Important Questions for CBSE Class 12 Economics Chapter 3

Important questions with answers for CBSE Class 12 Economics Chapter 3 ‘Money and Banking’, which are outlined by expert Economics teachers from the latest version of CBSE (NCERT) books.

CBSE Class 12 Macroeconomics Chapter 3 Important Questions

Question 1

A central bank is a/an _______.

a. Apex bank

b. Rural bank

c. Regional bank

d. Commercial bank


a. Apex bank

Question 2

Legal reserve ratio is equal to _______.


b. CRR – SLR

c. SLR – CLR

d. CRR + SLR


d. CRR + SLR

Question 3

Calculate the value of the money multiplier and the total deposit created if the initial amount is rupees 700 crore and the LRR is 10%.


Value of the money multiplier = 1/LRR, which is equal to 1/0.1 = 10

Initial deposit was Rs. 700 crore

Thus, the total deposit will be:
Initial deposit x Money multiplier

= 700 × 10

= 7,000 crores

Important Topics in Economics:

●     Consumer Protection Act

●     Economics MCQs

●     What is Demand?

●     Consumer Equilibrium

●     Central Problems of an Economy

Question 4

Calculate the LRR if the initial deposit of rupees500 crore leads to the establishment of the total deposit of rupees 4,000 crore.


Money multiplier = Total deposits/Initial deposits

= 4,000/500 = 8

Thus, money multiplier = 1/LRR

8 = 1/LRR

LRR = 0.125 or 12.5

Question 5

If the total deposits created by commercial banks are ₹. 12,000 and the LRR is 25%, calculate the initial deposit.


Money multiplier = 1/LRR = 1/0.25 = 4

Initial deposit = Total deposit/Money Multiplier

= 12,000/4

= ₹3,000

Question 6

One of the measures of money supply is ________ .

a. O1

b. N1

c. M1

d. P1


c. M1

Also, check: Money Creation by Banking System

Question 7

Money is a medium of ________ .

a. Communication

b. Barter

c. Exchange

d. Speculation


c. Exchange

Question 8

Money is something that is _______ .

a. Universally accepted

b. Locally accepted

c. Accepted by banks

d. Regionally accepted


a. Universally accepted

Question 9

One drawback of barter exchange is the _________.

a. Lack of trust

b. Lack of coincidence of wants

c. Lack of double coincidence of wants

d. Lack of goods


c. Lack of double coincidence of wants

Question 10

Does money overcome the issues of the barter system?

a. Cannot say

b. Seldom

c. No

d. Yes


d. Yes

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