Please refer to Money and Credit Class 10 Social Science notes and questions with solutions below. These revision notes and important examination questions have been prepared based on the latest Social Science books for Class 10. You can go through the questions and solutions below which will help you to get better marks in your examinations.
Class 10 Social Science Money and Credit Notes and Questions
Before You Read :
Money: Money is something that can act as a medium of exchange in transaction. In day to day transactions, goods are being bought & sold with the use of money.
Barter System: When goods are directly exhanged for goods and there is no use of money. It is called barter system.
Double Coincidence of wants: When in the exchange, both parties agree to sell and byu each other commodities. It is called double coincidence of wants. In the barter system double coincidence of wants is an essential feature.
Reserve bank of India : R.B.I is the central bank of India which controls the monetary policy of the country. R.B.I supervises the activities of formal sector and keep the track of their activities.
Credit : The activity of borrowing and lending money between the parties.
Collateral : Collateral is an asset that the borrower owns (such as land, building, vehicle, live stocks, deposits with baks) and uses this as a guarantee to a lender until the loan is repaid.
Property such as land titles, deposite with banks. livestock are some common examples of collateral used for borrouring.
SELF HELP GROUP (SHG) : It’s basic idea is to provide financial resources for the poor through organizing the rural poor especially women into small help groups.
Modern forms of Money:
Functions of reserve bank
• Issue the currency
• Monitor the work culture of banks and SHG
• Provide Direction Regarding terms and Interest
• Provide Feedback Regarding Monetary Policies of India
• Hold a part of the cash reserve of the banks
Credit: It refern to an agreement in which the lender supplies the borrower money, good and services in return for the promise of future repayment.
Terms of credit:
Works of SHG’s (self help groups):
SUMMARY
Money as a medium of exchange
Barter System: Goods and Services were directly exchanged without the use of money. This system of exchange was termed a barter system.
Double coincidence of wants is an essential feature of barter system in which both the parties (seller and the buyer) have to agree to buy and sell each other’s commodities.
Money: It acts as an intermediate in the exchange process & it is called a medium of exchange.
Modern Forms of Money
Money is something that can act as a medium of exchange in transactions.
Currency
• In the modern times, paper notes and coins are used as a medium of exchange
• The Reserve Bank of India issues currency notes on behalf of the central government
• According to the law no one can refuse payment made in rupees to settling transactions
Deposits with Banks
• People deposit extra cash in the banks by opening a bank account in their name
• Banks accept the deposits and also pay an amount as interest on the deposit
• Deposits in the bank accounts can be withdrawn on demand are called Demand Deposits
• Cheque: 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.
Loan Activities of Banks
• In India, the bank holds about 15% of their deposits as cash to pay to the depositors who might come to withdraw money from the bank on any given day
• Banks mediate between those who have extra funds (the depositors) and those who are in need of these funds (the borrowers).
• Banks charge a higher interest rate on loans than what they offer on deposits. The difference between these interests is the bank’s main source of income.
Two different credit situations
1. Credit (loan) plays a positive role when the borrower is able to return the loan amount on time and also made some profit with the use of that money. For example, Salim, a shoe manufacturer took a loan from different sources to complete the order of 3000 pairs of shoes. In the end, he delivered the order, made a profit, and repaid the loan.
2. In some cases, Credit pushes the borrower into a situation from which recovery is very painful. For example, a small farmer Swapna took a loan for crop cultivation but due to being hit by pests, her crops were destroyed. So she took another loan for spraying pesticides but the production was not enough to repay the loan. So she was caught in debt-trap.
MULTIPLE CHOICE QUESTIONS
Question. Which of the following is not a feature of Self Help Groups (SHGs)?
(a) It consists of 15-20 members or more.
(b) Here members pool their savings which acts as collateral.
(c) Loans are given at nominal rate of interest.
(d) It is an informal source of credit.
Answer : (d) It is an informal source of credit.
Question. All the banks act as mediator between and …………….. .
(a) rural people, urban people
(b) literates, illiterates
(c) people, government
(d) depositors, borrowers
Answer : (d) depositors, borrowers
Question. Which of the following is not an advantage of self-help group?
(a) Grant of timely loans
(b) Reasonable interests
(c) A platform to discuss various issues
(d) Does not help women to become self-reliant.
