Money and Credit Class 10 MCQ

Question 1

Question 1: What is the primary function of money in an economy?

A. To store wealthB. To act as a medium of exchangeC. To measure the value of goodsD. To facilitate barter transactions

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Answer

B. To act as a medium of exchange. Money simplifies transactions by eliminating the need for a “double coincidence of wants”.

Question 2

Question 2: Which of the following is NOT a characteristic of modern currency?

A. It is made of precious metals.B. It is authorized by the government.C. It is accepted as a medium of exchange.D. It has no intrinsic use value.

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Answer

A. It is made of precious metals. Modern currencies are typically made of paper or other materials, not precious metals.

Question 3

Question 3: What is the role of the Reserve Bank of India (RBI) in relation to currency?

A. It mints coins only.B. It prints and issues currency notes.C. It regulates foreign exchange rates.D. It controls the lending rates of banks.

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Answer

B. It prints and issues currency notes. The RBI is the central bank of India and has the sole authority to issue currency notes.

Question 4

Question 4: What are demand deposits?

A. Deposits that can be withdrawn on demand.B. Fixed deposits with a maturity period.C. Deposits held by the government.D. Deposits in foreign currency.

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Answer

A. Deposits that can be withdrawn on demand. Demand deposits are bank accounts that allow account holders to withdraw funds whenever they need them.

Question 5

Question 5: How do cheques facilitate transactions?

A. They are physical currency notes.B. They are a type of credit card.C. They instruct a bank to pay a specific amount.D. They are used for online payments only.

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Answer

C. They instruct a bank to pay a specific amount. A cheque is a written order to a bank to transfer funds from one account to another.

Question 6

Question 6: What is the “double coincidence of wants”?

A. A situation where two people want the same thing.B. A requirement for barter transactions.C. A feature of a monetary economy.D. A type of bank account.

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Answer

B. A requirement for barter transactions. Barter requires both parties to have what the other wants, which can be difficult to achieve.

Question 7

Question 7: Which of these is an example of money used in ancient times?

A. Paper currencyB. Credit cardsC. CattleD. Demand deposits

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Answer

C. Cattle. Various items like cattle, grains, and precious metals have been used as money throughout history.

Question 8

Question 8: Besides currency, what else functions as money in the modern economy?

A. Bartered goodsB. Demand depositsC. IOUsD. Promissory notes

Show Explanation

Answer

B. Demand deposits. Demand deposits, accessible through cheques, act as a medium of exchange.

Question 9

Question 9: Why is money considered a more efficient medium of exchange than barter?

A. It requires less physical effort.B. It eliminates the need for double coincidence of wants.C. It is always made of precious metals.D. It is easier to transport than all goods.

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Answer

B. It eliminates the need for double coincidence of wants. Money simplifies transactions by providing a universally accepted medium of exchange.

Question 10

Question 10: Which of the following best describes the evolution of money?

A. From complex financial instruments to simple bartering.B. From barter systems to various forms of commodity money to modern currency.C. From paper currency to gold coins and then back to paper currency.D. From digital transactions to the use of physical cash.

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Answer

B. From barter systems to various forms of commodity money to modern currency. Money has evolved over time to become more efficient and widely accepted.

Question 11

Question 11: What is the primary reason currency is accepted as a medium of exchange?

A. It is backed by gold reserves.B. It is legal tender authorized by the government.C. It has intrinsic value like gold or silver.D. It is universally desired by everyone.

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Answer

B. It is legal tender authorized by the government. The government’s backing makes currency acceptable in transactions.

Question 12

Question 12: Which of the following is NOT a characteristic of demand deposits?

A. They can be withdrawn on demand.B. They earn interest.C. They are physical currency notes.D. They can be accessed through cheques.

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Answer

C. They are physical currency notes. Demand deposits are held in bank accounts, not as physical cash.

Question 13

Question 13: How do demand deposits contribute to the money supply?

A. They decrease the amount of physical currency in circulation.B. They function as a medium of exchange alongside currency.C. They are used exclusively for international trade.D. They are invested in the stock market.

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Answer

B. They function as a medium of exchange alongside currency. Demand deposits, accessible by cheque, can be used to make payments.

