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MCQ Questions for Class 10 Social Science Money and Credit with Answers

Free PDF Download of CBSE Class 10 Social Science Economics Chapter 3 Money and Credit Multiple Choice Questions with Answers. MCQ Questions for Class 10 Social Science with Answers was Prepared Based on Latest Exam Pattern. Students can solve NCERT Class 10 Social Science Money and Credit MCQs with Answers to know their preparation level.

Class 10 Social Science MCQs Chapter 3 Money and Credit

1. Which one of the following statements is most appropriate regarding transaction made in money?
(a) It is the easiest way.
(b) It is the safest way.
(c) It is the cheapest way.
(d) It promotes trade.

Answer

Answer: a


2. Which one of the following is a modem form of currency?
(a) Gold
(b) Silver
(c) Copper
(d) Paper notes

Answer

Answer: d


3. Which among the following authorities issues currency notes on behalf of the government?
(a) Government of India
(b) The State Bank of India
(c) National Bank for Agriculture and Rural Development
(d) Reserve Bank of India

Answer

Answer: d


4. In which of the following systems exchange of goods is done without use of money?
(a) Credit system
(b) Barter system
(c) Banking system
(d) Collateral system

Answer

Answer: b


5. Banks provide a higher rate of interest on which of the following accounts?
(a) Saving account
(b) Current account
(c) Fixed deposits for long period
(d) Fixed deposits for very short period

Answer

Answer: c


6. Banks use the major portion of the deposits to:
(a) Keep as reserve so that people may withdraw
(b) Meet their routine expenses
(c) Extend loans
(d) Meet renovation of bank

Answer

Answer: c


7. What percentage of their deposits is kept as cash by the banks in India?
(a) 25%
(b) 20%
(c) 15%
(d) 10%

Answer

Answer: c


8. The informal source of credit does not include which one of the following?
(a) Traders
(b) Friends
(c) Cooperative Societies
(d) Moneylenders

Answer

Answer: c


9. Which one of the following is the new way of providing loans to the mral poor?
(a) Co-operative societies
(b) Traders
(c) Relatives and friends
(d) SHGs

Answer

Answer: d


Question 10. Why is currency accepted as a medium of exchange?
(a) Because the currency is authorised by the government of the country.
(b) Because it is liked by the people who use it.
(c) Because the use of currency has its origin in ancient times.
(d) Because the currency is authorised by the World Bank.

Answer

Answer: a


11. Who issues the currency notes in India?
(a) Currency notes are issued by the Finance Commission.
(b) All the nationalized banks can issue the currency notes.
(c) Only Reserve Bank of India can issue currency notes.
(d) Any individual or organization can issue cur¬rency notes with the permission of the govt.

Answer

Answer: c


12. Which among the following banks issues currency notes on behalf of the Central Government in India?
(a) RBI
(b) State Bank of India
(c) Bank of India
(d) Central Bank of India

Answer

Answer: a


13. What do the banks do with the deposits which I they accept from the customers?
(a) Banks use these deposits for charitable activities.
(b) Banks use a major portion of deposits to extend loans.
(c) Banks use deposits to give bonus to their employees.
(d) Banks use deposits to set up more branches in the country.

Answer

Answer: b


14. What is the main source of income of a bank?
(a) Bank charges that the depositors pay for ; keeping their money safe is the main ; source of the bank’s income.
(b) The difference between what is charged from the borrowers and paid to the depositors is the main source of bank’s income.
(c) Banks earn huge amounts of money by investing the money of the depositors in various company shares.
(d) The Government of India gives huge amounts of money to the banks to help their smooth functioning.

Answer

Answer: b


15. An agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future payment refers to
(a) Debt
(b) Deposit
(c) Credit
(d) Collateral

Answer

Answer: c


16. Which body (authority) supervises the functioning of formal sources of loans?
(a) Finance Ministry
(b) Head Office of each Bank
(c) Reserve Bank
(d) Cooperative Societies

Answer

Answer: c


17. Money-lenders usually demand a ‘security’ from the borrower. What is the formal word used for the ‘security’, such as land, vehicle, livestock, building, etc.?
(a) Deposit
(b) Collateral
(c) Credit
(d) Guarantee

Answer

Answer: b


18. Which among the following options will be the cheapest source of credit in rural areas?
(a) Bank
(b) Cooperative Society
(c) Money-lender
(d) Finance Company

Answer

Answer: b


19. 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

Answer: c


20. A typical Self Help Group usually has
(a) 100-200 members
(b) 50-100 members
(c) less than 10 members
(d) 15-20 members

Answer

Answer: d


21. Which of the following is not an informal source of credit?
(a) Money-lender
(b) Relatives and Friends
(c) Commercial Banks
(d) Traders

Answer

Answer: c


22. According to Crowther, “____________ can be defined as anything that is generally accepted as a means of exchange and at the same time acts as a measure and as a store of value.”