Answer : (d) Does not help women to become self-reliant.
Question. A person can withdraw money from a bank by issuing a cheque. What is a 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
Answer : (c) Paper instructing the bank to pay a specific amount.
Question. People are involved in a variety of occupations.
Match the following with the appropriate reason people might borrow money for:
Answer :
Question. Which one of the following is the important characteristic of modern form of currency?
(a) It is made from precious metal
(b) It is made from thing of everyday use
(c) It is authorised by the commercial banks
(d) It is authorised by the Government of the country
Answer : (d) It is authorised by the Government of the country
Question. Banks give out loans and charge ………. on the loan amount from the borrower.
(a) rent
(b) wages
(c) interest
(d) money
Answer : (c) interest
Question. Which one of the following is not a formal source of credit?
(a) Commercial Banks
(b) State Bank of India
(c) Employers
(d) Co-operatives
Answer : (c) Employers
Question. Banks use the major portion of the deposit to:
(a) Keep reserve so that people may withdraw
(b) Meet their routine expenses
(c) Extend loans
(d) Meet renovation of the bank
Answer : (c) Extend loans
Question. Which one of the following is the appropriate meaning of collateral?
(a) It is the sum total of money borrowed from banks.
(b) The amount borrowed from friends.
(c) It is an asset of the borrower used as guarantee to a lender.
(d) The amount invested in a business.
Answer : (c) It is an asset of the borrower used as guarantee to a lender.
Question. At present which form of money is increasingly used apart from paper money?
(a) Commodity money
(b) Metallic money
(c) Plastic money
(d) All the above
Answer : (c) Plastic money
Question. Which one of the following is a major reason that prevents the poor from getting loans from the banks?
(a) Lack of capital
(b) Not affordable due to high rate of interest
(c) Absence of collateral security
(d) Absence of mediators
Answer : (c) Absence of collateral security
Question. What is the main source of income of a bank?
(a) Bank charges that the depositors pay for; keeping their money safe is the main ; source of the bank’s income.
(b) The difference between what is charged from the borrowers and paid to the depositors is the main source of bank’s income.
(c) Banks earn huge amounts of money by investing the money of the depositors in various company shares.
(d) The Government of India gives huge amounts of money to the banks to help their smooth functioning.
Answer : (b) The difference between what is charged from the borrowers and paid to the depositors is the main source of bank’s income.
Question. Organised credit is also called
(a) informal credit
(b) formal credit
(c) cooperative credit
(d) none of these
Answer : (b) formal credit
Question. Which one of the following is not included in the terms of credit?
(a) Rate of Interest
(b) Mode of payment
(c) Rate of saving
(d) Collateral
Answer : (c) Rate of saving
Question. All the banks act as mediator between ————— and ——————–.
(a) rural people, urban people
(b) literates, illiterates
(c) people, government
(d) depositors, borrowers
Answer : (d) depositors, borrowers
ASSERTION/REASON TYPE QUESTIONS
Question. Assertion : The facility of demand deposits makes it possible to settle payments without the use of cash.
Reason : Demand deposits are paper orders which make it possible to transfer money from one person’s account to another person’s account.
Option:
(a) If both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If assertion is true, but reason is false.
(d) If both assertion and reason are false.
Answer : (d) If both assertion and reason are false.
Question. Assertion : The modern currency is used as a medium of exchange; however, it does not have a use of its own.
Reason : Modem currency is easy to carry.
Option:
(a) If both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If assertion is true, but reason is false.
(d) If both assertion and reason are false.
Answer : (b) If both assertion and reason are true, but reason is not the correct explanation of assertion.
Question. Assertion : Credit would be useful or not depends on the risk involved in a situation.
Reason : The chance of benefitting from credit is highest in agriculture sector.
Option:
(a) If both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If assertion is true, but reason is false.
(d) If both assertion and reason are false.
Answer : (c) If assertion is true, but reason is false.
Question. Assertion : Banks charge a higher interest rate on loans than what they offer on deposits.
Reason : The difference between what is charged from borrowers and what is paid to depositors is their main source of income.
Option:
(a) If both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If assertion is true, but reason is false.
(d) If both assertion and reason are false.
Answer : (a) If both assertion and reason are true, and reason is the correct explanation of assertion.