Question 14

Question 14: What is the role of banks in the creation of demand deposits?

A. They print the currency notes.B. They accept deposits from individuals and businesses.C. They regulate the interest rates on loans.D. They control the money supply in the economy.

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Answer

B. They accept deposits from individuals and businesses. Banks facilitate the creation of demand deposits by allowing customers to deposit funds.

Question 15

Question 15: What is a cheque?

A. A type of credit card.B. A paper instrument instructing a bank to pay a specific amount.C. A digital payment transfer.D. A form of currency.

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Answer

B. A paper instrument instructing a bank to pay a specific amount. Cheques are used to transfer funds between bank accounts.

Question 16

Question 16: What distinguishes currency from other forms of money like demand deposits?

A. Currency is universally accepted, while demand deposits are not.B. Currency is physical, while demand deposits are electronic.C. Currency is issued by the government, while demand deposits are created by banks.D. All of the above.

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Answer

D. All of the above. These are all key distinctions between currency and demand deposits.

Question 17

Question 17: Why are demand deposits considered a form of money?

A. They are backed by gold reserves.B. They can be used to make payments.C. They earn high interest rates.D. They are issued by the central bank.

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Answer

B. They can be used to make payments. The ability to use demand deposits for transactions makes them a form of money.

Question 18

Question 18: What is the relationship between currency and demand deposits?

A. They are completely unrelated.B. They are both forms of money in the modern economy.C. Currency is more widely used than demand deposits.D. Demand deposits are backed by currency held in reserve.

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Answer

B. They are both forms of money in the modern economy. Both currency and demand deposits serve as mediums of exchange.

Question 19

Question 19: Which of the following is an example of a demand deposit?

A. Cash in your walletB. Funds in your savings accountC. A gold coinD. A government bond

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Answer

B. Funds in your savings account. Savings accounts and checking accounts are both types of demand deposits.

Question 20

Question 20: How does the use of cheques contribute to economic activity?

A. It increases the need for physical currency.B. It facilitates transactions without the need for carrying large amounts of cash.C. It reduces the role of banks in the economy.D. It makes international trade more difficult.

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Answer

B. It facilitates transactions without the need for carrying large amounts of cash. Cheques offer a convenient and safe way to make payments.

Question 21

Question 21: What is the primary function of banks in an economy?

A. To print currency notesB. To provide loans and accept depositsC. To regulate the stock marketD. To control government spending

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Answer

B. To provide loans and accept deposits. Banks act as intermediaries between those who have money to save and those who need to borrow.

Question 22

Question 22: What is the term used to describe the portion of deposits banks are required to keep as reserves?

A. Interest rateB. Reserve requirementC. Loan amountD. Credit score

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Answer

B. Reserve requirement. This is a percentage of deposits that banks must hold and not lend out.

Question 23

Question 23: How do banks generate profit?

A. By printing currencyB. By charging higher interest rates on loans than they pay on depositsC. By investing in the stock marketD. By providing free financial advice

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Answer

B. By charging higher interest rates on loans than they pay on deposits. The difference between these interest rates is the bank’s net interest margin.

Question 24

Question 24: What is the role of banks in the credit creation process?

A. They directly control the money supply.B. They create credit by lending out a portion of deposited funds.C. They regulate interest rates for all lenders.D. They provide financial aid to struggling businesses.

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Answer

B. They create credit by lending out a portion of deposited funds. This is known as fractional reserve banking.

Question 25

Question 25: What is the relationship between deposits and loans in a bank’s operations?

A. Deposits are used to fund loan disbursements.B. Loans are used to increase the amount of deposits.C. Deposits and loans are completely independent of each other.D. Banks only accept deposits and do not provide loans.

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Answer

A. Deposits are used to fund loan disbursements. Banks use the money deposited by savers to provide loans to borrowers.

Question 26

Question 26: What is the purpose of banks maintaining cash reserves?

A. To invest in government bonds.B. To meet the withdrawal demands of depositors.C. To increase their profit margins.D. To regulate the money supply.

