1) Which of the following statements are true?
a) As per Indian law, apart from RBI, no other individual or organization is allowed to issue currency.
b) The law legalizes the use of the rupee as a medium of payment that cannot be refused in settling transactions in India
c) No individual in India can legally refuse a payment made in rupees.
d) All of the above are true.
Answer: Option (d)
2) Banks in India these days hold about _________ of their deposits as cash.
a) 25 percent
b) 20 percent
c) 15 percent
d) 5 percent
Answer: Option (c)
3) Banks use the major portion of the deposits to ______.
a) extend loans
b) invest in infrastructure
c) deposit in foreign banks
d) None of the above
Answer: Option (a)
4) The difference between what is charged from borrowers and what is paid to depositors is the main source of banks income.
Answer: Option (a)
5) In rural areas, the main demand for credit is for ________.
a) purchasing land
b) purchasing the house
c) medical expenses
d) crop production
Answer: Option (d)
Money and credit Class 10 important Questions
How do the deposits with banks become their source of income? (2016 D)
Banks charge a higher interest rate on loans they extend than what they offer on deposits. The difference of interest is the main source of income of banks.
Why one cannot one refuse a payment made in rupees in India? (2016 D)
One cannot refuse a payment made in rupees in India because it is accepted as a medium of exchange. The currency is authorized by the government of the country.
Compare formal sector loans with an informal sector of loans regarding interest only. (2016 D)
Most of the informal lenders charge much higher interest on loans than the formal sector answer:
Why is the supervision of the functioning of formal sources of loans necessary? (2016 OD)
Supervision of the functioning of formal sources of loans is necessary because banks have to submit information to the RBI on how much they are lending, to whom they are lending at what interest rate etc.
Prove with an argument that there is a great need to expand formal sources of credit in rural India. (2016 OD)
There is a great need to expand formal sources of credit in rural India because:
- There is no organization that supervises the credit activities of lenders in the informal sector. They lend at whatever interest rate they choose.
- No one can stop rural money-lenders from using unfair means to get their money back.
Why are most of the poor households deprived from the formal sector of loans? (2016 OD)
Most of the poor households are deprived from formal sector loans because of a lack of proper documents and the absence of collateral.
What do you understand by demand deposits?
To ensure the safety of their money, people deposit their money with banks. Banks accept deposits and pay interest on deposits. People have the provision to withdraw their money as and when they require it. Since money can be withdrawn on demand, these deposits are known as demand deposits.
- A demand deposit has the essential characteristic of money. It can be used as a medium of exchange.
- The facility of cheques against demand deposits makes it possible to make payments, without using cash.
- Since demand deposits are accepted widely as a means of payment along with currency, they constitute money in the modem economy.
Which country has successfully organized SHGs? Who had initiated the program?
Bangladesh has successfully organized SHGs. Grameen Bank of Bangladesh is the biggest success story in reaching the poor to meet their credit needs at reasonable rates. Grameen Bank has now over 6 million borrowers in 40,000 villages across Bangladesh. Most of the borrowers are women and belong to the poorest section of society. This idea is the brainchild of Prof. Mohammad Yunus, recipient of the 2006 Nobel Prize for Peace.
Highlight the inherent problem in the double coincidence of wants. (2017 D)
Double coincidence of wants means that when someone wants to exchange his goods with another person, the latter must also be willing to exchange his goods with the first person. It can only work when both the persons are ready to exchange each other’s goods.
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