Answer/Explanation

Answer:
Explanation: Money


23. The modern forms of money include ____________ and ____________ .

Answer/Explanation

Answer:
Explanation: Paper notes; coins


24. A ____________ is the apex institution of monetary system of a country.

Answer/Explanation

Answer:
Explanation: Central Bank (RBI in case of India)


25. Currency (coins and notes) is a ____________ which cannot be refused in payment for transactions.

Answer/Explanation

Answer:
Explanation: Legal tender money


26. The deposits in a bank which are payable on demand are called ____________ .

Answer/Explanation

Answer:
Explanation: Demand deposits


27. ____________ is an agreement whereby a financial institution agrees to lend a borrower a maximum amount of money over a given period of time.

Answer/Explanation

Answer:
Explanation: Credit


28. ‘Low rate of interest’ is a feature of ____________ credit.

Answer/Explanation

Answer:
Explanation: Formal


29. ____________ includes details regarding interest rate, collateral and documentation requirement, and the mode of payment.

Answer/Explanation

Answer:
Explanation: Terms of Credit


30. The situation when it becomes impossible to repay the loan and the borrower adds on a new debt to pay the existing one is known as _________ .

Answer/Explanation

Answer:
Explanation: Debt-trap


31. Money eliminates the need for double coincidence of wants. (True/False)

Answer/Explanation

Answer:
Explanation:
True, as money acts as the medium of exchange.


32. Credit card is a paper instructing the bank to pay a specific amount from the person’s account to the person in whose name it has been made. (True/False)

Answer/Explanation

Answer:
Explanation:
False, as it is cheque which is a paper instructing the bank to pay a specific amount from the person’s account to the person in whose name it has been made.


33. Informal sector credit includes loans from banks and cooperatives. (True/False)

Answer/Explanation

Answer:
Explanation:
False, as informal sector credit includes loans from friends, relatives, moneylenders, traders etc.


34. Rich households largely depend on informal sources of credit. (True/False)

Answer/Explanation

Answer:
Explanation:
False, as rich households largely depend on formal sources of credit.


35. In formal sector, higher rate of interest is charged. (True/False)

Answer/Explanation

Answer:
Explanation:
False, as higher rate of interest is charged in informal sector and not in the formal sector.


36. In rural areas, the main demand for credit is for building houses. (True/False)

Answer/Explanation

Answer:
Explanation:
False, as in rural areas, the main demand for credit is for crop production.


37. ‘Inculcating saving habits in community’ is an objective of Self Help Groups, (True/False)

Answer/Explanation

Answer:
Explanation:
True, as the SHGs try to organise rural poor especially to promote the saving habit.


38. What is demonetisation?

Answer/Explanation

Answer:
Explanation:
On November 8, 2016, currency notes of ? 500 and ? 1,000 were declared invalid. People were asked to deposit these notes to the banks by a specific period and receive new currency notes. This is known as demonetisation.


39. List various ways through which digital transactions are made.

Answer/Explanation

Answer:
Explanation:
Internet or mobile phones, cheques, ATM cards, credit cards, and POS swipe machines.


40. What is the main objective to promote digital transactions?

Answer/Explanation

Answer:
Explanation:
To reduce the requirement of cash for transcations and also control corruption.


41. What is meant by double coincidence of wants?

Answer/Explanation

Answer:
Explanation:
Double coincidence of wants means owner of good X, say shoes, to find someone else with good Y, say a bag of wheat, and both being in need of each other’s good.


42. What is the meaning of barter system? [Delhi 2015]

Answer/Explanation

Answer:
Explanation:
A system where goods are directly exchanged, without the use of money, is called barter system.


43. Define money.

Answer/Explanation

Answer:
Explanation:
Money is anything which has common acceptability as a means of exchange, a measure and a store of value.


44. Why is money called ‘a medium of exchange’? [All India 2017]

Answer/Explanation

Answer:
Explanation:
Money acts as an intermediary in the exchange process, thus it is called a medium of exchange.


45. What objects were used as money in India, before the introduction of coins?

Answer/Explanation

Answer:
Explanation:
Foodgrains and cattle were used as money before the introduction of coins in India.


46. Which metals were used for making coins in India in later stages?

Answer/Explanation

Answer:
Explanation:
Gold, silver and copper coins were used for making coins in later stages in India.