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Answer

B. To meet the withdrawal demands of depositors. Banks need to have enough cash on hand to cover customer withdrawals.

Question 27

Question 27: What is the meaning of “intermediation” in the context of banking?

A. Banks act as a link between depositors and borrowers.B. Banks regulate the flow of money in the economy.C. Banks provide financial advice to individuals and businesses.D. Banks invest in the stock market on behalf of their customers.

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Answer

A. Banks act as a link between depositors and borrowers. Banks connect those with surplus funds to those who need funds.

Question 28

Question 28: What is the primary source of income for banks?

A. Fees charged for account maintenance.B. The interest rate differential between loans and deposits.C. Profits from investing in the stock market.D. Government subsidies.

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Answer

B. The interest rate differential between loans and deposits. This difference is how banks make money.

Question 29

Question 29: How does the fractional reserve banking system contribute to economic growth?

A. It limits the amount of money in circulation.B. It allows banks to create credit and stimulate investment.C. It increases the risk of bank failures.D. It makes it harder for businesses to borrow money.

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Answer

B. It allows banks to create credit and stimulate investment. Fractional reserve banking allows banks to lend out more money than they hold in reserve, fostering economic activity.

Question 30

Question 30: Which of the following best describes the role of banks in the modern economy?

A. They solely manage government funds.B. They play a crucial role in facilitating transactions and credit creation.C. They primarily focus on international trade financing.D. They have limited impact on the overall economy.

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Answer

B. They play a crucial role in facilitating transactions and credit creation. Banks are essential for the smooth functioning of the modern economy.

Question 31

Question 31: What is credit?

A. A type of currency.B. An agreement where a lender provides resources to a borrower for future repayment.C. A government subsidy for businesses.D. A tax levied on financial transactions.

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Answer

B. An agreement where a lender provides resources to a borrower for future repayment. Credit involves a promise to pay back borrowed funds or goods.

Question 32

Question 32: In what scenario can credit have a positive impact?

A. When it leads to a debt trap.B. When it is used for unproductive consumption.C. When it helps a business expand and increase earnings.D. When it is taken from informal lenders at high interest rates.

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Answer

C. When it helps a business expand and increase earnings. Credit can be beneficial when used for productive investments.

Question 33

Question 33: What is a “debt trap”?

A. A situation where a borrower is unable to repay their loan.B. A type of bank account.C. A government program for debt relief.D. A form of collateral.

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Answer

A. A situation where a borrower is unable to repay their loan. Debt traps occur when borrowers accumulate unmanageable debt.

Question 34

Question 34: What are some potential risks associated with taking credit?

A. Increased financial stability.B. The possibility of falling into a debt trap.C. Improved credit score.D. Enhanced business opportunities.

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Answer

B. The possibility of falling into a debt trap. If not managed responsibly, credit can lead to financial difficulties.

Question 35

Question 35: How can credit contribute to economic growth?

A. By discouraging investment and spending.B. By limiting access to funds for businesses.C. By facilitating investment and business expansion.D. By increasing the reliance on barter transactions.

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Answer

C. By facilitating investment and business expansion. Credit enables businesses to invest and grow, contributing to economic development.

Question 36

Question 36: Which of the following is an example of credit being used for productive purposes?

A. Taking a loan to buy a new car for leisure.B. Using a credit card to purchase luxury items.C. Borrowing money to invest in a small business.D. Taking a loan to pay for a lavish vacation.

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Answer

C. Borrowing money to invest in a small business. This is an example of using credit to generate income and create assets.

Question 37

Question 37: Why is it important to consider the terms of credit before taking a loan?

A. To avoid paying any interest.B. To ensure that the loan is affordable and manageable.C. To get the maximum possible loan amount.D. To impress the lender with your financial knowledge.

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Answer

B. To ensure that the loan is affordable and manageable. Understanding the terms helps borrowers make informed decisions.

Question 38

Question 38: What factors can influence the impact of credit on an individual or business?

A. The purpose for which the credit is used.B. The terms of the credit agreement.C. The borrower’s ability to manage debt.D. All of the above.

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Answer

D. All of the above. These factors all play a role in determining whether credit has a positive or negative impact.

Question 39

Question 39: In the context of credit, what does “repayment” refer to?

