Roll No: Time:
Date : MM :143
1 Which one of the following statements is most appropriate regarding transaction made in
money?
(a) It is the easiest way.
1
(b) It is the safest way.
(c) It is the cheapest way.
(d) It promotes trade.
2 Which one of the following is a modern form of currency?
(a) Gold (b) Silver 1
(c) Copper (d) Paper notes
3 Which among the following authorities issues currency notes on behalf of the government?
(a) Government of India
(b) The State Bank of India 1
(c) National Bank for Agriculture and Rural Development
(d) Reserve Bank of India
4 In which of the following systems exchange of goods is done without use of money?
(a) Credit system (b) Barter system 1
(c) Banking system (d) Collateral system
5 Banks provide a higher rate of interest on which of the following accounts?
(a) Saving account
(b) Current account 1
(c) Fixed deposits for long period
(d) Fixed deposits for very short period
6 Banks use the major portion of the deposits to:
(a) Keep as reserve so that people may withdraw
(b) Meet their routine expenses 1
(c) Extend loans
(d) Meet renovation of bank
7 What percentage of their deposits is kept as cash by the banks in India?
(a) 25% (b) 20% 1
(c) 15% (d) 10%
8 The informal source of credit does not include which one of the following?
(a) Traders
(b) Friends 1
(c) Cooperative Societies
(d) Moneylenders
9 Which one of the following is the new way of providing loans to the rural poor?
(a) Co-operative societies
(b) Traders 1
(c) Relatives and friends
(d) SHGs
10 Read the information given below and select the correct option Rohan has taken a loan of ` 5 lakhs from the bank to purchase a
house on 12% rate of interest. He has to submit papers of new house and salary record to the bank. What is this process called 1
as? (a) Interest Rate (b) Collateral (c) Principal Amount (d) Instalments
11 Rehman is a poor agricultural labour and needs a loan for cultivation on his small piece of land. Which of the following would
Definitely offer him a fair interest rate and flexible terms of credit? (a) Village moneylender (b) Cooperative society (c) 1
Commercial bank (d) Rich landowner
12 Identify the correct statement regarding transactions involving money: (a) Goods can bought and sold with the use of money. (b)
In some transactions, services are being exchanged with money. (c) In some transactions, there might not be any actual transfer 1
of money taking place now but a promise to pay money later. (d) All of the above
13 Why is money called a medium of exchange? (a) Because it acts as an intermediate in the exchange process. (b) Because it is
1
made of precious metal. (c) Because it is a thing of everyday use. (d) None of the above
14 Which of the following authorities of India issues currency notes on behalf of the Central Government? (a) The State Bank of
1
India (b) The Reserve Bank of India (c) The Allahabad Bank (d) The Punjab National Bank
15 Statement I: Modern forms of money include currency-paper notes and coins. Statement II: A large number of transactions in our
day to day activities involve credit in some form or the other. Statement III: Interest rate, collateral and documentation
requirement and the mode of repayment together comprise the terms of credit. Statement IV: Banks use very less portion of 1
the deposits to extend loans (a) Statement (i) and (ii) are right. (b) Statement (i), (ii) and (iii) are right. (c) Statement (iii) is right.
(d) Only statement (iv) is right.
16 Statement I: In a barter system goods are directly exchanged without the use of money. Statement II: Money acts as an
intermediate in the exchange process. (a) Statement (i) is correct and (ii) is incorrect (b) Statement (i) is incorrect and (ii) is 1
correct (c) Both (i) and (ii) are incorrect (d) Both (i) and (ii) are correct
17 Which of the following is an example of collateral? (a) Land titles (b) Livestock (c) Both (a) and (b) (d) None of the above 1
18 Identify the correct statement from the following: (a) Money eliminates the need for double coincidence of wants. (b) 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
1
made. (c) Informal sector credit includes loans from banks and cooperatives. (d) Rich households largely depend on
informal sources of credit.
