Money and Banking: Class 12 Economics (CBSE) important questions and practice
Money and Banking is chapter 3 of 14 in CBSE Class 12 Economics. Below are the topics the paper draws from, the question types that come up again and again, and a free practice test on this chapter alone.
Topics in this chapter
- Functions of money and barter's limitations
- Demand for money: transaction and speculative motives
- Supply of money: M1 measure, currency and demand deposits
- Money creation by the commercial banking system; money multiplier and reserve ratios
- Central bank functions: issue of currency, banker to banks and government, lender of last resort, controller of credit
- Instruments of monetary policy: repo, reverse repo, bank rate, CRR, SLR, open market operations, margin requirements
What examiners usually ask
- Explain the process of money creation by commercial banks with a numerical example (LRR = 20 percent)
- Describe the functions of a central bank
- How do the repo rate and open market operations control credit in the economy?
Exam tip
The credit creation example (deposit of Rs 1,000 with 20 percent LRR gives total deposits of Rs 5,000 via 1/LRR) is asked every year; write it as a table of rounds, and distinguish quantitative (bank rate, CRR, OMO) from qualitative (margin, moral suasion) tools.
Money and Banking on other boards and exams
Frequently asked questions
What are the important questions from Money and Banking for CBSE Class 12?
The question types listed above repeat most often in CBSE Class 12 Economics papers for this chapter. Practise them with the chapter test and then attempt them inside a full previous-year paper under time.
Is Money and Banking in the CBSE Class 12 Economics syllabus?
Yes. Money and Banking is part of the current CBSE Class 12 Economics syllabus, as listed on this site from the prescribed textbook.
Can I practise Money and Banking MCQs in Hindi?
Yes. The chapter test and explanations are available in Hindi and English, with an AI doubt solver for any question.