47. Give the modem forms of money.

Answer/Explanation

Answer:
Explanation:
The modern forms of money include currency-paper notes and coins and plastic money.


48. The modern currency is accepted as a medium of exchange. Why?

Answer/Explanation

Answer:
Explanation:
It is accepted as a medium of exchange because it is authorised by the Government of India.


49. Why one cannot refuse a payment made in mpees in India? [Delhi 2016]

Answer/Explanation

Answer:
Explanation:
One cannot refuse a payment made in rupees in India because it is authorised by the Indian government.


50. Define a bank.

Answer/Explanation

Answer:
Explanation:
A bank is a financial institution whose demand deposits are widely accepted as money for making payments and has the power to create money.


51. What are demand deposits?

Answer/Explanation

Answer:
Explanation:
Deposits in the bank accounts, which can be withdrawn on demand are called demand deposits.


52. What is a cheque? [Foreign 2015]

Answer/Explanation

Answer:
Explanation:
A cheque is an instrument instructing the bank to pay a specific amount from the person’s account to the person in whose name the cheque has been issued.


53. What determines the main source of income for the banks?

Answer/Explanation

Answer:
Explanation:
It is the difference between what is charged from the borrowers and what is paid to the depositors or savers, which determines the income of the banks.


54. Define credit.

Answer/Explanation

Answer:
Explanation:
Credit or loan refers to an agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future repayment.


55. For what purpose credit is mainly demanded in rural areas?

Answer/Explanation

Answer:
Explanation:
Credit is mainly demanded for the purpose of crop production in rural areas.


56. What is a debt-trap?

Answer/Explanation

Answer:
Explanation:
A debt-trap is a situation when it becomes impossible to repay the loan and the borrower adds on a new debt to pay the
existing debt.


57. What is collateral?

Answer/Explanation

Answer:
Explanation:
Collateral is an asset, such as land, vehicle, building, livestock and deposits with banks, that the borrower owns and uses this as a guarantee to a lender until the loan is repaid.


58. What are the main ‘terms of credit’?

Answer/Explanation

Answer:
Explanation:
Interest rate, collateral, documentation requirements and the mode of repayment together comprise ‘terms of credit’.


59. Which are the two major sources of formal loan for rural households?

Answer/Explanation

Answer:
Explanation: Banks and Cooperatives


60. Who supervises the functioning of formal sources of loans?

Answer/Explanation

Answer:
Explanation: Reserve Bank of India


61. Why are banks unwilling to lend loans to small farmers?

Answer/Explanation

Answer:
Explanation:
Banks provide loans after collateral and documentation securities, which generally the small farmers fail to comply with.
Therefore, banks are unwilling to give loans to small farmers.


62. What kind of credit is cmcial for a country’s development?

Answer/Explanation

Answer:
Explanation:
Cheap and affordable credit plays a crucial role in a country’s development.


63. Besides banks, what are the other sources of credit from which the small farmers borrow?

Answer/Explanation

Answer:
Explanation:
Besides banks, the small farmers borrow from landlords, moneylenders, traders, relatives and friends etc.


64. What are SHGs?

Answer/Explanation

Answer:
Explanation:
They are Self-Help Groups formed by the poor rural women.


65. What does the stock of money consist of?

Answer/Explanation

Answer:
Explanation:
The stock of money consists of currency held by the public and the demand deposits that they hold with the banks.


66. Who issues the currency notes in India?

Answer/Explanation

Answer:
Explanation:
In India, the currency notes are issued by the Reserve Bank of India (RBI) on behalf of the central government.


67. For which purpose are a major portion of the deposits with the banks used?

Answer/Explanation

Answer:
Explanation:
Banks use the maj or portion of their deposits to extend loans.


Fill in the Blanks

1. …………. implies the direct exchange of goods
against goods without the use of money.
2. …………. may be defined as anything which is generally accepted by people in exchange of goods and services or in repayment of debts.
3. In India, the law legalises the use of …………. as a medium of payment that cannot be refused in settling any transaction.
4. Money as a medium of exchange has removed the problem of …………. of wants.
5. Modern forms of money include currencies which are …………. and ………….
6. …………. help in pooling the savings of their members, who are poor women to meet their credit needs.
7. The share of formal sector credit is …………. for the richer households as compared to the poor households in India.
8. Absence of …………. as a guarantee is a major cause that prevents poor people from obtaining loans from formal sector sources, such as commercial banks.

Answers

1. Barter system
2. Money
3. rupee
4. double coincidence
5. paper notes, coins
6. Self Help Groups
7. higher
8. collateral

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