Question. Assertion : In India, no individual can refuse to accept a payment made in rupees.
Reason : Rupee is the legal tender in India.
Option:
(a) If both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If assertion is true, but reason is false.
(d) If both assertion and reason are false.
Answer : (a) If both assertion and reason are true, and reason is the correct explanation of assertion.
Question. Assertion : Rohan took credit in the form of advance payment from a buyer and he delivered the goods to the buyer on time and also earned profit. The credit made Rohan better off in this situation.
Reason : Credit can never push a person into a debt trap.
Option:
(a) If both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If assertion is true, but reason is false.
(d) If both assertion and reason are false.
Answer : (c) If assertion is true, but reason is false.
Question. Assertion : Banks keep only a small proportion of their deposits as cash with themselves.
Reason : Banks in India these days hold about 15 per cent of their deposits as cash.
Option:
(a) If both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If assertion is true, but reason is false.
(d) If both assertion and reason are false.
Answer : (b) If both assertion and reason are true, but reason is not the correct explanation of assertion.
Very Short Answer Questions
Question. Which authority does supervise the functioning of formal sources of loans and how ?
Answer : 1. Reserve Bank of India.
2. The RBI monitors that the banks actually maintain the cash balance. It also sees that the banks give loans to all rich as well as poor.
Question. How do banks play an important role in the economy of India?
Answer : (i) Banks provide people the facility to deposit their surplus money by opening a bank account in their name. Banks also pay an amount as interest on the deposits. In this way, people’s money is safe with the banks and it earns an amount as interest. Thus, banks add to the income of the family.
(ii) Banks use the major portion of the deposits to extend loans to the needy. There is a huge demand for loans for various economic activities. Banks, thus, mediate between those who have surplus money and those who are in need of this money.
Question. Which are the modern forms of money?
Answer : The modern forms of money comprises: currency — paper notes and coins. Unlike the things that were used as money earlier, modern currency is not made of precious metals such as gold, silver, and copper. And unlike grain and cattle, they are neither of everyday use. The modern currency is without any use of its own.
Question. Why is it necessary for the banks and cooperative societies to increase their lending facilities in rural areas?
Answer : (i) Banks and cooperative societies can help people in obtaining cheap and affordable loans.
(ii) This will empower people in a variety of ways. They could grow corps, do business, set up small- scale industries etc. They could set up new industries or trade in goods.
Question. What is meaning of Barter system ? Why is double coincidence of wants is an essential feature of a Barter system ?
Answer : Meaning of Barter system: A system in which goods are directly exchanged without the use of money is called barter system.
Double coincidence of wants means when both the parties – seller and purchaser – agree to sell and buy each other’s commodities. It implies that what a person desires to sell is exactly what the other wishes to buy. No money is used in such an arrangement. Therefore it is an essential feature of barter system.
Question. State the role of Reserve Bank of India.
Answer : (i) In India, the Reserve Bank of India issues currency notes on behalf of the Central Government.
(ii) The RBI supervises the functioning of formal sources of loans.
Question. Why is modern currency accepted as a medium of exchange without any use of its own ? Point out the reasons.
Answer : • In India, the Reserve Bank of India issues currency notes on behalf of the central government.
• As per Indian law, no other individual or organisation is allowed to issue currency.
Question. How do the demand deposits share the essential features of money ?
Answer : The demand deposits share the essential features of money:
The facility of cheques against demand deposits make it possible to directly settle payments without the use of cash.
Since demand deposits are accepted widely as a means of payment, along with currency, they constitute money in the modern economy.
Question. Why should credit at reasonable rates from the banks and cooperatives be available for all ?
Answer : 1. High interest rate do little to increase the income of the borrowers.
2. It is necessary that the banks and cooperatives increase their lending particularly in rural areas, so that the dependence of the people on informal sources of credit reduces.
Question. What is debt-trap ?
Answer : Debt-trap – When a borrower particularly in rural area fails to repay the loan due to the failure of the crop, he is unable to repay the loan and is left worse off. This situation is commonly called debt-trap. Credit in this case pushes the borrower into a situation from which recovery is very painful.
Short Answer Questions
Question. What comprises ‘terms of credit’?
Answer : Rate of interest, collateral security, documentation requirements and mode of repayment together comprise terms of credit. This varies from bank to bank and borrower to borrower.
