All questions of Money and Credit for Class 10 Exam

*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 metals such as gold, silver, and copper.

* Hence option" D" is correct

Money acts as a medium of exchange. For example - we gave money to shopkeeper and in return they gave us food items, clothes, etc . Money are printed in form of paper notes and coins and also in DD. Therefore, option A) is correct answer.

Old method of exchange goods . In this type of system , when both parties have to sell and buy each others commodities , i.e., Double Coincidence Of Wants .

The formal sector refers to the sector of the economy that is regulated by the government and includes registered businesses and workers who receive regular salaries or wages, benefits, and legal protections. In contrast, the informal sector includes unregistered businesses and workers who often operate outside the legal system and do not receive the same benefits and protections.

In India, the formal sector accounts for a relatively small proportion of the total credit available to poor households. According to a report by the Reserve Bank of India, the percentage of formal sector credit in total credit for poor households in India is around 15%.

Some possible reasons for this relatively low percentage of formal sector credit include:

- Limited access: Poor households may have limited access to formal sector credit due to factors such as lack of collateral, poor credit history, or limited financial literacy.
- High costs: Formal sector credit may be relatively expensive for poor households due to high interest rates, fees, and other charges.
- Limited outreach: Formal sector lenders may not have a strong presence in rural and remote areas where many poor households live, making it difficult for them to access formal credit.
- Preference for informal credit: Poor households may prefer to obtain credit from informal sources such as moneylenders, friends, and family members who may be more flexible and accessible than formal lenders.

Overall, increasing access to formal sector credit for poor households in India is an important policy goal that could help to reduce poverty and promote economic development. This could involve measures such as improving financial literacy, expanding outreach of formal lenders, and reducing the costs of formal credit.

1: Introduction to Economics

1. Which of the following is not a factor of production?
a) Labour
b) Capital
c) Natural resources
d) Money

Answer: d) Money

2. Which of the following is not a basic economic problem?
a) What to produce?
b) How to produce?
c) When to produce?
d) For whom to produce?

Answer: c) When to produce?

3. Opportunity cost is:
a) The cost of producing one more unit of a good
b) The cost of producing one unit of a good in terms of another good
c) The cost of producing one unit of a good in terms of money
d) The cost of producing one unit of a good in terms of time

Answer: b) The cost of producing one unit of a good in terms of another good

4. The law of demand states that:
a) As price increases, quantity demanded also increases
b) As price decreases, quantity demanded also decreases
c) As price increases, quantity demanded decreases
d) As price decreases, quantity demanded increases

Answer: d) As price decreases, quantity demanded increases

5. Which of the following is not a determinant of demand?
a) Income
b) Price of the good itself
c) Price of related goods
d) Cost of production

Answer: d) Cost of production

6. Which of the following is a characteristic of a market economy?
a) Government control of prices
b) Private ownership of resources
c) Central planning
d) Limited consumer choice

Answer: b) Private ownership of resources

7. Which of the following is a characteristic of a command economy?
a) Private ownership of resources
b) Consumer sovereignty
c) Central planning
d) Competition among firms

Answer: c) Central planning

8. Which of the following is not a goal of macroeconomic policy?
a) Full employment
b) Price stability
c) Economic growth
d) Profit maximization

Answer: d) Profit maximization

9. The circular flow diagram shows that:
a) Firms supply goods and services to households
b) Households supply goods and services to firms
c) Firms and households are completely independent of each other
d) The government plays no role in the economy

Answer: a) Firms supply goods and services to households

10. Which of the following is not a factor that affects the level of economic development in a country?
a) Natural resources
b) Education and training
c) Political stability
d) Population density

Answer: d) Population density

The cooperative society is a voluntary association of persons who join together with the motive of welfare of members. It may have farmers, workers and women as it's members.

Founder of Grameen Bank of Bangladesh

The founder of Grameen Bank of Bangladesh is Mohammad Yunus. He is a Bangladeshi social entrepreneur, banker, economist, and civil society leader. Yunus is known for his work in microfinance, which involves providing small loans to poor individuals who are not able to access traditional banking services.