19 Assertion: Modern currency is accepted as a medium of exchange. Reason: The currency is authorised by the government of
the country. (a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A) (b) Both
1
Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A) (c) Assertion (A) is true but
Reason (R) is false (d) Assertion (A) is false but Reason (R) is true
20 Assertion (A): Banks keep a major proportion of their deposits as cash with themselves. Reason (R): Banks make use of the
deposits to meet the loan requirements of the people. (a) Both Assertion (A) and Reason (R) are true and Reason (R) is the
1
correct explanation of Assertion (A) (b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A) (c) Assertion (A) is true but Reason (R) is false (d) Assertion (A) is false but Reason (R) is true
21 Which of the following objects were used as money in ancient times in India? (a) Grain (b) Cattle (c) Both (a) and (b) (d) Cheque 1
22 he modern form of money include: (a) Coins (b) Paper notes (c) Both (a) and (b) (d) None of
1
these
23 A ___________ is the apex institution of monetary system of a country. (a) Central bank (b)
1
Commercial bank (c) Non banking financial institutions (d) NABARD
24 What are demand deposits? (a) Loan given by bank to the people on demand (b) Deposits in the
bank accounts, which can be withdrawn on demand (c) Interest given by banks on saving 1
deposits (d) Money given by RBI to commercial banks
25 What is a Cheque? (a) A cheque is a paper instructing the bank to pay a specific amount from
the person’s account to the person in whose name the cheque has been issued. (b) A cheque is
a card from which a person in whose name it has been issued can take out the amount from the
bank directly. (c) A cheque is a form of cash which the payer who doesn’t has an account with 1
the bank, can take the money from the bank and makes the payment. (d) A cheque is a paper
instructing the bank to pay from a specific amount from one person’s bank account to the
account of another person in the same bank only.
26 Banks use the major portion of the deposits to ____________. (a) keep with themselves as cash (b) extend loans (c) convert
1
cash into gold (d) give to the RBI as the interest payment
27 While taking a loan, borrowers look for easy terms of credit. This means ___________ (a) High interest rate (b) Tough conditions
1
for repayment (c) Less collateral (d) Documentation requirments
28 Which of the following sources is the source of formal loans? (a) Banks (b) Cooperatives (c) Both (a) and (b) (d) Non-
1
government organisations
29 As the cost to the borrowers of informal loans is much higher, what is its impact on him? (a) Larger part of the earnings of the
borrowers is used to repay the loan. (b) It can push the borrowers into a debt trap. (c) Both (i) and (ii) (d) Borrowers have more 1
income left for themselves
30 Assertion (A): No individual in India can legally refuse a payment made in rupees. Reason (R): The law legalises the use of
rupee as a medium of payment that cannot be refused in settling transactions in India. (a) Both Assertion (A) and Reason (R) are
true and Reason (R) is the correct explanation of Assertion (A) (b) Both Assertion (A) and Reason (R) are true and Reason (R) is 1
not the correct explanation of Assertion (A) (c) Assertion (A) is true but Reason (R) is false (d) Assertion (A) is false but Reason
(R) is true
31 Assertion (A): demand deposits are not considered as money in modern economy. Reason (R): demand deposits are accepted
widely as a means of payment (a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
1
Assertion (A) (b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A) (c)
Assertion (A) is true but Reason (R) is false (d) Assertion (A) is false but Reason (R) is true
32 Assertion (A): In rural areas, the main demand for credit is for crop production. Reason (R): Repayment of the loan is
crucially dependent on the income from farming. (a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
1
explanation of Assertion (A) (b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of
Assertion (A) (c) Assertion (A) is true but Reason (R) is false (d) Assertion (A) is false but Reason (R) is true
33 Assertion (A): While formal sector loans need to expand, it is also necessary that everyone receives these loans. Reason (R): It 1
is the poor households who receive formal credit whereas the richer have to depend on the informal sources. (a) Both Assertion
(A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A) (b) Both Assertion (A) and Reason (R)
are true and Reason (R) is not the correct explanation of Assertion (A) (c) Assertion (A) is true but Reason (R) is false (d)
Assertion (A) is false but Reason (R) is true
34 State the role of Reserve Bank of India 2
35 How does money solve the problem of ‘double coincidence of wants’? Explain with an example. 2
36 List some characteristics of modern coins and paper notes. 2
37 Explain the role of Reserve Bank of India in issue of currency. 2
38 Explain the meaning of ‘terms of credit’. 2
39 ‘Credit has its own unique role for development.’ Justify the statement with arguments. 3
40 What is money? Why is modern money currency accepted as a medium of exchange? 3
41 How can money be easily exchanged for goods and services? Give an example to explain. Or
Why are transactions made in money? Explain with suitable examples. Or How is money used 3
as a medium of exchange? Explain with examples.
42 What are demand deposits? How is money safe with the banks? Explain. 3
43 What do you think would happen if all the depositors went to ask for their money at the same
3
time?
44 Explain the procedure involved in the issuing of a cheque. 3
45 How do the deposits with the banks become their source of income? 3
46 Given that a large number of people in our country are poor, does it in any way affect their
3
capacity to borrow?