Question. What is meant by double coincidence of wants? What is its inherent problem?
Answer : Double coincidence of wants is a situation when both parties have agreed to sell and buy each other’s products or commodities.
It can only work when both the persons are ready to exchange each other’s goods.
Question. Study the diagram given below and answer the three questions that follows:
(i) Which are the two major sources of credit for rural households in India?
Answer : Money lenders and cooperative societies.
(ii) Which one of them is the most dominant source of credit for rural households?
Answer : Money lenders
(iii) What is the most dominant source of credit? Write any two reasons.
Answer : i) Money lenders do not ask for collateral
ii) Complicated paper work or documentation is not involved.
Question. Why are most of the poor households deprived from the formal sector of loans?
Answer : Most of the poor households are deprived from the formal sector loans because of lack of proper documents and absence of collateral.
Question. What is money? Why is modern money/ currency accepted as a medium of exchange?
Answer : Money is a medium of exchange in transactions. A person holding money can easily exchange it for any commodity or service that he or she might want.
Modem money currency is accepted as a medium of exchange because:
• it is certified for a particular denomination (For example, ₹ 10, ₹ 20, ₹ 100, ₹ 1,000).
• it is issued by the Central Bank of the country.
• it is authorized by the government of the country.
Question. “Cheap and affordable credit is essential for poor households both in rural and urban areas.” In the light of the above statement explain the social and economic values attached to it.
Answer : Cheap and affordable credit is crucial for the country’s growth and economic development. Credit is in great demand for various kinds of economic activities—big or small investments, to set up business, buying cars, houses, etc.
• In rural areas credit helps in the development of agriculture by providing funds to farmers to buy seeds, fertilizers, expensive pesticides.
• Manufacturers need credit for buying raw material or to meet ongoing expenditure of production. Credit helps in the purchase of plant, machinery, equipment, etc.
• Some people may need to borrow for personal or family needs like marriage, hospitalisation etc.
Thus, cheap and affordable credit is crucial for the country’s growth and economic development.
Question. Why do banks ask for collateral while giving credit to a borrower?
Answer : Collateral is an asset that the borrower owns such as land, building, vehicle, livestock, land documents, deposits with banks etc. This stands as a security against the money borrowed from the bank. In case the borrower fails to repay the loan to the bank, the lender has the right to sell the asset or collateral.
Question. “Supervision of the functioning of formal sources of loans is necessary”. Why?
Answer : 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 and at what interest rate etc.
Question. What do you understand by demand deposits?
Answer : Banks accept the surplus money from the people as deposits and pay interest for that. People have the provision to withdraw their money as and when they require. Since money can be withdrawn on demand, these deposits are known as demand deposits.
Its features are: Features:
• 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.
Question. “There is a great need to expand formal sources of credit in rural India.” Examine the statement.
Answer : There is great need to expand formal sources of credit in rural India because: In the informal sector there is no organisation to supervises the credit activities of lenders. They lend at whatever interest rate they choose. No one can stop rural money-lenders from using unfair means to get their money back.
Long Answer Questions
Question. “RBI plays a crucial role in controlling formal sector loan.” Explain.
OR
In what ways does the Reserve Bank of India supervise the functioning of banks?
Answer : (1) The Reserve Bank of India supervises the functioning of formal sources of credit in India. It is the central bank of India.
(2) It supervises the functioning of banks in the following ways :
(i) The RBI monitors that the banks actually maintain a minimum cash balance out of the deposits they receive. Banks in India these days, hold about 15 per cent of their deposits as cash.
(ii) RBI ensures that the banks give loans not just to profit- making business and traders but also to small cultivators, small- scale industries, small borrowers, etc.
(iii) Periodically, banks have to submit information to the RBI on how much they are lending, to whom, at what interest rates, etc.
Question. Self-Help Groups can help in solving the problem of credit in rural areas. Explain.
OR
In what ways do Self-Help Groups help the rural sector of the economy?
Answer : (1) The absence of collateral is one of the major reasons which prevent the poor from getting bank loans. Whereas, there is no need for collateral or difficult paperwork to take loans from SHGs.
(2) SHGs have a lower interest rate than that of moneylenders or traders. They can get timely loans for a variety of purposes.
