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# Important Questions for CBSE Class 12 Economics Chapter 3

Important Questions with Answers for CBSE Class 12 Economics Chapter 3 – Money and Banking which is outlined by expert Economics teachers from the latest version of CBSE (NCERT) books.

## CBSE Class 12 Macro Economics Chapter- 3 Important Questions

Question 1

Central Bank is a/an,

• Apex Bank
• Rural Bank
• Regional bank
• Commercial Bank

Question 2

Legal reserve ratio is equal to,

• CRR/SLR
• CRR – SLR
• SLR – CLR
• CRR + SLR

Question 3

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

Answer: Value of money multiplier = 1/LRR which is equal to 1/0.1 = 10

Initial deposit was ₹. 700 crores

Thus, Total deposit will be Initial Deposit x Money Multiplier

= 700 X 10

= ₹. 7,000 crores

 Important Topics in Economics:

Question 4

Calculate LRR, if the initial deposit of ₹. 500 crores lead to the establishment of total deposits of ₹. 4,000 crores.

Answer: 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 total deposits created by the commercial banks are ₹. 12,000/-, LRR is 25%. Calculate the initial deposit.

Answer: 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 the money supply is,

• O1
• N1
• M1
• P1

Also Check: Money Creation by Banking System

Question 7

Money is a medium of,

• Communication
• Barter
• Exchange
• Speculation

Question 8

Money is something that is,

• Universally accepted
• Locally accepted
• Accepted by banks
• Regionally accepted

Question 9

One drawback of barter exchange is,

• Lack of trust
• Lack of coincidence of wants
• Lack of double coincidence of wants
• Lack of goods

Answer: Lack of double coincidence of wants

Question 10

Money overcomes the issues of the barter system.

• Can’t say
• Seldom
• no
• yes