Money & Credit

Q.1.
System of exchanging goods for goods is called :

(a) monetary system
(b) credit system
(c) barter system
(d) exchange system
Ans. (c)
Q.2. Money
(a) eliminates double-coincidence of wants
(b) acts as a common measure of value
(c) acts as a standard of deferred payments
(d) all the above
Ans. (d)
Q.3. 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
Ans. (c)
Q.4. What are the modern forms of money?
(a) Currency
(b) Plastic money
(c) Demand deposits
(d) All the above
Ans. (d)
Q.5. Terms of credit are with respect to :
(a) interest rate
(b) collateral
(c) documentation
(d) all the above
Ans. (d)
Q.6. Credit or loan refers to an agreement between :
(a) lender and borrower
(b) consumer and producer
(c) government and tax payer
(d) all the above
Ans. (c)
Q.7. The formal sector meets only about
_______ of the credit needs of rural people :
(a) 25%
(b) 52%
(c) 75%
(d) 15%
Ans. (b)
Q.8. The part of the total deposits which a bank keeps with itself in cash is
(a) zero
(b) a small proportion
(c) a big proportion
(d) 100 percent
Ans. (b)
Q.9. An asset that the borrower uses as a repayment guarantee to a lender is termed as a :
(a) deposit
(b) collateral
(c) advance
(d) all the above
Ans. (b)
Q.10. Currency is issued in India by :
(a) commercial banks (b) regional rural banks (c) nationalised banks (d) Reserve Bank of India
Ans. (d)
Q.11. Who supervises the credit activities of lenders in the informal sector?
(a) Central Bank of India (b) Commercial banks
(c) Moneylenders
(d) None
Ans. (d)
Q.12. Rich households in urban areas avail cheap credit from
(a) formal sources (b) informal sources
(c) government
(d) all the above
Ans. (a)
Q.13. Productive loans by farmers are taken
(a) to buy seeds, fertilisers, implements etc.
(b) for celebration of marriages
(c) for storage of foodgrains in godowns
(d) none of the above
Ans. (a)
Q.14. Which of the following is not a source of rural credit?
(a) Regional rural banks
(b) Moneylenders
(c) Traders
(d) Government
Ans. (d)
Q.15. Rate of interest charged by moneylenders as compared to that charged by banks is :
(a) lower
(b) same
(c) slightly higher
(d) much higher
Ans. (d)
Q.16. Regional Rural Banks were set up in

(a) 1969
(b) 1979
(c) 1989
(d) 1999
Ans. (a)
Q.17. A Self-Help Group usually has :
(a) 5-10 members (b) 10-15 members
(c) 15-20 members (d) 20-25 members
Ans. (c)
Q.18. When was the KCC (Kisan Credit Card) scheme introduced?
(a) 1969
(b) 1979
(c) 1987-88
(d) 1998-99
Ans. (d)
Q.19. Which state accounts for maximum percentage of SHGs (self-help groups) in bank credit?
(a) Andhra Pradesh (b) Tamil Nadu
(c) Kerala
(d) Karnataka
Ans. (a)
Q.20. _________ are widely accepted as a medium of exchange.
(a) Rupee notes (b) Gold coins
(c) Silver coins
(d) All the above
Ans. (a)
Q.21. Majority of the credit needs of the poor households are met from
(a) formal sources (b) informal sources (c) self-help groups (d) none of the above
Ans. (b)
Q.22. Who supervises the functioning of formal sources of loans?
(a) RBI (Reserve Bank of India) (b) Central government
(c) State government
(d) None
Ans. (a)
Q.23. Which of the following is a major reason which prevents the poor from getting bank loans?
(a) Absence of collateral (security)
(b) Non-repayment of loans
(c) Higher interest rates
(d) Documentation
Ans. (a)
Q.24. Who helps the borrowers to overcome the problem of lack of collateral?
(a) Self-help group (SHG) (b) State government (c) Employers
(d) Moneylenders
Ans. (a)
Q.25. Formal sources of credit include
(a) banks
(b) moneylenders
(c) employers
(d) all the above
Ans. (a)
Q.26. Which of the following is not a modern form of money?
(a) Paper notes (b) Demand deposits
(c) Silver coins
(d) None of the above
Ans. (c)
Q.27. 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.
Ans. (d)
Q.28. What do you mean by collateral?
(a) It is the total sum of money with a person
(b) It is the things kept in the locker
(c) It is the guarantee given by the lender to the borrower.
(d) It is the security to a lender until the loan is repaid
Ans. (c)
Q.29. Identify the formal source of credit.
(a) Cooperative societies (b) Moneylenders (c) Traders
(d) Landlords
Ans. (a)
Q.30. Which one of the following is not a modern form of money?
(a) Demand Deposits
(b) Paper currency
(c) Coins
(d) Precious metals
Ans. (d)
Q.31. Which one of the following authorises money as a medium of exchange?

