Money and Credit - Social Science

Welcome to your Money and Credit

1.

Why is modern currency accepted as a medium of exchange?

Because it is made of precious metals

Because it has intrinsic value

Because it is authorized by the government

Because it is a commonly used commodity

2.

What social issues can be addressed during the regular meetings of SHGs?

Government policies

Health, nutrition, and domestic violence

Marketing strategies

Only financial issues

3.

How does the group benefit when members take loans from an SHG?

The group can collectively decide on loan terms and repayment.

Members are not accountable to each other for repayments.

Loans are provided without any interest.

Loans are granted without any conditions.

4.

What does 'double coincidence of wants' refer to?

The requirement that both parties must want what the other is offering

The need for two parties to agree on a price

The simultaneous exchange of money and goods

The use of two currencies in transactions

5.

What percentage of loans do poor households in urban areas typically take from informal sources?

17%

33%

50%

84%

6.

What is a Self-Help Group (SHG)?

A bank that offers low-interest loans to poor families.

An informal lending group with no structure.

A government initiative to provide loans to the rich.

A group of individuals who pool savings to provide loans to members.

7.

What characterizes demand deposits?

They earn interest only when not used

They cannot be withdrawn

They can be withdrawn on demand

They are not accepted as a medium of exchange

8.

What does the term "debt-trap" refer to in Swapna's situation?

A method of saving money

A scenario that leads to improved financial status

A situation where credit leads to further debt and financial distress

A situation where a borrower successfully repays loans

9.

Why do farmers usually take crop loans at the beginning of the season?

To pay off old debts

To cover expenses on seeds, fertilizers, and equipment

To buy livestock

To invest in stocks

10.

What do banks primarily do with the deposits they accept?

Store them safely

Invest in stock markets

Extend loans to borrowers

Distribute among depositors

11.

Why do poorer households often depend on informal sources for credit?

Informal lenders offer lower interest rates.

They prefer the informal lending process.

Banks require collateral, which they often lack.

They have easier access to formal banks.

12.

What is the main source of income for banks?

Government grants

Interest on deposits

Difference between interest charged on loans and interest paid on deposits

Transaction fees

13.

What is a common requirement specified in loan agreements?

Interest rate

High collateral value

Both B and C

Fixed repayment period

14.

Which of the following is NOT a modern form of money

Grains

Paper notes

Coins

Demand deposits

15.

What percentage of their deposits do banks in India typically keep as cash?

25%

10%

15%

20%

16.

Who issues currency notes in India?

International monetary organizations

The Reserve Bank of India

State Bank of India

Central Bank of India

17.

Why is it important for banks and cooperatives to lend more to rural areas?

To allow informal lenders to charge less.

To increase their profit margins.

To limit the number of loans given to the poor.

To reduce the dependence on informal sources of credit.

18.

What can happen if a member fails to repay a loan within an SHG?

The member gets a longer repayment period.

The loan is forgiven by the bank.

The group dissolves immediately.

Other members will follow up seriously on the repayment.

19.

Why do informal lenders typically charge higher interest rates?

They have lower operating costs.

They are unregulated and can set rates as they choose.

They offer loans without any collateral.

They are more efficient than banks.

20.

What is the function of a cheque in the banking system?

To record financial transactions

To serve as currency

To withdraw cash

To make a payment from the bank account

21.

Which of the following statements reflects a significant advantage of using money in transactions?

It creates more barriers in trading

It allows for easier exchanges between diverse parties

It reduces the need for a mutual agreement on goods

It increases the complexity of exchanges

22.

Which of the following is considered a formal source of credit?

Banks and cooperatives

Traders

Friends and relatives

Moneylenders

23.

Which of the following best describes 'medium of exchange'?

An item used only for trading

Anything that is accepted in exchange for goods and services

A method of saving money

A type of currency with intrinsic value

24.

What role does the Reserve Bank of India (RBI) play in the lending process?

It monitors informal lenders.

It supervises the functioning of formal lenders like banks.

It eliminates the need for loans.

It provides loans directly to borrowers.

25.

What does collateral refer to in the context of borrowing?

A personal guarantee

An asset used as security against a loan

The amount of money borrowed

A type of loan agreement

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