Multiple Choice Questions

ECONOMICS - Money and Credit

Updated for CBSE 2027
Board Exam Preparation
46+ Practice Questions
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Practice Questions with Answers

Total 46 questions available

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Q. 1
Which among the following statements is true regarding banks?
A
Banks use the deposits to fulfil loan requirements of the people.
B
Banks use a major proportion of deposits to invest in mutual funds
C
Banks mediate between those who want to sell one commodity in exchange of other commodity.
D
Banks charge a lower interest rates on loan than the interest rate they offer on deposits.
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Q. 2
Identify the incorrect statement regarding informal sources of credit:
A
They cover those sources of credit which are registered by the government.
B
There is no organisation which supervises the credit activities of lenders
C
Their only motive is profit-making
D
They charge a much higher rate of interest on loans in comparison to formal lenders.
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Q. 3
Identify the correct statement with regard to banks from the following options:
A
SBI lays down the norms for other banks.
B
PNB lays down the norms for other banks.
C
RBI lays down the norms for other banks.
D
Syndicate bank lays down the norms for other banks.
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Q. 4
Which among the following lenders will possibly not ask the borrower to sign the terms of credit?
A
Banks
B
Money lenders
C
Cooperatives
D
Private agencies
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Q. 5
Which among the following is the name given to a system wherein goods were exchanged without using money?
A
Goods system
B
Exchange system
C
Barter system
D
No-money system
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Q. 6
Which among the following statements is correct with regard to banks and borrowers?
A
Banks give loans and charge money on loan amount from the borrowers.
B
Banks give loans and charge rent on loan amount from the borrowers.
C
Banks give loans and charge interest on loan amount from the borrowers.
D
Banks give loans and charge wages on loan amount from the borrowers.
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Q. 7
Formal sources of credit does not include:
A
None of these
B
cooperatives
C
money-lenders
D
banks
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Q. 8
A person can withdraw money by issuing a cheque. Which one among the following statements is true about cheque?
A
Loan taken by the bank.
B
Loan taken by the depositor from the bank.
C
Paper instructing the bank to pay a specific amount.
D
Paper valid to withdraw money.
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Q. 9
The property of money that acts as an intermediary in a transaction, is referred to as _________ .
A
unit of releasing funds
B
standard of deferred payment
C
medium of exchange
D
unit of value
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Q. 10
Ram and Shyam are small farmers. Ram has taken credit of 20,000 at 1.5% interest per month from a trader while Shyam has taken the same amount of credit at 8% interest per annum from a bank. Who is better off?
A
Shyam is better because his interest payment is less.
B
Ram is better because he has to do no paperwork.
C
Ram is better because he has not given any collateral
D
Both Ram and Shyam are equal so no one is better off.
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Q. 11
Choose the correctly-matched pair about Chit Fund:
A
Chit fund comes under formal credit.
B
Chit fund comes under discounted coupon
C
Chit fund comes under unorganised credit.
D
Chit fund comes under organised credit.
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Q. 12
Who among the following takes the decision regarding saving and loan activities in the Self Help Groups (SHGs)?
A
Local Money Lenders
B
Members of Non-Governmental Organisation (NGO)
C
Manager of a Bank
D
Members of Self-Help Group (SHG)
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Q. 13
Mohan produces ice cream and wants to sell it to people. He also requires sugar to make ice cream, so he wishes to buy sugar. Now, Mohan is unable to find a person who will exchange sugar for ice cream. Which of the following terms explain the problem that Mohan is facing?
A
Lack of trade expertise
B
Double coincidence of wants
C
Irrational consumer behaviour
D
Future expectations
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Q. 14
A paper that instructs a bank to pay a specific amount from a person's account to another person in whose name the paper is issued is called a __________ .
A
time deposit
B
demand deposit
C
cheque
D
bond
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Q. 15
All the banks act as mediator between _____ and ________ .
A
rural people, urban people
B
literates, illiterates
C
people, government
D
depositors, borrowers
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Q. 16
Modern forms of money include:
A
silver coins
B
copper coins
C
paper notes
D
gold coins
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Q. 17
Which of the following is the most important function of the banks?
A
Open as many bank accounts as possible.
B
Accept deposits and extend loans.
C
Give loans to government
D
Give loans to businesses.
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Q. 18
Which one of the following is the other name of organised credit?
A
Cooperative credit
B
Formal credit
C
Informal credit
D
None of the above
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Q. 19
Which of the following statement best describes the double coincidence of wants?
A
Two individuals must be able to produce all goods and services for the entire society.
B
A person should demand a great amount of a good or service so that another person is willing to produce it.
C
A person must have double the money if he or she wishes to buy goods or any service.
D
Two individuals must agree to sell and buy each other's commodities.
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Q. 20
Which among the following is included in modern forms of money?
A
Gold and silver coins
B
Grains and cattle
C
Currency notes and coins
D
Cowrie shells and stones
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Q. 21
Higher cost of borrowing for the farmers means a larger part of the __________ of the borrowers is used to repay the loan.
A
collateral
B
earnings
C
expenses
D
None of these
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Q. 22
