Here we are providing 1 Mark Questions for Economics Class 12 Chapter 3 Money and Banking are the best resource for students which helps in class 12 board exams.

One Mark Questions for Class 12 Economics Chapter 3 Money and Banking

Question 1.
What is meant by money? (C.B.S.E2010) (CBSE Outside Delhi2011,201 f (Comp.))
Money can be defined as a generally acceptable medium that can be exchanged for goods and services, and can be used as a measure and store of value.

Question 2.
What is barter? (C.B.S.E 2013 (Comp.))
Barter is a system of exchange in which goods and services are directly traded for other goods and services without the mediation of money.

Question 3.
Define bank money.
Bank money mainly means cheques and bank drafts.

Question 4.
Give two demerits of money.
Demerits of money are:
(i) Increase in corruption
(ii) Inequality of income

Question 5.
Write secondary function of money.
Secondary functions of money include:
(i) Store of value
(ii) Standard of deferred payments

Question 6.
What will be the effect of a rise in bank rate on money supply?
A rise in bank rate will reduce the money supply.

Question 7.
Define money supply? (C.B.S.E 2018, C.B.S.E 2011)
Money supply is the total stock of money of different types of money (currency in circulation and deposits) in an economy at any specific point of time.

Question 8.
What are the various money stock measures?
M1 ,M2, M3 and M4 are the various money stock measures.

Question 9.
What are the constituents of money supply in narrow sense?
State the components of money supply. (C.B.S.E 2010,2011 Comp), (C.B.S.E Outside Delhi 2013)
The constituents of money supply in narrow sense are coins, currency notes and demand deposits.

Question 10.
What is a commercial bank?
Commercial bank is a financial institution that accepts deposits from the public and advances loans to other people in order to earn profits.

Question 11.
What are the functions of commercial banks?
The main functions of commercial banks are accepting deposits and advancing loans.

Question 12.
What are demand deposits? (C.B.S.E 2012,2013,2014)
Demand deposits are those deposits in the banks, which can be withdrawn by drawing cheques on demand.

Question 13.
What are time deposits? (C.B.S.E Outside Delhi 2012,2014)
Time deposits are those deposits of the public in banks which are deposited for a fixed period.

Question 14.
What is bank rate? (C.B.S.E 2009,2011 Comp.)
Bank rate is that minimum rate at which the central bank discounts the first class bills and provides credit to the commercial banks.

Question 15.
Define ‘money multiplier’. (C.B.S.E Outside Delhi 2019)
Money multiplier measures the amount of money that the banks are able to create in form of deposits with every initial deposit.

Question 16.
What is central bank?
Central bank is the apex institution, which controls and regulates the quantity of money for the economic welfare of the public.

Question 17.
What is the main function of central bank?
The main function of central bank is to design and control the monetary policy of its country.

Question 18.
What is meant by Statutory Liquidity Ratio? (C.B.S.E 2010,11)
Statutory Liquidity Ratio (SLR) is the ratio of total demand and time deposits of commercial bank which it has to keep in the form of specified liquid assets.

Question 19.
What is meant by Cash Reserve Ratio? (C.B.S.E 2010, 11)
Cash Reserve Ratio (CRR) is the ratio of bank deposits that the commercial banks must keep with the central bank as reserves.

Question 20.
What are the quantitative instruments of credit control?
The quantitative instruments of credit control include:
(i) Bank Rate
(ii) Open Market Operations
(iii) Cash Reserve Ratio

Question 21.
What are the qualitative instruments of credit control?
The qualitative instruments of credit control include:
(i) Marginal Requirements
(ii) Rationing of Credit
(iii) Moral Suasion
(iv) Direct Action