A. The process of borrowing money.B. The act of returning the borrowed funds along with interest.C. The interest rate charged on the loan.D. The collateral provided as security for the loan.

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Answer

B. The act of returning the borrowed funds along with interest. Repayment is the fulfillment of the borrower’s obligation.

Question 40

Question 40: What is the key difference between using credit for consumption versus investment?

A. Consumption involves using credit to buy goods or services for immediate use, while investment involves using credit to acquire assets or start businesses with the expectation of generating future income.B. Consumption always has a negative impact on the borrower, while investment always has a positive impact.C. There is no difference between consumption and investment when it comes to using credit.D. Consumption involves borrowing from formal sources, while investment involves borrowing from informal sources.

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Answer

A. Consumption involves using credit to buy goods or services for immediate use, while investment involves using credit to acquire assets or start businesses with the expectation of generating future income. Credit used for investment has the potential to generate returns and improve financial well-being.

Question 41

Question 41: What is a common reason farmers in rural areas need credit?

A. To buy luxury goods.B. To fund crop production expenses.C. To invest in the stock market.D. To travel abroad for vacations.

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Answer

B. To fund crop production expenses. Farmers often need credit to purchase seeds, fertilizers, and other inputs.

Question 42

Question 42: What are some risks associated with farmers taking credit for crop production?

A. Guaranteed profits.B. Crop failure due to unforeseen circumstances.C. Stable market prices for agricultural products.D. Easy access to formal credit sources.

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Answer

B. Crop failure due to unforeseen circumstances. Factors like weather and pests can impact harvests and repayment ability.

Question 43

Question 43: What is a “debt trap” in the context of rural credit?

A. A type of government subsidy for farmers.B. A situation where a farmer is unable to repay their loan and accumulates more debt.C. A system of cooperative farming.D. A method of crop insurance.

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Answer

B. A situation where a farmer is unable to repay their loan and accumulates more debt. This can lead to a cycle of poverty and further borrowing.

Question 44

Question 44: What is the meaning of “terms of credit”?

A. The amount of money borrowed.B. The conditions of a loan agreement.C. The credit score of the borrower.D. The type of collateral offered.

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Answer

B. The conditions of a loan agreement. This includes interest rates, repayment schedules, and other details.

Question 45

Question 45: Which of the following is NOT a component of the terms of credit?

A. Interest rateB. CollateralC. Borrower’s personal opinion about the lenderD. Documentation requirements

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Answer

C. Borrower’s personal opinion about the lender. The terms are objective conditions of the loan, not subjective opinions.

Question 46

Question 46: What is collateral?

A. The total amount of the loan.B. An asset pledged as security for a loan.C. The interest rate charged on the loan.D. The borrower’s credit history.

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Answer

B. An asset pledged as security for a loan. If the borrower defaults, the lender can seize the collateral.

Question 47

Question 47: Why do lenders require collateral?

A. To increase their profits.B. To reduce the risk of loan default.C. To make it harder for people to borrow money.D. To comply with government regulations.

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Answer

B. To reduce the risk of loan default. Collateral provides a safety net for lenders.

Question 48

Question 48: Which of the following can serve as collateral for a loan?

A. Land and buildingsB. LivestockC. Bank depositsD. All of the above

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Answer

D. All of the above. These are all examples of assets that can be used as collateral.

Question 49

Question 49: What is the significance of the interest rate in a credit agreement?

A. It determines the loan amount.B. It represents the cost of borrowing money.C. It is the collateral offered for the loan.D. It is the repayment schedule.

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Answer

B. It represents the cost of borrowing money. The interest rate is the percentage of the principal that the borrower pays as interest.

Question 50

Question 50: How do the terms of credit vary?

A. They are always the same for all borrowers.B. They depend on factors like the lender, borrower, loan amount, and purpose.C. They are determined solely by the government.D. They are fixed by law and cannot be changed.

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Answer

B. They depend on factors like the lender, borrower, loan amount, and purpose. Different loans and borrowers will have different terms.

Question 51

Question 51: What are the two main sectors of credit in India?