(3) It creates employment opportunities for the members who are rural poor, particularly women.
(4) It encourages regular savings of the rural poor.
(5) SHGs help rural women not only to become financially self- reliant but also, the regular meetings of the group provide a platform to discuss and act on a variety of social issues such as health, nutrition, domestic violence, etc.
Question. How do SHG’s act to provide a platform for women to address their various social issues?
Answer : SHGs act to provide a platform for women to address their various social issues in the following ways:
(1) A Self-Help Group is an organization of rural poor, particularly women who pool their savings.
(2) The SHG encourages its members for savings and enables them to take small loans from the group itself to meet their needs. In this way, it addresses their economic issue that is the base of many social issues.
(3) SHGs are the building blocks of the organization of the rural poor. Not only does it help women to become financially self- reliant, but the regular meetings of the group also provide a platform to discuss and act on a variety of social issues such as health, nutrition, domestic violence, etc.
(4) The SHG provides self-employment opportunities to its members by providing them loans for meeting working capital needs, for housing materials, for acquiring assets like a sewing machine, handlooms, cattle, etc.
(5) The group charges interest on these loans but this is still less than what the money-lenders charge.
Question.Why are credit arrangements not fair for all sections of society? Give three reasons. Suggest two remedies for the problem.
OR
Why is the share of formal sector credit higher for the richer households compared to the poorer households ? Give any three reasons responsible for this.
Answer : (1) Undoubtedly, credit arrangements are not very fair for all sections of society The share of formal sector credit is higher for the richer households as compared to the poorer households. This has the following reasons:
(i) Poverty affects poor households’ capacity to borrow. Formal sector credit requires proper documents and collateral as security against loans. Collateral is an asset. So, poor people lack in providing such things which affect their capacity to borrow.
(ii) The poor people do not repay.
(iii) The people in villages may not have access to banks in their village. Also, they are R. loan on time because of the various day- to-day needs. – hesitant and unsure about the functioning of the banks.
(2) (i) More credit facilities should be made available in rural areas by opening more banks there.
(ii) The procedure of giving loans should be made easier and simpler.
Question. What is the difference between formal sector loans and informal sector loans? Give two examples of each.
OR
Mention three points of difference between the formal sector and informal sector loans.
Answer : Formal Sector Loans:
(1)Comparatively rate of interest charged is lower than that of the informal sector loans.
(2) RBI supervises their function of giving loans.
(3) Collateral is required to obtain credit.
(4) Rich urban households depend largely on formal sources of credit.
(5) Examples: Banks and Co-operatives.
Informal Sector Loans:
(1) Higher interest rates on loan are charged.
(2) No organization is there to supervise its lending activities.
(3) They are ready to give loans without collateral.
(4) Poor households largely depend on informal sources.
(5) Examples : Traders, employers, money-lenders, relatives, friends, etc.
Question. Self-Help Groups enjoy a lot of freedom in their functioning. Explain.
Answer : (1) In Self-Help Groups, there is no provision of a certain number of members or a certain amount to deposit. Members are free to their number and amount to deposit in the group.
(2) Most of the important decision regarding the savings and loan activities are taken by the group members.
(3) The group decides as regards the loans to be granted—the purpose, amount, interest to be charged, repayment schedule, etc.
(4) Also, it is the group which is responsible for the repayment of the loan. In any case of non-repayment of the loan by anyone, the member is followed up seriously by other members in the group.
(5) The SHGs help borrowers overcome the problem of lack of collateral and documentation requirement. Besides, the regular meetings of the group provide a platform to discuss and act on a variety of social issues such as health, nutrition, domestic violence, etc.
Question. Describe the organization, working and importance of Self-Help Groups.
OR
What are the Self-Help Groups? How do they work? Explain.
OR
What is meant by Self Help Group? Explain its working.
Answer : (1) SHGs are the groups created by the needy persons themselves, especially women to fulfil their credit and loan needs. A typical SHG has 15-20 members, who meet and save regularly.
(2) Saving of per member varies from 25 to Z 100 or more depending on the ability of the people to save.
(3) Members can take small loans from the group itself to meet their needs.
(4) The group charges interest on these loans but this is still less than what the money-lenders charge.
(5) If the group is regular in savings, it becomes eligible for availing loan from the bank. The loan is sanctioned in the name of the group and is meant to create self-employment opportunities for the members.
