Money and banking

Written by Dr. Ahmed Raza (Economics)

Class 12 · Economics · 12 questions

Name: ____________________ Date: ____________

Barter needs a:
- A Mobile wallet
- B Double coincidence of wants
- C Central bank
- D Credit card
Which of these is a function of money?
- A Collecting taxes
- B Medium of exchange
- C Making laws
- D Producing goods
Money that must be accepted by law in payment of debts is called:
- A Cheque
- B Barter
- C Credit
- D Legal tender
The central bank of Pakistan is the:
- A State Bank of Pakistan
- B Habib Bank
- C Federal Reserve
- D National Bank
The central bank acts as banker to:
- A Only exporters
- B Only the public
- C The government and the commercial banks
- D Only farmers
A rise in the policy rate usually makes borrowing:
- A Free
- B Cheaper
- C Impossible
- D More expensive
With a reserve ratio of 10 per cent, the credit multiplier is:
- A 1
- B 100
- C 0.1
- D 10
A new deposit of Rs. 1,000 with a reserve ratio of 20 per cent can support total deposits of up to:
- A Rs. 20,000
- B Rs. 1,200
- C Rs. 5,000
- D Rs. 2,000
In the equation MV = PT, the letter V stands for:
- A Volume of output
- B Value
- C Velocity of circulation
- D Variable cost
If M = 100, V = 4 and T = 200, the price level P is:
- A 2
- B 0.5
- C 20
- D 4
Raising the cash reserve requirement:
- A Prints money
- B Increases lending
- C Reduces the ability of banks to lend
- D Lowers prices directly
Which is NOT a function of a commercial bank?
- A Providing payments services
- B Accepting deposits
- C Giving loans
- D Issuing banknotes

Answer key

1. B, 2. B, 3. D, 4. A, 5. C, 6. D, 7. D, 8. C, 9. C, 10. A, 11. C, 12. D