A. Public and privateB. Formal and informalC. Rural and urbanD. Domestic and international

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Answer

B. Formal and informal. These sectors differ in their regulation and lending practices.

Question 52

Question 52: Which of the following is an example of a formal credit source?

A. MoneylendersB. BanksC. RelativesD. Traders

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Answer

B. Banks. Banks are part of the formal credit sector and are regulated by the RBI.

Question 53

Question 53: Who supervises the functioning of formal sector loans in India?

A. The President of IndiaB. The Reserve Bank of India (RBI)C. The Ministry of FinanceD. The Supreme Court of India

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Answer

B. The Reserve Bank of India (RBI). The RBI plays a key role in regulating and overseeing the formal credit sector.

Question 54

Question 54: Which of the following is a characteristic of the informal credit sector?

A. Loans at low interest ratesB. Supervised by the RBIC. Loans from moneylenders and relativesD. Strict documentation requirements

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Answer

C. Loans from moneylenders and relatives. Informal lenders are typically not subject to formal regulations.

Question 55

Question 55: What is a potential disadvantage of borrowing from the informal sector?

A. Lower interest ratesB. Easy access to creditC. High interest rates and unfair practicesD. Simple documentation requirements

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Answer

C. High interest rates and unfair practices. Informal lenders may charge exorbitant interest rates and use aggressive recovery methods.

Question 56

Question 56: Which sector of credit generally charges lower interest rates?

A. Formal sectorB. Informal sectorC. Both sectors charge the same ratesD. Interest rates are not a factor in credit decisions

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Answer

A. Formal sector. Formal lenders typically offer lower interest rates due to regulation and competition.

Question 57

Question 57: Why is access to formal credit important for economic development?

A. It discourages entrepreneurship.B. It increases the cost of borrowing.C. It encourages economic activity and reduces reliance on informal lenders.D. It primarily benefits large corporations.

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Answer

C. It encourages economic activity and reduces reliance on informal lenders. Formal credit enables businesses to grow and individuals to invest in their future.

Question 58

Question 58: What is a key difference between formal and informal lenders regarding supervision?

A. Formal lenders are supervised by the RBI, while informal lenders are not.B. Informal lenders are supervised by the government, while formal lenders are not.C. Both formal and informal lenders are supervised by the RBI.D. Neither formal nor informal lenders are subject to any supervision.

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Answer

A. Formal lenders are supervised by the RBI, while informal lenders are not. This is a crucial distinction between the two sectors.

Question 59

Question 59: Which sector of credit is more likely to use unfair means to recover loans?

A. Formal sectorB. Informal sectorC. Both sectors use the same methodsD. Loan recovery methods are always fair and ethical

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Answer

B. Informal sector. Due to lack of regulation, informal lenders may resort to aggressive or unfair practices.

Question 60

Question 60: What is a major advantage of borrowing from the formal credit sector?

A. No interest chargesB. Lower interest rates and greater transparencyC. No need for collateralD. Faster loan processing times

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Answer

B. Lower interest rates and greater transparency. Formal lending offers better terms and more regulated practices.

Question 61

Question 61: What is the role of the RBI in the credit sector?

A. It provides direct loans to individuals.B. It supervises the functioning of formal sector lenders.C. It sets the prices of goods and services.D. It controls the stock market.

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Answer

B. It supervises the functioning of formal sector lenders. The RBI ensures that banks adhere to regulations and lending practices.

Question 62

Question 62: How does the RBI monitor banks’ cash reserves?

A. By conducting regular inspections and audits.B. By setting the reserve requirement.C. By controlling the interest rates on loans.D. By providing financial aid to banks.

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Answer

A. By conducting regular inspections and audits. The RBI ensures that banks maintain adequate reserves to meet withdrawal demands.

Question 63

Question 63: What is the purpose of the RBI ensuring that banks lend to small cultivators and small-scale industries?

A. To maximize bank profits.B. To promote inclusive economic growth.C. To discourage large corporations.D. To control inflation.

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Answer

B. To promote inclusive economic growth. The RBI encourages lending to diverse sectors, not just large businesses.

Question 64

Question 64: How does the RBI collect information on banks’ lending activities?