Establishment of Grameen Bank

Yunus established Grameen Bank in 1983 with the aim of providing microcredit to the poor in Bangladesh. The bank's mission was to provide financial services to the poor, particularly women, who were often excluded from the formal banking sector. Grameen Bank's innovative microcredit model has been widely replicated around the world, and it has helped to lift millions of people out of poverty.

The Bank's Philosophy

Grameen Bank's philosophy is based on the belief that people are not poor because they lack talent or ability, but rather because they lack access to resources and opportunities. The bank's approach is to provide small loans to individuals who are not able to access traditional banking services, and to provide them with the training and support they need to start their own businesses.

Impact of Grameen Bank

Grameen Bank has had a significant impact on poverty reduction in Bangladesh. According to the bank's own statistics, it has provided loans to over 9 million borrowers, 97% of whom are women. The bank's repayment rate is over 95%, which is higher than most traditional banks. In addition to providing loans, Grameen Bank has also provided other services, such as education and healthcare.

Conclusion

Mohammad Yunus's vision of providing microcredit to the poor has had a profound impact on poverty reduction in Bangladesh and around the world. His work has demonstrated that it is possible to provide financial services to the poor, and that this can help to break the cycle of poverty. Yunus's ideas have inspired many other organizations to adopt similar models, and his legacy will continue to shape the field of microfinance for years to come.

Option A correct because Indian government providing all the facilities to the citizens of India for to sell the goods of the people or to buy the goods from the people through the currency which is mainly rupee only

National Sample Survey Organisation (NSSO) is a government organisation responsible for collecting data on various socio-economic aspects of the Indian population. It is one of the largest organisations conducting national surveys in India and operates under the Ministry of Statistics and Programme Implementation.

Functions of NSSO:
NSSO collects data on various aspects of the Indian population, including employment, education, health, housing conditions, consumer expenditure, and household amenities.

NSSO conducts surveys to collect data on various aspects of the Indian economy, such as agriculture, industry, and services.

NSSO also collects data on informal sector credit, which is not covered by formal banking institutions.

NSSO conducts surveys on the impact of government policies and programs on the population, such as the National Rural Employment Guarantee Act (NREGA).

NSSO also conducts surveys to assess the impact of natural disasters, such as floods or droughts, on the population.

Conclusion:
In conclusion, the NSSO is an important organisation responsible for collecting data on various socio-economic aspects of the Indian population. Its data is used by policymakers, researchers, and analysts to make informed decisions and develop policies that improve the lives of the Indian people.

The correct answer is option 'A', which states that banks keep 15% of deposits as cash. This is known as the cash reserve ratio (CRR), which is a policy tool used by central banks to control the money supply in an economy.

The cash reserve ratio is the percentage of deposits that banks are required to keep with the central bank as a reserve. It is a crucial tool used by central banks to maintain stability in the financial system and control inflation. By regulating the amount of cash that banks must keep on hand, central banks can influence the lending capacity of commercial banks and ultimately control the money supply.

Now, let's understand why the correct answer is option 'A' in more detail:

1. Cash Reserve Ratio (CRR):
- The cash reserve ratio (CRR) is the percentage of deposits that banks are required to keep with the central bank.
- It is a statutory requirement imposed by the central bank on commercial banks.
- The purpose of CRR is to ensure that banks have enough cash to meet their obligations and maintain liquidity.

2. Role of the Central Bank:
- The central bank is responsible for regulating the banking system and controlling the money supply.
- By adjusting the cash reserve ratio, the central bank can influence the lending capacity of banks.
- If the central bank increases the CRR, banks are required to keep a higher percentage of their deposits as cash, reducing their lending capacity.
- Conversely, if the central bank decreases the CRR, banks can keep a lower percentage of their deposits as cash, increasing their lending capacity.

3. Significance of the Cash Reserve Ratio:
- The cash reserve ratio plays a vital role in controlling inflation and maintaining financial stability.
- By regulating the amount of cash that banks can lend, the central bank can control the money supply in the economy.
- If the central bank wants to reduce inflation, it can increase the CRR, reducing the amount of money available for lending and reducing aggregate demand.
- On the other hand, if the central bank wants to stimulate economic growth, it can decrease the CRR, allowing banks to lend more money and increasing aggregate demand.

