GSEB Banking and Monetary Policy MCQ — Class 12

What is a central function of commercial banks?

Commercial banks collect deposits and channel funds into lending and related services.

Which institution is India's central bank?

The RBI performs central-bank functions in India.

A bank account used frequently for business transactions is generally what?

Current accounts are designed for frequent transactions.

A deposit kept for a specified period is generally called what?

Term or fixed deposits are placed for a stated maturity period.

Monetary policy mainly concerns management of what?

Monetary policy influences the availability and cost of money and credit.

Who commonly acts as banker to the government?

The central bank handles designated government banking functions.

Which is an example of a bank's agency service?

Banks collect payments and carry out authorised instructions for customers.

What does CRR refer to?

CRR requires banks to maintain a specified reserve proportion with the central bank.

What is an open-market operation?

Security transactions are a monetary instrument affecting liquidity.

What is moral suasion in monetary policy?

The central bank uses advice and persuasion to influence bank behaviour.

1. A customer saves money but also makes occasional withdrawals. Which account commonly fits?

1. A factory inventory account
2. A tariff schedule
3. A population register
4. Savings account

2. A bank lends part of its collected deposits. What economic role is illustrated?

1. Only tax collection
2. Only barter
3. Financial intermediation
4. Only physical production

3. The central bank lends to a bank facing a temporary eligible liquidity need. Which role is clearest?

1. Importer of all goods
2. Banker to banks
3. Retail shopkeeper
4. Population planner