Question. What are formal sources of credit? Why do we need to expand formal sources of credit in India?
OR
Why do we need to expand formal source or credit in India? Explain any four reasons.
Answer : (1) The formal source of credit includes a loan from banks and co-operatives.
(2) We need to expand formal sources of credit in India for the following reasons :
(i) Formal sources of credit are less risky and they charge a low rate of interest.
(ii) The Reserve Bank of India supervises the functioning of formal sources of loans. It monitors the banks in actually maintaining a cash balance.
(iii) RBI ensures that loans are given not only to the profit-making businessmen and traders but also to small cultivators, small- scale industries, small borrowers, etc.
(iv) Compared to the formal lenders, most of the informal lenders charge higher interest rates. Thus, the cost to the borrower becomes much higher that leads to less income. Also, the borrowers may become victim to debt-trap. So, formal sector loans help reduce dependence on informal sources of credit.
(v) Due to the high interest rates of the informal source of credit, people who might wish to start an enterprise by borrowing, may not do so because of the high cost of borrowing.
(vi) Cheap and affordable credit by the formal sector is crucial for the country’s development.
(3) (i) The bank should open its branches in villages.
(ii) The RBI should give guidelines to the bank to make loan procedure simpler.
(iii) Public awareness of the banks and cooperatives should be increased.
Question. Why are informal sources of credit preferred in rural areas? Give five reasons.
Answer : (1) There is no need for collateral such as land; building, vehicles, deposits with banks. The rural poor people are unable to provide collateral.
(2) Also, there is no need for complicated paperwork which the rural poor are not capable of providing.
(3) These moneylenders, traders and rich landlords continue to extend loans to defaulters even if the previous loan is unpaid.
(4) They are hesitant and unsure about the functioning of the banks.
(5) They may not have access to banks in their villages.
(6) The procedure for giving credit is often very simple.
Case Study Questions:
Question. Thomas and Selvan are small farmers. Thomas has taken credit @ 1.5% per month on < 20000 from a trader while Selvan has taken credit at 8% per annum from bank on the same amount. Who is better off?
(a) Thomas is better because he has to do no paperwork.
(b) Selvan is better because his interest payment is less.
(c) Thomas is better because he has not paid any collateral.
(d) Both Thomas and Selvan are equal so no one is better off.
Answer : (b) Selvan is better because his interest payment is less.
Question. Ramu is a potter 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?
(a) Incidence of wants
(b) Double coincidence of wants
(c) Barter system of wants
(d) None of the above
Answer : (b) Double coincidence of wants
Question. Nakul is a trader. He provides farm inputs on credit on the condition that farmers will sell their crop products to him at prices so that he could sell them at————- prices in the market.
(a) high, medium
(b) low, high
(c) medium, high
(d) high, low
Answer : (b) low, high
Question. Sam is a merchant. He has some surplus money, he opens a bank account and deposits in it. Whenever he needs money, he can go to his bank and withdraw from there. This kind of deposit with the banks are known as:
(a) demand deposit
(b) term deposit
(c) fixed deposit
(d) surplus deposit
Answer : (a) demand deposit
Question. Source: A Currency
Modern forms of money include currency-paper notes and coins. Unlike the things that were used as money earlier, modern currency is not made of precious metal such as gold, silver and copper. And unlike grain and cattle, they are neither of everyday use. The modern currency is without any use of its own. Then, why is it accepted as a medium of exchange? It is accepted as a medium of exchange because the currency is authorised by the government as it legalises the use of rupee as a medium of payment that cannot be refused in settling transactions in India. No individual in India can legally refuse a payment made in rupees. Hence, the rupee is widely accepted as a medium of exchange in the country. In India, the Reserve Bank of India issues currency notes on behalf of the central government. As per Indian law, no other individual or organisation is allowed to issue currency. Moreover, the law legalises the use of rupee as a medium of payment that cannot be refused in selling transactions in India. No individual in India can legally refuse a payment made in rupees. Hence, the rupee is widely accepted as a medium of exchange.
1. Who issues the currency notes in India? Which is our currency used nowadays?
(a) The State Bank of India issues currency notes on behalf of the district government. Nowadays paper notes and coins are used as currency in our country.