A. By conducting surveys of borrowers.B. By monitoring social media.C. By requiring banks to submit regular reports.D. By analyzing stock market data.

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Answer

C. By requiring banks to submit regular reports. Banks provide data on loan amounts, recipients, and interest rates to the RBI.

Accepted Answer

D. All of the above. The RBI’s oversight is crucial for a healthy and fair credit market.

Accepted Answer

B. Lower interest rates, transparency, and regulated practices. Formal credit offers better terms and protection for borrowers.

Accepted Answer

B. It provides funding for new ventures and business expansion. Access to capital is essential for entrepreneurs to start and grow businesses.

Accepted Answer

C. It fuels investment, job creation, and overall economic progress. Formal credit plays a vital role in driving economic development.

Accepted Answer

B. To protect borrowers from high interest rates and unfair practices. Informal credit can be exploitative and lead to debt traps.

Accepted Answer

B. It encourages banks to provide financial services to all sections of society. The RBI promotes access to formal credit for underserved populations.

Accepted Answer

A. Moneylenders. Graph 1 should visually indicate that moneylenders are the primary source of credit in rural areas.

Accepted Answer

B. Informal. Graph 1 should show a greater reliance on informal sources like moneylenders.

Accepted Answer

C. Poor households. Graph 2 should illustrate that poorer households depend more on informal lenders.

Accepted Answer

C. Formal sources like banks. Graph 2 should depict that richer households have better access to formal credit.

Accepted Answer

A. The rich have greater access to formal credit than the poor. This pattern should be evident in both graphs.

Accepted Answer

C. Higher dependence on informal lenders with potentially high interest rates. This can lead to debt traps and hinder economic progress.

Accepted Answer

B. To reduce reliance on expensive informal credit and promote financial inclusion. Expanding formal credit can empower rural communities.

Accepted Answer

B. It promotes fairness and equal opportunities for all, including the poor. Equitable access to credit is crucial for inclusive growth.

Accepted Answer

B. There is a significant need for expanding the reach of formal financial institutions in rural areas. This highlights the gap in formal credit availability.

Accepted Answer

C. Hindered income growth and economic development. High interest rates can trap borrowers in a cycle of debt and limit their economic opportunities.

Accepted Answer

C. They often lack proper documentation and collateral required by banks. This is a significant barrier for low-income individuals.

Accepted Answer

C. It increases the reliance on informal lenders. Limited bank presence forces people to turn to informal sources with potentially unfavorable terms.

Accepted Answer

C. The poor are considered high-risk borrowers due to their financial situation. Banks assess risk before lending, and the poor may lack the financial stability to qualify for loans.

Accepted Answer

A. They provide credit to those who cannot access it from banks. Moneylenders fill the gap but often at a high cost.

Accepted Answer

B. Falling into a debt trap due to high interest rates. High interest rates can make it difficult to repay loans, leading to further debt.

Accepted Answer

B. To promote financial inclusion and economic empowerment. Access to formal credit can help break the cycle of poverty.

Accepted Answer

B. Expand bank presence in rural areas. Increasing access to banks can reduce reliance on informal lenders.

Accepted Answer

C. By developing mobile banking and online lending platforms. Technology can make financial services more accessible to remote and underserved populations.

Accepted Answer

C. It empowers individuals to make informed financial decisions and understand the terms of credit. Financial literacy is crucial for responsible borrowing.

Accepted Answer

B. High credit score. The poor typically have limited credit history or a low credit score, which can be a barrier to accessing formal credit.

Accepted Answer

C. Small groups of rural poor who pool their savings and provide loans to each other. SHGs are a form of microfinance.

Accepted Answer

B. To promote financial self-reliance and access to credit for the poor. SHGs offer an alternative to informal credit sources.

Accepted Answer

C. Rural poor, particularly women. SHGs often focus on empowering women and marginalized communities.

Accepted Answer

C. Members save regularly and contribute to a common fund. This pooled savings forms the basis for their lending activities.

Accepted Answer

C. Banks often provide loans to SHGs after they demonstrate successful savings and lending practices. SHGs act as a bridge between the poor and formal credit institutions.

