Money and Credit (10 Social Science)
Money is a medium of exchange, and credit systems facilitate economic transactions. Understanding money and credit is essential for economic literacy.
TL;DR: Money is a medium of exchange, and credit systems facilitate economic transactions. Understanding money and credit is essential for economic literacy.
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Money is a medium of exchange, and credit systems facilitate economic transactions. Understanding money and credit is essential for economic literacy.
Money and Credit MCQs with Answers & Explanations
Q1. What is money?
- Only coins and notes
- Medium of exchange, store of value, and unit of account ✓ (correct)
- Only bank deposits
- Government property
Q2. What is barter?
- Direct exchange of goods for money
- Direct exchange of goods for goods ✓ (correct)
- Government trade
- Tax payment
Q3. What is credit?
- Borrowing money with interest
- Lending or borrowing money with promise of repayment ✓ (correct)
- Saving money
- Investing money
Q4. What is the role of banks in credit creation?
- Only keep deposits safe
- Create money by lending out deposits ✓ (correct)
- Tax collection
- Government administration
Q5. What is a promissory note?
- Currency note
- Written promise to pay a sum on demand or at fixed future date ✓ (correct)
- Bank check
- Investment certificate
Q6. What is interest?
- Tax on loans
- Fee charged by lender on borrowed money ✓ (correct)
- Government subsidy
- Bank fee
Q7. What is the Reserve Bank of India (RBI)?
- Commercial bank
- Central bank of India controlling money supply and credit ✓ (correct)
- Government department
- Private institution
Q8. What is inflation?
- Increase in value of money
- Sustained increase in price levels reducing purchasing power ✓ (correct)
- Currency expansion
- Wage increase
Q9. What is collateral in credit?
- Interest rate
- Asset pledged as security for a loan ✓ (correct)
- Loan period
- Bank fee
Q10. What is the difference between formal and informal credit?
- Same thing
- Formal is through banks/institutions, informal is through money-lenders and friends ✓ (correct)
- Informal has no interest
- Formal is for government only
Frequently Asked Questions
How do banks ensure safe use of credit?
Banks verify borrower creditworthiness, charge interest based on risk, require collateral for large loans, set repayment terms, and have legal recourse if loans default. These measures protect both bank and borrower interests.
What are the advantages of formal credit over informal credit?
Formal credit from banks is regulated, has lower interest rates, provides loan security, maintains records, and has legal protections. Informal credit often has high interest rates, lacks documentation, and limited recourse for disputes.
More 10 Social Science MCQs
- Nationalism in India
- Resources and Development
- Power Sharing
- Sectors of Indian Economy
- French Revolution
- Nazism
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