MCQ on Banking Class 12 ISC covers certain important topics, which are covered under syllabus for ISCE Class 12 and are coming in Term II examination for the academic year 2022-23. Banking Class 12 MCQ Test contains 41 questions. MCQ on Economics Class 12 ISC have been made for Class 12 students to help check the concept you have learnt from detailed classroom sessions and application of your knowledge.
MCQ on Banking Class 12 ISC
Central bank
1. ______ is the apex institution in banking and financial structure of the economy.
(a) Commercial bank
(b) Central bank
(c) Government bank
(d) Foreign bank
Answer
Answer: (b) Central bank
2. Which of the following are the roles of a central bank?
(a) Organization of banking system
(b) Running the banking system
(c) Regulation and development of banking system
(d) All of the above
Answer
Answer: (d) All of the above
3. Central banks are entrusted with the responsibility of formulating monetary policy of a country. (True/False)
Answer
Answer: True
4. The Reserve bank of India was established in;
(a) 1694
(b) 1844
(c) 1935
(d) 1969
Answer
Answer: (c) 1935
5. RBI was nationalised in;
(a) 1935
(b) 1949
(c) 1964
(d) 1969
Answer
Answer: (b) 1949
6. The zonal offices of RBI are situated at;
(a) Delhi
(b) Kolkata
(c) Chennai
(d) All of the above
Answer
Answer: (d) All of the above
7. The central bank is a profit making institution (True/False)
Answer
Answer: False
8. Maximization of surplus is the main objective of the RBI . (True/ False )
Answer
Answer: False
9. Which of the following is a function of RBI.
(a) Investing for public welfare
(b) Dealing with general public
(c) Extending loan to public
(d) All of the above
Answer
Answer: (a) Investing for public welfare
10. Which of the following statement about the Central bank is correct?
(a) It is an organ of the government
(b) Has sole monopoly of issuing currency
(c) Banker of Government
(d) All of the above
Answer
Answer: (d) All of the above
MCQ on Banking Class 12 ISC
Functions of Central Bank
11. Which of the following is the function of the central bank?
(a) Bank of issue
(b) Agent of government
(c) Bankers to the bank
(d) All of the above
Answer
Answer: (d) All of the above
12. Currency notes issued by RBI are;
(a) Legal tender money
(b) High powered money
(c) Low Powered money
(d) Stock of money
Answer
Answer: (a) Legal tender money
13. Which of the following are the advantages of RBI as an issuing authority?
(a) Uniformity in the economy
(b) Imparts a distinctive prestige to currency
(c) Have effective control over credit creation
(d) All of the above
Answer
Answer: (d) All of the above
14. Central bank acts as a ____ of government
(a) Agent and banker
(b) Advisor
(c) Both (a)&(b)
(d) None of the above
Answer
Answer: (c) Both (a)&(b)
15. Central bank buys and sells foreign currency on behalf of the government.
(True/False)
Answer
Answer: True
16. Which of the following functions are performed by the Central bank as a banker to commercial banks?
(a) Acts as a custodian of cash reserves of the commercial banks
(b) Provides short term credit to commercial banks
(c) Provides guidance and regulates their activities
(d) All of the above
Answer
Answer: (d) All of the above
17. The centralised cash reserve serves as the basis of a large and elastic credit structure. (True/False)
Answer
Answer: True
18. As custodian of foreign exchange reserves, the central bank follows the following functions.
(a) Controls the receipts and payment of foreign exchange
(b) Try to maintain stability of exchange rate
(c) Enforces exchange control regulations
(d) All of the above
Answer
Answer: (d) All of the above
19. Central bank acts as a ________ of mutual claims of the commercial bank on each other.
(a) Clearing house for transfer
(b) Clearing house for settlement
(c) Both (a)&(b)
(d) None of the above
Answer
Answer: (c) Both (a)&(b)
20. ______ is the major component of money supply in an economy.
(a) Currency
(b) Bank money
(c) High powered money
(d) All of the above
Answer
Answer: (b) Bank money
MCQ on Banking Class 12 ISC
21. Central bank is entrusted with the responsibility of developing and promoting the banking system. (True/False)
Answer
Answer: True
22. Monetary management relates to ____
(a) Control of money supply
(b) Increase in money supply
(c) Management of money supply
(d) Decrease in money supply
Answer
Answer: (c) Management of money supply
23. _____ is the policy of the Central Bank to control and regulate the availability and flow of credit with the public for achieving a predetermined purpose.