Accepted Answer

B. Access to formal credit without collateral. SHGs enable the poor to overcome the barrier of collateral requirements.

Accepted Answer

C. They provide a platform for members to discuss and address social issues. SHGs foster collective action and social change.

Accepted Answer

B. A microfinance organization in Bangladesh. The Grameen Bank is known for its successful model of microcredit.

Accepted Answer

C. Providing microcredit to the poorest sections of society, especially women. The Grameen Bank demonstrates the potential of microfinance.

Accepted Answer

C. They are creditworthy and can successfully run small income-generating activities. The Grameen Bank’s success challenges traditional assumptions about the poor.

Money and Credit Class 10 MCQ

Table of Contents

Money as a Medium of Exchange and its Evolution (Money and Credit Class 10 MCQ 1 to 10)

Question 7: Which of these is an example of money used in ancient times?A. Paper currencyB. Credit cardsC. CattleD. Demand depositsShow ExplanationCorrect Answer: C. Cattle. Various items like cattle, grains, and precious metals have been used as money throughout history.

Question 8: Besides currency, what else functions as money in the modern economy?A. Bartered goodsB. Demand depositsC. IOUsD. Promissory notesShow ExplanationCorrect Answer: B. Demand deposits. Demand deposits, accessible through cheques, act as a medium of exchange.

Currency and Demand Deposits (Money and Credit Class 10 MCQ 11 to 20)

Question 19: Which of the following is an example of a demand deposit?A. Cash in your walletB. Funds in your savings accountC. A gold coinD. A government bondShow ExplanationCorrect Answer: B. Funds in your savings account. Savings accounts and checking accounts are both types of demand deposits.

Role of Banks and their Lending Practices (Money and Credit Class 10 MCQ 21 to 30)

Credit: Positive and Negative Impacts (Money and Credit Class 10 MCQ 31 to 40)

Credit in Rural Areas and Terms of Credit (Money and Credit Class 10 MCQ 41 to 50)

Question 48: Which of the following can serve as collateral for a loan?A. Land and buildingsB. LivestockC. Bank depositsD. All of the aboveShow ExplanationCorrect Answer: D. All of the above. These are all examples of assets that can be used as collateral.

Formal and Informal Credit Sectors (Money and Credit Class 10 MCQ 51 to 60)

Question 51: What are the two main sectors of credit in India?A. Public and privateB. Formal and informalC. Rural and urbanD. Domestic and internationalShow ExplanationCorrect Answer: B. Formal and informal. These sectors differ in their regulation and lending practices.

Question 52: Which of the following is an example of a formal credit source?A. MoneylendersB. BanksC. RelativesD. TradersShow ExplanationCorrect Answer: B. Banks. Banks are part of the formal credit sector and are regulated by the RBI.

RBI’s Role in Credit and Importance of Formal Credit (Money and Credit Class 10 MCQ 61 to 70)

Access to Credit in Urban and Rural Areas (Money and Credit Class 10 MCQ 71 to 80)

Question 7: Which of these is an example of money used in ancient times?
A. Paper currencyB. Credit cardsC. CattleD. Demand deposits
Show Explanation
Correct Answer: C. Cattle. Various items like cattle, grains, and precious metals have been used as money throughout history.

Question 8: Besides currency, what else functions as money in the modern economy?
A. Bartered goodsB. Demand depositsC. IOUsD. Promissory notes
Show Explanation
Correct Answer: B. Demand deposits. Demand deposits, accessible through cheques, act as a medium of exchange.

Question 48: Which of the following can serve as collateral for a loan?
A. Land and buildingsB. LivestockC. Bank depositsD. All of the above
Show Explanation
Correct Answer: D. All of the above. These are all examples of assets that can be used as collateral.

Question 51: What are the two main sectors of credit in India?
A. Public and privateB. Formal and informalC. Rural and urbanD. Domestic and international
Show Explanation
Correct Answer: B. Formal and informal. These sectors differ in their regulation and lending practices.

Question 52: Which of the following is an example of a formal credit source?
A. MoneylendersB. BanksC. RelativesD. Traders
Show Explanation
Correct Answer: B. Banks. Banks are part of the formal credit sector and are regulated by the RBI.