंसी और वाणिज्यिक बैंकों के नकद आरक्षित
- D. Demand deposits and time deposits of commercial banks / वाणिज्यिक बैंकों की माँग जमाएँ और सावधि जमाएँ
Solution
High-powered money equals currency held by the public plus the cash reserves of commercial banks; it is the base on which credit creation rests.
उच्च-शक्ति मुद्रा जनता के पास रखी करेंसी तथा वाणिज्यिक बैंकों के नकद आरक्षित के योग के बराबर होती है; यह वह आधार है जिस पर साख सृजन टिका होता है।
Q2. The Legal Reserve Ratio of the banking system is reduced from 20% to 10%. As a result, the value of the money multiplier will change from:
बैंकिंग प्रणाली का वैधानिक आरक्षित अनुपात 20% से घटाकर 10% कर दिया जाता है। परिणामस्वरूप, मुद्रा गुणक का मान बदलकर हो जाएगा:
- A. $5$ to $10$ / $5$ से $10$
- B. $2$ to $4$ / $2$ से $4$
- C. $5$ to $20$ / $5$ से $20$
- D. $10$ to $5$ / $10$ से $5$
Solution
Money multiplier $=\frac{1}{LRR}$, so it rises from $\frac{1}{0.20}=5$ to $\frac{1}{0.10}=10$, showing an inverse relation with the LRR.
मुद्रा गुणक $=\frac{1}{LRR}$, अतः यह $\frac{1}{0.20}=5$ से बढ़कर $\frac{1}{0.10}=10$ हो जाता है, जो LRR के साथ विपरीत संबंध दर्शाता है।
Q3. The currency notes and coins issued in India are accepted as money mainly because the government, by law, orders them to be accepted in all transactions, and not because of the metal or paper they are made of. Such money is best described as:
भारत में जारी की गई करेंसी नोट और सिक्के मुद्रा के रूप में मुख्यतः इसलिए स्वीकार किए जाते हैं क्योंकि सरकार, कानून द्वारा, इन्हें सभी लेन-देनों में स्वीकार किए जाने का आदेश देती है, न कि इसलिए कि वे जिस धातु या कागज से बने हैं। ऐसी मुद्रा का सर्वोत्तम वर्णन है:
- A. Fiat money / फिएट मुद्रा (आदेशित मुद्रा)
- B. Full-bodied money / पूर्ण मूल्य वाली मुद्रा
- C. Near money / निकट मुद्रा
- D. Credit money / साख मुद्रा
Solution
Money accepted on the government's order/law rather than for its own material value is fiat money, which is also legal tender.
वह मुद्रा जो सरकार के आदेश/कानून के आधार पर स्वीकार की जाती है, न कि अपने भौतिक मूल्य के कारण, फिएट मुद्रा (आदेशित मुद्रा) कहलाती है, जो वैध मुद्रा भी होती है।

Frequently asked questions

How many questions are in the CBSE Class 12 Humanities Economics · Ch 3: Money and Banking?

30 questions for 30 marks, to be answered in 20 minutes.

Is there negative marking in the CBSE Class 12 Humanities Economics · Ch 3: Money and Banking?

No — wrong answers are not penalised in this test.

Which topics does the CBSE Class 12 Humanities Economics · Ch 3: Money and Banking cover?

Money and Banking (30 questions).

Is the CBSE Class 12 Humanities Economics · Ch 3: Money and Banking free?

It is part of the CBSE Class 12 Humanities (Arts) Test Series 2027 — Chapter-wise + Full Tests (37 tests, ₹199). You can first try English · Ch 1: The Last Lesson for free.

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