MCQ Questions for Class 10 Economics Chapter 3 Money and Credit with Answers

1. Which one of the following is a formal source of credit?

A. Traders
B. Cooperative societies
C. Moneylenders
D. Friends and relatives

ANSWER= B. Cooperative societies

 

2. Which one of the following is the appropriate meaning of collateral?

A. It is the sum total of money borrowed from banks.
B. The amount borrowed from friends.
C. It is an asset of the borrower used as guarantee to a lender.
D. The amount invested in a business.

ANSWER= C. It is an asset of the borrower used as guarantee to a lender.

 

3. Which one of the following is a modern form of currency?

A. Paper notes
B. Gold
C. Silver
D. Copper

ANSWER= A. Paper notes

 

4. Which one of the following is the newer way of providing loans to the rural poor, particularly women?

A. Cooperative Banks
B. Grameen Banks
C. Self-Help Groups
D. Moneylenders

ANSWER= C. Self-Help Groups

 

5. Which of the following is the main informal source of credit for rural households in India?

A. Friends
B. Relatives
C. Landlords
D. Moneylenders

ANSWER= D. Moneylenders

 

6. Name the system in which the double coincidence of wants is an essential feature.

A. Barter system
B. Money economy
C. Global economy
D. None of these

ANSWER= A. Barter system

 

7. Grameen Bank of Bangladesh was started in

A. 1960s
B. 1970s
C. 1980s
D. 1990s

ANSWER= B. 1970s

 

8. In a SHG, most of the decisions regarding loan activities are taken by

A. Banks
B. Members
C. Non-government organisation
D. Cooperative

ANSWER= B. Members

 

9. Which of the following is not an informal source of credit?

A. Money-lender
B. Relatives and Friends
C. Commercial Banks
D. Traders

ANSWER= C. Commercial Banks

 

10. In which country is the Grameen Bank meeting the credit needs of over 6 million poor people?

A. Bhuta
B. Sri Lanka
C. Bangladesh
D. Nepal

ANSWER= C. Bangladesh

 

11. Which is not the main source of credit from the following for rural households in India?

A. Traders
B. Relatives and friends
C. Commercial Banks
D. Moneylanders

ANSWER= A. Traders

 

12. What portion of deposits are kept by the banks for their day to day transaction?

A. 10%
B. 15%
C. 20%
D. 25%

ANSWER= B. 15%

 

13. Which households take more loans from the formal sector?

A. Poor households and rich household.
B. Well off households and households with few assets.
C. Poor households and well off households
D. Well off households and rich households.

ANSWER= D. Well off households and rich households.

 

14. Which among these is an essential feature of barter system?

A. Money can easily exchange any commodity
B. It is based on double co-incidence of wants
C. It is generally accepted as a medium of exchange of goods with money
D. It acts as a measure and store of value

ANSWER= B. It is based on double co-incidence of wants

 

15. Which one of the following is the main source of credit for the rich households?

A. Informal
B. Formal
C. Both formal and informal
D. Neither Formal nor informal

ANSWER= B. Formal

 

16. Which one of the following is not a formal source of credit?

A. Commercial Banks
B. State Bank of India
C. Employers
D. Co-operatives

ANSWER= C. Employers

 

17. Double coincidence of wants means ____.

A. what a person desires to sell is exactly what the other person wishes to buy.
B. what a person desires to sell is exactly what the other person also wishes to sell.
C. what a person desires to buy is exactly what the other person also wishes to buy.
D. None of the above.

ANSWER= A. what a person desires to sell is exactly what the other person wishes to buy.

 

18. Which of the following could lead to a debt trap?

A. The high interest rate for borrowing can mean that the amount to be repaid is greater than the income of the borrower.
B. Higher cost of borrowing means a larger part of the earnings of the borrowers is used to repay the loan.
C. The high interest rate for borrowing can mean that the amount to be repaid is lesser than the income of the borrower.
D. both A. and B.

ANSWER= D. both A. and B.

 

19. In India, _____ issues currency notes on behalf of the Central Government.

A. Reserve Bank of India (RBI)
B. Ministry of Finance
C. Finance Commission
D. None of the above

ANSWER= A. Reserve Bank of India (RBI)

 

20. Which of the following statements are true?

A. As per Indian law, apart from RBI, no other individual or organisation is allowed to issue currency.
B. The law legalises the use of rupee as a medium of payment that cannot be refused in settling transactions in India
C. No individual in India can legally refuse a payment made in rupees.
D. All of the above are true.

ANSWER= D. All of the above are true.

 

21. Banks in India these days hold about ___ of their deposits as cash.

A. 25 percent
B. 20 percent
C. 15 percent
D. 5 percent

ANSWER= C. 15 percent

 

22. Banks use the major portion of the deposits to __.

A. extend loans
B. invest in infrastructure
C. deposit in foreign banks
D. None of the above

ANSWER= A. extend loans

 

23. _____ of the loans taken by households with few assets in the urban areas are from informal sources.

A. 72 percent
B. 28 percent
C. 53 percent
D. 47 percent

ANSWER= C. 53 percent

 

24. In rural areas, the main demand for credit is for ____.

A. purchasing land
B. purchasing house
C. medical expenses
D. crop production

ANSWER= D. crop production

 

25. Which of the following is an example of collateral?

A. Livestocks
B. Land
C. Deposits with banks
D. All of the above

ANSWER= D. All of the above

 

26. What are the different components of the terms of credit?

A. Interest rate
B. Documentation requirements
C. Collateral
D. All of the above

ANSWER= D. All of the above

 

27. Which of the following statements are correct?

A. Members of a cooperative pool their resources for cooperation in certain areas.
B. Besides banks, the other major source of cheap credit in rural areas are the cooperative societies.
C. There are several types of cooperatives possible such as farmers cooperatives, weavers cooperatives, industrial workers cooperatives.
D. All of the above statements are true.

ANSWER= D. All of the above statements are true.

 

28. Which of the following are examples of the informal sector loans?

A. Moneylenders
B. Traders
C. Cooperatives
D. Only A. and B.

ANSWER= D. Only A. and B.

 

29. As of 2012, the major source of credit to the rural households in India was ___.

A. Moneylenders.
B. Commercial banks.
C. Cooperative societies.
D. Relatives and friends.

ANSWER= A. Moneylenders.

 

30. Which of the following statements are false?

A. There is no organisation which supervises the credit activities of lenders in the informal sector.
B. RBI stops the money lenders from using unfair means to get their money back.
C. Compared to the formal lenders, most of the informal lenders charges much lesser interest on loans
D. Only B. and C.

ANSWER= D. Only B. and C.

 

31. Which of the following statements are true?

A. Periodically, banks do not submit information to the RBI on how much they are lending, to whom, at what interest rate, etc.
B. The Reserve Bank of India does not supervise the functioning of formal sources of loans.
C. The RBI monitors the banks in actually maintaining cash balance.
D. None of the above statements are true.

ANSWER= C. The RBI monitors the banks in actually maintaining cash balance.

 

32. _____ of the loans taken by poor households in the urban areas are from informal sources.

A. 85 percent
B. 70 percent
C. 65 percent
D. 50 percent

ANSWER= A. 85 percent

 

33. _____ of the loans taken by rich households in the urban areas are from formal sources.

A. 20 percent
B. 10 percent
C. 15 percent
D. 90 percent

ANSWER= D. 90 percent

 

34. _____ of the loans taken by well-off households in the urban areas are from formal sources.

A. 54 percent
B. 64 percent
C. 72 percent
D. 90 percent

ANSWER= C. 72 percent

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