Presently, banks in India, hold about _______ per cent of their deposits as cash.
A
20
B
35
C
30
D
15
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Q. 23
Identify the correct option with regard to money from the following options:
A
Currency
B
Barter
C
Value
D
Transfer
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Q. 24
What is the name given to a new medium of exchange thatwas developed to solve the problem of similar wants?
A
Money
B
Rent
C
Cost
D
Capital
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Q. 25
Which of the following statements best describes a demand deposit?
A
The currency approved by international bodies to carry out trade practices is called demand deposit
B
The order to a bank to pay a certain sum from the drawer's account is called demand deposit.
C
The cash deposited in a bank which can be withdrawn on demand is called demand deposit.
D
The cash held by people which can be used as and when they require is called demand deposit.
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Q. 26
Which of the following is the term used for method of repayment of loan?
A
None of the above
B
Mode of repayment
C
Method of payment
D
Mode of payment
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Q. 27
What is the name of the bank that met the credit needs of the poor at reasonable rates in Bangladesh?
A
Grameen Bank
B
Cooperative Bank
C
Sahkari Bank
D
Reserve Bank of Bangladesh
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Q. 28
Deposits in bank accounts that can be withdrawn on demand are called:
A
Demand deposits
B
Withdrawal deposits
C
Fixed deposits
D
Recurring deposits
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Q. 29
Which of the following statements best describes a debt-trap?
A
When a person takes loan from a bank, the person is in a debt trap as the banks charge a very high interest rate on loans.
B
When a person takes loan from unorganised sector, the person is in a debt trap.
C
When a person takes a loan and is unable to repay the loan, he or she has to sell portion of the land and it worsens the persons situation is known as a debt trap.
D
When a person takes loan for production process, earns good profit, returns the credit and again takes loan in the next production cycle, the person is in a debt trap.
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Q. 30
Identify the one who helps the borrowers to overcome the problem of lack of collateral:
A
Employers
B
State government
C
Self-Help Group (SHG)
D
Moneylenders
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Q. 31
Identify the correct essential feature of barter system:
A
Money can easily be used to exchange any commodity.
B
It is generally accepted as a medium of exchange of goods.
C
It acts as a measure and store of value.
D
It is based on double coincidence of wants
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Q. 32
Which of the following is NOT a part of terms of credit?
A
Mode of repayment
B
Interest rate
C
Functioning of private banks
D
Documentation required
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Q. 33
Choose the correctly-matched pair about percentage of formal sector in total credit in India in poor households.
A
Very Poor-80%
B
Middle - 20%
C
Poor-15%
D
Rich- 70%
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Q. 34
Informal sector loans are given by:
A
Relatives and friends
B
Traders
C
All of the above
D
Employers
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Q. 35
A porter making pots, wants to exchange pots for wheat. Luckily, he meets a farmer who has wheat and is willing to exchange it for the pots. What is this situation known as? Select the appropriate option:
A
None of the above
B
Incidence of wants
C
Barter system of wants
D
Double coincidence of wants
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Q. 36
Which of the following is a reason for using money to buy goods and services?
A
Money is nore valuable than any goods or service a person wants.
B
Money can be easily exchanged for any goods or service a person wants.
C
Money is less valuable than any goods or service a person wants so people easily give money for the goods and services.
D
Money cannot be put to any other use apart from transaction.
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Q. 37
Which of the following is not a feature of Self Help Groups (SHGs)?
A
It consists of 15-20 members or more.
B
It is an informal source of credit
C
Here, members pool their savings which acts as collateral.
D
Loans are given at nominal rate of interest.
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Q. 38
In rural areas, farmers take credit for:
A
Fodder
B
Crop production
C
Education
D
Health
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Q. 39
A major portion of the deposits is used by banks for:
A
setting up new branches
B
extending loans
C
None of the above
D
paying taxes
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Q. 40
Identify the correct statement with regard to agricultural stage:
A
In agricultural stage, grains were used as coins
B
in agricultural stage, grains were used as ingredient.
C
In agricultural stage, grains were used as commodity.
D
In agricultural stage, grains were used as money.
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Q. 41
Identify which of the following organisations supervises the credit activities of lenders in the informal sector?
A
None of the above
B
Ministry of finance
C
Commercial banks
D
RBI
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Q. 42
Since money act as an intermediate in the exchange process, it is called _______ . Choose the correct option:
A
Balance
B
Withdrawal
C
Medium of exchange
D
Cash deposit
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Q. 43
Which one of the following is the name given to a substitute of cash and cheque?
A
Demand deposit
B
Coin
C
Currency
D
Credit card
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Q. 44
Which among the following is an example of cooperative society?
A
Farmers
B
Women
C
All of these
D
Workers
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Q. 45
Which of the following is the most important function of money?
A
Payment of loans
B
Medium of exchange
C
Stock market exchange
D
Used in banking transactions
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Q. 46
Identify which one of the following is the newer way of providing loans to the rural poor, particularly women?
A
Grameen Banks
B
Self-Help Groups
C
Cooperative Banks
D
Money-lenders
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