Money and Banking — Class 12 Economics PYQs

"Irfaan (a student) borrows ₹ 80,000 to finance his college fee. He plans to begin repaying the loan six months after his graduation, making payments over a span of ten years."
Based on above text, identify the indicated function of money.
(Choose the correct option)
Options :
(A) Medium of Exchange
(B) Unit of Account
(C) Standard of Deferred Payments
(D) Store of Value

In the context of the Commercial Banks, which of the following statements are correct ?
(Choose the correct option)
(I) Deposits received are liabilities for Commercial Banks.
(II) They are creator of credit in the economy.
(III) They accept deposits from general public.
(IV) They accept deposits on behalf of Reserve Bank of India.
Options :
(A) (I), (II) and (III)
(B) (II) and (III)
(C) (I) and (II)
(D) (I) and (IV)

Suppose in an economy, primary deposits are ₹ 500, if the Reserve Ratio is 25%. Estimate the total deposits created and the total lending by the banking system.

Read the following text carefully :
Union Food and Consumer Affairs Minister said that the Central Government has taken many proactive steps in the past few years to control retail prices of food items. He said that the government aims to keep inflation under control without compromising the country's economic growth... The Government has banned the export of many food items... It has also reduced import duties on edible oils and pulses to boost domestic supply and control price rise.
On the basis of the given text and common understanding, answer the following questions :
(c) Explain any one monetary measure used to control inflation.

The monetary policy is formulated by the ______ in the Indian economy.
(Choose the correct option to fill up the blank)
(A) Central Government
(B) State Governments
(C) Reserve Bank of India
(D) World Bank

As the Banker to the Bank, Reserve Bank of India performs all functions except ______.
(Choose the correct option to fill up the blank)
(A) Purchase and sale of securities on behalf of general public
(B) Maintaining current account for Commercial Banks
(C) Clearing and settlement of Interbank transactions
(D) Facilitating governmental transactions

(A) On the basis of the given image, explain the steps which may be taken by the Government of India to control the indicated macro-economic issue.
(B) Define 'Open Market Operations'.
Note : The following questions are for the Visually Impaired Candidates only in lieu of Q. No. 13/14.
(A) Explain any one fiscal policy measure that can be taken up by the Government to control the situation of inflation prevailing in an economy.
(B) Define 'Open Market Operations'.

(a) Justify the following statements with valid arguments :
(i) Money supply in an economy is an example of a stock variable.
(ii) The Central Bank provides several Banking services to the government.
OR
(b) Assuming for a hypothetical economy, Central Bank increases the Reserve Ratio from 20% to 25% and the total primary deposits stand at ₹ 1,000.
Explain the effect of rise in Reserve Ratio on credit creation by commercial banks.

Identify the incorrect feature(s) of money supply (M1) from the following :
(i) It is measured at a point of time.
(ii) It does not include stock of money held by the government.
(iii) It is always the currency in the hands of the Central Bank of a nation.
Alternatives :
(A) (i) and (ii)
(B) (ii) and (iii)
(C) (ii) only
(D) (iii) only

Find the missing figures and choose the correct alternative :
Round Deposits Loans (80%) Reserve Ratio (20%)
I 5000 4000 ..(i)..
II 4000 ..(ii).. 800
...
Total ..(iii).. ..(iv).. 5000
Alternatives :
(A) 1000, 800, 20000, 25000
(B) 5000, 3200, 25000, 20000
(C) 1000, 3200, 25000, 20000
(D) 1000, 800, 20000, 25000