Economics Practice Quiz 41

Q1.What are deposits in bank accounts called if they can be withdrawn on demand?

A. Fixed deposits B. Recurring deposits C. Demand deposits D. Savings deposits

Q2.According to the provided text, what is the primary function of a cheque?

A. To serve as a receipt for cash deposits. B. To instruct the bank to pay a specific amount from one person's account to another. C. To apply for a new bank account. D. To guarantee a loan repayment.

Q3.In the context of cheque payments, how is the transaction completed without the use of cash?

A. The money is directly handed over by the payer to the payee. B. The bank issues a new currency note to the payee. C. The money is transferred from one bank account to another bank account. D. The transaction requires a physical exchange of goods.

Q4.How long does it typically take for money to be transferred between bank accounts when a cheque is deposited?

A. Instantly B. Within a couple of days C. Approximately one week D. More than a month

Q5.What essential features do demand deposits share, making them comparable to money in the modern economy?

A. They are primarily used for long-term investments. B. They share the essential features of money. C. They are only accepted by government institutions. D. They provide high returns on savings.

Q6.What crucial role do banks play in the existence of demand deposits and cheque payments?

A. They regulate the interest rates on all types of loans. B. They are responsible for printing new currency notes. C. Without them, there would be no demand deposits and no payments by cheques against these deposits. D. They primarily facilitate international trade agreements.

Q7.Why do demand deposits constitute money in the modern economy, along with currency?

A. Because they are backed by gold reserves. B. Because they are accepted widely as a means of payment. C. Because they are issued directly by the central government. D. Because they offer unlimited withdrawal facilities.

Q8.What are the modern forms of money mentioned in the text, and how are they connected to the banking system?

A. Gold and silver, linked to historical trade routes. B. Currency and deposits, closely linked to the working of the modern banking system. C. Stocks and bonds, linked to corporate finance. D. Precious gems and real estate, linked to investment portfolios.

Q9.As per the provided text, what percentage of their deposits do banks in India typically hold as cash these days?

A. 5 per cent B. 10 per cent C. 15 per cent D. 20 per cent

Q10.Why do banks keep only a small proportion of their deposits as cash with themselves?

A. To invest in government securities for profit B. To pay depositors who might come to withdraw money C. To meet their daily operational expenses D. To extend new loans to large corporations

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Economics Practice Quiz 41