Multiple Choice Questions
ECONOMICS - Money and Credit
Practice Questions with Answers
Total 46 questions available
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 fundsC
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.Click an option to check your answer
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 lendersC
Their only motive is profit-makingD
They charge a much higher rate of interest on loans in comparison to formal lenders.Click an option to check your answer
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.Click an option to check your answer
Q. 4
Which among the following lenders will possibly
not ask the borrower to sign the terms of credit?
A
BanksB
Money lendersC
CooperativesD
Private agenciesClick an option to check your answer
Q. 5
Which among the following is the name given to
a system wherein goods were exchanged without
using money?
A
Goods systemB
Exchange systemC
Barter systemD
No-money systemClick an option to check your answer
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.Click an option to check your answer
Q. 7
Formal sources of credit does not include:
A
None of theseB
cooperativesC
money-lendersD
banksClick an option to check your answer
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.Click an option to check your answer
Q. 9
The property of money that acts as an
intermediary in a transaction, is referred to as _________ .
A
unit of releasing fundsB
standard of deferred paymentC
medium of exchangeD
unit of valueClick an option to check your answer
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 collateralD
Both Ram and Shyam are equal so no one is better off.Click an option to check your answer
Q. 11
Choose the correctly-matched pair about Chit
Fund:
A
Chit fund comes under formal credit.B
Chit fund comes under discounted couponC
Chit fund comes under unorganised credit.D
Chit fund comes under organised credit.Click an option to check your answer
Q. 12
Who among the following takes the decision
regarding saving and loan activities in the Self
Help Groups (SHGs)?
A
Local Money LendersB
Members of Non-Governmental Organisation (NGO)C
Manager of a BankD
Members of Self-Help Group (SHG)Click an option to check your answer
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 expertiseB
Double coincidence of wantsC
Irrational consumer behaviourD
Future expectationsClick an option to check your answer
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 depositB
demand depositC
chequeD
bondClick an option to check your answer
Q. 15
All the banks act as mediator between _____ and ________ .
A
rural people, urban peopleB
literates, illiteratesC
people, governmentD
depositors, borrowersClick an option to check your answer
Q. 16
Modern forms of money include:
A
silver coinsB
copper coinsC
paper notesD
gold coinsClick an option to check your answer
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 governmentD
Give loans to businesses.Click an option to check your answer
Q. 18
Which one of the following is the other name of
organised credit?
A
Cooperative creditB
Formal creditC
Informal creditD
None of the aboveClick an option to check your answer
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.Click an option to check your answer
Q. 20
Which among the following is included in modern
forms of money?
A
Gold and silver coinsB
Grains and cattleC
Currency notes and coinsD
Cowrie shells and stonesClick an option to check your answer
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
collateralB
earningsC
expensesD
None of theseClick an option to check your answer
Q. 22
Presently, banks in India, hold about _______ per cent of their deposits as cash.
A
20B
35C
30D
15Click an option to check your answer
Q. 23
Identify the correct option with regard to money
from the following options:
A
CurrencyB
BarterC
ValueD
TransferClick an option to check your answer
Q. 24
What is the name given to a new medium of
exchange thatwas developed to solve the problem
of similar wants?
A
MoneyB
RentC
CostD
CapitalClick an option to check your answer
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 depositB
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.Click an option to check your answer
Q. 26
Which of the following is the term used for
method of repayment of loan?
A
None of the aboveB
Mode of repaymentC
Method of paymentD
Mode of paymentClick an option to check your answer
Q. 27
What is the name of the bank that met the
credit needs of the poor at reasonable rates in
Bangladesh?
A
Grameen BankB
Cooperative BankC
Sahkari BankD
Reserve Bank of BangladeshClick an option to check your answer
Q. 28
Deposits in bank accounts that can be withdrawn
on demand are called:
A
Demand depositsB
Withdrawal depositsC
Fixed depositsD
Recurring depositsClick an option to check your answer
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.Click an option to check your answer
Q. 30
Identify the one who helps the borrowers to
overcome the problem of lack of collateral:
A
EmployersB
State governmentC
Self-Help Group (SHG)D
MoneylendersClick an option to check your answer
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 wantsClick an option to check your answer
Q. 32
Which of the following is NOT a part of terms of
credit?
A
Mode of repaymentB
Interest rateC
Functioning of private banksD
Documentation requiredClick an option to check your answer
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%Click an option to check your answer
Q. 34
Informal sector loans are given by:
A
Relatives and friendsB
TradersC
All of the aboveD
EmployersClick an option to check your answer
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 aboveB
Incidence of wantsC
Barter system of wantsD
Double coincidence of wantsClick an option to check your answer
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.Click an option to check your answer
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 creditC
Here, members pool their savings which acts as collateral.D
Loans are given at nominal rate of interest.Click an option to check your answer
Q. 38
In rural areas, farmers take credit for:
A
FodderB
Crop productionC
EducationD
HealthClick an option to check your answer
Q. 39
A major portion of the deposits is used by banks
for:
A
setting up new branchesB
extending loansC
None of the aboveD
paying taxesClick an option to check your answer
Q. 40
Identify the correct statement with regard to
agricultural stage:
A
In agricultural stage, grains were used as coinsB
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.Click an option to check your answer
Q. 41
Identify which of the following organisations
supervises the credit activities of lenders in the
informal sector?
A
None of the aboveB
Ministry of financeC
Commercial banksD
RBIClick an option to check your answer
Q. 42
Since money act as an intermediate in the
exchange process, it is called _______ .
Choose the correct option:
A
BalanceB
WithdrawalC
Medium of exchangeD
Cash depositClick an option to check your answer
Q. 43
Which one of the following is the name given to a
substitute of cash and cheque?
A
Demand depositB
CoinC
CurrencyD
Credit cardClick an option to check your answer
Q. 44
Which among the following is an example of
cooperative society?
A
FarmersB
WomenC
All of theseD
WorkersClick an option to check your answer
Q. 45
Which of the following is the most important
function of money?
A
Payment of loansB
Medium of exchangeC
Stock market exchangeD
Used in banking transactionsClick an option to check your answer
Q. 46
Identify which one of the following is the
newer way of providing loans to the rural poor,
particularly women?
A
Grameen BanksB
Self-Help GroupsC
Cooperative BanksD
Money-lendersClick an option to check your answer
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