47 Why should credit at reasonable rates be available for all? 3
48 Explain why the supervision of the functioning of formal sources of loans is necessary? 3
49 Why do the poor households rely on informal credit till today? Explain. 3
50 How is the concept of Self-Help Groups (SHGs) important for poor people? Give your viewpoint. 3
51 Describe any three advantages of the Self-Help Groups (SHGs) for the poor. 3
52 Explain any three drawbacks of barter system. 3
53 What are the modern forms of money? Why is the rupee widely accepted as a medium of
3
exchange?
54 Why are demand deposits considered as money? 3
55 Why do lenders ask for collateral while lending? Explain. 3
56 Should there be a supervisor, such as the Reserve Bank of India, that looks into the loan
3
activities of informal lenders? Why would its task be quite difficult?
57 Why do you think that the share of formal sector credit is higher for the richer households
3
compared to the poorer households?
58 How do banks play an important role in the economy of India? Explain. 5
59 Differentiate between formal sector credit and informal sector credit.
Or 5
Mention any three points of distinction between formal sector loans and informal sector loans.
60 Why is cheap and affordable credit important for a country’s development? Explain with reasons.
5
Or Describe the importance of formal sources of credit in the
economic development.
61 Read the given passages and answer the following questions:
Aperson holding money can easily exchange it for any commodity or service that he or she might
want. Thuseveryone prefers to receive payments in money andthen exchange the money for
things that they want.Take the case of a shoe manufacturer. He wants tosell shoes in the market
and buy wheat. The shoemanufacturer will first exchange shoes that he hasproduced for money,
and then exchange the moneyfor wheat. Imagine how much more difficult it wouldbe if the shoe
manufacturer had to directly exchangeshoes for wheat without the use of money. He wouldhave 5
to look for a wheat growing farmer who not onlywants to sell wheat but also wants to buy the
shoes inexchange. That is, both parties have to agree to selland buy each others commodities.
(a) What is barter system?
(b) Identify the problem that can arise while exchanging goods in the absence of money?
(c) Why transactions are made in money?
62 Read the given passages and answer the following questions: 5
We have seen that money is something that can act as a medium of exchange in transactions.
Before theintroduction of coins, a variety of objects was usedas money. For example, since the
very early ages,Indians used grains and cattle as money. Thereaftercame the use of metallic
coins — gold, silver, coppercoins — a phase which continued well into the lastcentury.
(a) Why is money called ‘a medium of exchange’?
Or
How does money act as a medium of exchange.
(b) What objects were used as money in India, before the introduction of coins?
(c) Give the modern forms of money.
63 Read the given passages and answer the following questions:
The other form in which people hold money is as deposits with banks. At a point of time, people
needonly some currency for their day-to-day needs. Forinstance, workers who receive their
salaries at the endof each month have extra cash at the beginning ofthe month. What do people
do with this extra cash?They deposit it with the banks by opening a bankaccount in their name.
Banks accept the deposits andalso pay an amount as interest on the deposits. Inthis way
people’s money is safe with the banks andit earns an amount as interest. People also have 5
theprovision to withdraw the money as and when theyrequire, these deposits are called demand
deposits.
(a) Define a bank.
(b) What are demand deposits?
(c) What is a cheque?
64 Read the given passages and answer the following questions:
Megha has taken a loan of ₹ 5 lakhs from the bank to purchase a house. The annual interest
rate on theloan is 12 per cent and the loan is to be repaid in 10years in monthly instalments.
Megha had to submitto the bank, documents showing her employmentrecords and salary before
the bank agreed to give herthe loan. The bank retained as collateral the papersof the new 5
house, which will be returned to Meghaonly when she repays the entire loan with interest.
(a) From which source of credit Megha has taken loan?
(b) Explain the terms of credit given in the source.
65 Read the given passages and answer the following questions:
Banks keep only a small proportion of their deposits as cash with themselves. For example,
banks in Indiathese days hold about 15 per cent of their deposits ascash. This is kept as
provision to pay the depositorswho might come to withdraw money from the bankon any given
day. Since, on any particular day, onlysome of its many depositors come to withdraw cash,the
bank is able to manage with this cash. 5
(a) Explain with examples, how people are involved with the banks.
(b) What do you think would happen if all the depositors went to ask for their money at the same
time?
(c) How do the deposits with the banks become their source of income?
66 Why do most of the rural households still remain dependent on the informal sources of credit? 3
Explain.