(a) Reserve Bank of India
(b) Self Help Groups
(c) The Central Government
(d) The President of India.
Ans. (a)
Q.32. Which of the following is not true regarding the in convenience of Barter Exchange ?
(a) Lack of double coincidence of want
(b) Absence of divisibility
(c) Difficulty in storing wealth
(d) Availability of money as a medium of exchange.
Ans. (d)
Q.33. Which one of the following is NOT an informal sector loans for poor rural household in India ?
(a) Commercial Banks
(b) Moneylenders
(c) Traders
(d) Landlords
Ans. (a)
Q.34. 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
Ans. (d)
Q.35. Which one of the following constitutes money in modern day economy?
(a) Gold
(b) Silver
(c) Interest
(d) Demand Deposits
Ans. (d)
Q.36. In a SHG most of the decisions regarding loan activities are taken by
(a) Banks
(b) Member
(c) Non-government organizations
(d) Cooperatives
Ans. (b)
Q.37. 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
Ans. (c)
Q.38. Which one of the following agencies issues currency notes on behalf of the government of India ?
(a) Ministry of Finance (b) Reserve Bank of India (c) State Bank of India
(d) World Bank
Ans. (c)
Q.39. Formal Sources of credit include :
(a) money lenders (b) co-operatives
(c) Employers
(d) Finance companies
Ans. (b)
Q.40. Anything which is generally accepted by the people in exchange of goods and services is called :
(a) money
(b) barter
(c) credit
(d) loans
Ans. (b)
Q.41. Terms of credit does not include :
(a) interest rate (b) collateral
(c) cheque
(d) mode of repayment
Ans. (c)
Q.42. Banks do not give loans :
(a) to small farmers
(b) to marginal farmers
(c) to industries
(d) without proper collateral and documents
Ans. (d)
Q.43. The functioning of the formal sources of credit are supervised by :
(a) Government of India (b) Reserve Bank of India (c) Ministry of finance (d) State Bank of India
Ans. (b)
Q.44. 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
Ans. (c)
Q.45. 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
Ans. (c)
Q.46. Which is not the main source of credit fr om the following for rural households in India ?
(a) Traders
(b) Relatives and friends
(c) Commercial Banks (d) Moneylanders
Ans. (a)
Q.47. Cheap and affordable credit results in which one of the following ?
(a) Slow economic growth (b) Creating a debt trap (c) Poverty (d) Good economic growth
Ans. (d)
Q.48. Deposites in bank accounts withdrawn on demand are called :
(a) Fixed deposit
(b) Recurring deposit
(c) Demand deposit
(d) None of these
Ans. (c)
Q.49. 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
Ans. (c)
Q.50. When both parties agree to sell and buy each others commodities it is known as :
(a) measure of value (b) double coincidence of wants (c) store of value (d) credit
Ans. (b)
Q.51. Which among these is an essential feature of barter system ?
(a) Money can easily exchange any commodity (b) It is based on double co-incidence of wants
(c) It is generally accepted as a medium of exchange of goods with money
(d) It acts as a measure and store of value
Ans. (b)
Q.52. Which one of the following is the main source of credit for the rich households?
(a) Informal (b) Formal (c) Both formal and informal
(d) Neither Formal nor informal
Ans. (b)
Q.53. Why bank deposits are known as demand deposits ?
(a) Deposits with the banks
(b) People have the provision to withdraw the money when they require.
(c) Deposits with the banks cannot be witdrawn.
(d) People have the provision to withdraw the money only by cash.
Ans. (b)
Q.54. Which households take more loans from the formal sector ?
(a) Poor households and rich household.
(b) Well off households and households with few assets.
(c) Poor households and well off households
(d) Well off households and rich households.
Ans. (d)
Q.55. What portion of deposits are kept by the banks for their day to day transaction ?
(a) 10%
(b) 15%
(c) 20%
(d) 25%
Ans. (b)

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Q.1.

System of exchanging goods for goods is called :

Q.16. Regional Rural Banks were set up in

Q.31. Which one of the following authorises money as a medium of exchange?

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