(b) The Reserve Bank of India issues currency notes on behalf of the state government. Nowadays paper notes and coins are used as currency in our country.
(c) The Reserve Bank of India issues currency notes on behalf of the Central government. Nowadays paper notes and coins are used as currency in our country.
(d) The Rural Bank of India issues currency notes on behalf of the Central government. Nowadays only coins are used as currency in our country.
Answer : (c) The Reserve Bank of India issues currency notes on behalf of the Central government. Nowadays paper notes and coins are used as currency in our country.
2. What is accepted as the medium of exchange in India?
(a) Dollar is accepted as the medium of exchange in India.
(b) Rupee is accepted as the medium of exchange in India.
(c) Euro is accepted as the medium of exchange in India.
(d) Dinar is accepted as the medium of exchange in India.
Answer : (b) Rupee is accepted as the medium of exchange in India.
3. Fill in the blanks:
The Reserve Bank of India issues currency notes on behalf of the ———————.
(a) Central government
(b) District government
(c) State government
(d) Village government
Answer : (a) Central government
4. What does the Indian Law say about the currency?
(a) As per Indian law, no other individual or organisation is allowed to issue bills. Moreover, the law legalises the use of rupee as a medium of payment that cannot be refused in settling transactions in India.
(b) As per Indian law, no other individual or organisation is allowed to issue currency. Moreover, the law legalise the use of dollar as a medium of payment that cannot be refused in settling transactions in India.
(c) As per Indian law, no other individual or organisation is allowed to issue currency. Moreover, the law legalises the use of rupee as a medium of payment that cannot be refused in settling transactions in India.
(d) As per Indian law, no other individual, except for two organisations, is allowed to issue currency. Moreover, the law legalises the use of rupee as a medium of payment that cannot be refused in settling transactions in India.
Answer : (c) As per Indian law, no other individual or organisation is allowed to issue currency. Moreover, the law legalises the use of rupee as a medium of payment that cannot be refused in settling transactions in India.
Question. The Reserve Bank of India supervises the functioning of formal sources of loans. For instance, we have seen that the banks maintain a minimum cash balance out of the deposits they receive. The RBI monitors the banks in actually maintaining cash balance. Similarly, the RBI sees that the banks give loans not just to profit-making businesses and traders but also to small cultivators, small scale industries, to small borrowers, etc. Periodically, banks have to submit information to the RBI on how much they are lending, to who, at what interest rate, etc. There is no organisation which supervises the credit activities of lenders in the informal sector. They can lend at whatever interest rate they choose. There is no one to stop them from using unfair means to get their money back.
1). Fill in the blanks_ RBI gives loans to—————————-
(a) To established cultivators, small scale industries, to small borrowers, etc.
(b) To small cultivators, small scale industries, to small borrowers, etc.
(c) To small cultivators, large scale industries, to small borrowers, etc.
(d) Only to small scale industries
Answer : (b) To small cultivators, small scale industries, to small borrowers, etc.
2). Which organisation supervises the functioning of formal sources of loans in India?
(a) The Reserve Bank of India supervises the functioning of formal sources of loans.
(b) The State Bank of India supervises the functioning of formal sources of loans.
(c) The Indian Bank of India supervises the functioning of formal sources of loans.
(d) The Union Bank of India supervises the functioning of formal sources of loans.
Answer : (a) The Reserve Bank of India supervises the functioning of formal sources of loans.
3). Who supervises the credit activities of lenders in the informal sector?
(a). There are around three organisation which supervises the credit activities of lenders in the informal sector.
(b) There are two organisation which supervises the credit activities of lenders in the informal sector.
(c) There is no organisation which supervises the credit activities of lenders in the informal sector.
(d) There are about four organisation which supervises the credit activities of lenders in the informal sector.
Answer : (c) There is no organisation which supervises the credit activities of lenders in the informal sector.
4). Fill in the blanks
There is no organisation which supervises the credit activities of lenders in the——————–
(a) Informal sector
(b) Primary sector
(c) Secondary sector
(d) Tertiary sector
Answer : (a) Informal sector
We hope the above Money and Credit Class 10 Social Science are useful for you. If you have any questions then post them in the comments section below. Our teachers will provide you an answer. Also refer to MCQ Questions for Class 10 Social Science