(a) Monetary policy
(b) Fiscal policy
(c) Budgetary policy
(d) None of the above
Answer
Answer: (a) Monetary policy
24. Monetary policy is also known as;
(a) Monetary policy
(b) Fiscal policy
(c) Credit policy
(d) None of the above
Answer
Answer: (c) Credit policy
25. The main objectives of monetary policy are;
(a) Economic growth
(b) Price stability
(c) Growth with Equity
(d) All of the above
Answer
Answer: (d) All of the above
26. Quantitative credit control methods;
(a) Affect all the sectors of the economy uniformly.
(b) Have non-uniform impact on the sectors of economy
(c) Excludes bank rate and open market operation
(d) None of the above
Answer
Answer: (a) Affect all the sectors of the economy uniformly.
27. Qualitative credit control methods;
(a) Designed to regulate the flow of credit for specific uses
(b) Deal with allocation of credit among alternative uses
(c) Channelise the flow of credit
(d) All of the above
Answer
Answer: (d) All of the above
28. ______ is the minimum rate at which the central bank gives loans to Commercial banks.
(a) Bank rate
(b) Reverse repo rate
(c) Reverse bank rate
(d) None of the above
Answer
Answer: (a) Bank rate
29. The Monetary policy Committee is the committee headed by President of India (True/False)
Answer
Answer: False
30. ______ is the rate of interest at which RBI lends to commercial banks for short periods.
(a) Bank rate
(b) Repo rate
(c) Reverse repo rate
(d) Reverse bank rate
Answer
Answer: (b) Repo rate
MCQ on Banking Class 12 ISC
31. ______ is the rate of interest at which RBI borrows from commercial bank, for short period
(a) Bank rate
(b) Repo rate
(c) Reverse repo rate
(d) Reverse bank rate
Answer
Answer: (c) Reverse repo rate
32. ________ refers to the sale and purchase of government securities in the open market by the RBI.
(a) Bank rate
(b) Open market operations
(c) Reverse repo rate
(d) Reverse bank rate
Answer
Answer: (b) Open market operations
33. ______ is the minimum percentage of the total deposits required to be maintained in the form of cash reserves by commercial banks with central bank.
(a) Bank rate
(b) Repo rate
(c) Cash reserve ratio
(d) Liquidity ratio
Answer
Answer: (c) Cash reserve ratio
34. Commercial banks are required to keep a certain percentage of their deposits with themselves in form of liquid assets, known as;
(a) Bank rate
(b) Statutory minimum reserve
(c) Cash reserve ratio
(d) Liquidity ratio
Answer
Answer: (b) Statutory minimum reserve
35. Excess over the statutory reserve is called:
(a) Excess reserve
(b) Excess supply
(c) Excess supply
(d) None of the above
Answer
Answer: (a) Excess reserve
36. There is a direct relationship between CRR and SLR (True/False)
Answer
Answer: False
37. Which of the following are qualitative credit control methods?
(a) Regulation of consumer’s credit
(b) Credit Rationing
(c) Moral suasion
(d) All of the above
Answer
Answer: (d) All of the above
38. _____ is the difference between the Value of security and the loan granted against it.
(a) Cash reserve ratio
(b) Marginal requirement
(c) Open market operation
(d) None of the above
Answer
Answer: (b) Marginal requirement
39. Which of the following are the forms of credit Rationing?
(a) Maximum amount fixed by the Central bank to lend to commercial banks
(b) Central bank fixes the maximum ratio of loans of a commercial bank to its total deposits
(c) Both (a) and (b)
(d) None of the above
Answer
Answer: (c) Both (a) and (b)
40. ______ refers to the various directives issued by the Central bank to commercial banks from time to time to regulate them.
(a) Direct action
(b) Credit Rationing
(c) Both (a)&(b)
(d) None of the above
Answer
Answer: (a) Direct action
41. ______ is the method of persuasion, request and advice to commercial banks from the Central bank.
(a) Moral suasion
(b) Direct action
(c) Credit control
(d) All of the above
Answer
Answer: (a) Moral suasion
Economics Class 12 ISC MCQs – Term 2
- Theory of Income and Employment Class 12 MCQ
- Money : Meaning and Functions
- Banks : Commercial Bank and Central bank
- Balance of Payments and Exchange Rate
- Government Budget
- MCQ on Fiscal Policy Class 12 Economics
- National Income and Circular flow of Income
- National Income Aggregates Class 12 MCQ
- Methods of Measuring National Income Class 12 MCQ