Return to your course question bank (click on Questions in the course Administration block). Click on the Categories tab:

Let's create a new category for questions related to burning fossil fuels-I know the science department is interested in those. Give your new category a name.

Select the parent category (you might not need to worry about this just yet). For example, energy questions might be categorized under Physics, which in turn is under Science.

Although you don't have to, give your category a meaningful description. It will make your new category friendlier to your colleagues if you decide to share it with them.

When you are happy with the settings of your new category, press the Add category button. The Edit categories page will be updated to show your new category, and how it fits into the hierarchy of other categories. For example, the parent of my new category is my course, basically:

The numbers in brackets indicate how many questions are in that category.

Click on the Questions tab to return to the question bank. To move a question into a category, you first need to select the category containing the question from the Category drop-down list.

Click on the check box next to the question you want to move to select it:

With the selected question, we want to move it to the new category. Select the category you want to move the question to from the Move to drop-down list:

Press the Move to >> button to move the selected question (or questions) to the chosen category.