In conclusion, the correct answer is option 'A' because banks are required to keep 15% of their deposits as cash under the cash reserve ratio (CRR) policy imposed by the central bank. This policy ensures that banks have enough liquidity to meet their obligations and helps the central bank control the money supply in the economy.

Option B since statement A is about discouragement of informal sector whereas statement R is about in difficulty I'm taking loan from formal sector. Both the statement doesn't match so B is correct

Bank laying down norms for bank is option A.) Reserve Bank of India (RBI).

The bill of exchange contains an unconditional order to pay a certain amount on an agreed date while the promissory note contains an unconditional promise to pay a certain sum of money on a certain date. In India these instruments are governed by the Indian Negotiable Instruments Act 1881.

Reserve Bank of India issues currency notes in India.

I think Option A.) informal credit will be right answer..Any way pls check it out and say wat is right answer

Under Section 22 of the Reserve Bank of India Act, RBI has sole right to issue currency notes .

However one rupee note is issued by the Ministry of Finance but distributed by the RBI throughout the country

Kisan credit card scheme was introduced in 1998-99. Providing credit in agricultural sector.

Ya bro both are correct but both are not related to each other so option is b

In Self-Help Groups (SHGs), the decisions regarding savings and loan activities are primarily taken by the members of the group. SHGs are small voluntary associations of people who come together to address their common socio-economic needs. These groups are formed with the objective of promoting savings and providing access to credit to their members.

Here's a detailed explanation of why the correct answer is option 'B' - Members:

1. Empowerment of Members:
- The main goal of SHGs is to empower their members, particularly women, by enhancing their financial capabilities.
- By involving the members in decision-making processes related to savings and loan activities, SHGs aim to promote self-reliance and confidence among the members.

2. Collective Decision-Making:
- SHGs operate on the principle of collective decision-making, where all the members have an equal say in shaping the group's activities.
- The decisions regarding savings and loan activities are taken through discussions and consensus among the members.
- This participatory approach ensures that the decisions are made in the best interest of the members and the group as a whole.

3. Savings Mobilization:
- SHGs encourage their members to save a portion of their income regularly.
- The decision to save and the amount to be saved are made by the individual members based on their financial capacity and needs.
- The savings collected by the members are then pooled together and utilized for providing loans to the members.

4. Loan Disbursement:
- SHGs also provide credit facilities to their members for various purposes like entrepreneurship, education, healthcare, etc.
- The decision regarding loan disbursement is taken collectively by the members based on the loan requirements and repayment capacity of the individual members.
- The loan amount, interest rate, and repayment schedule are determined by the members themselves, ensuring transparency and fairness in the process.

5. Monitoring and Accountability:
- SHGs maintain proper records of savings, loans, and repayments to ensure transparency and accountability.
- The members collectively monitor the utilization of funds and repayment of loans by fellow members.
- In case of any default, the members collectively take necessary actions and decisions to address the issue.

Overall, the involvement of members in decision-making regarding savings and loan activities in SHGs fosters a sense of ownership, responsibility, and empowerment among the members. It also promotes financial discipline and helps in creating a supportive and sustainable environment for economic development at the grassroots level.

A credit agreement is a legally binding contract made between a person who borrows money and the lender. It is agreed upon by both parties and outlines the terms of repayment, the fees, other costs and all the rules and requirements pertaining to the loan.

Grains as Money in Agricultural Stage

Grains have been used as a form of currency or money in many agricultural societies throughout history. This was especially prevalent in ancient civilizations where agriculture was the primary means of subsistence. Here are some reasons why grains were used as money in the agricultural stage:

1. Durability: Grains are durable and can be stored for long periods of time without spoiling. This made them a reliable form of currency that could be saved for future use.

2. Portability: Grains are lightweight and easy to transport. This made them a convenient form of currency for trade and exchange.

3. Universality: Grains were a staple food in many societies, so they were widely accepted and valued. This made them a universal form of currency that could be used to buy and sell a variety of goods and services.

4. Divisibility: Grains could be easily divided into smaller units, allowing for more flexibility in transactions. For example, a farmer could use a few grains to buy a small item, or a larger amount to buy a larger item.

5. Intrinsic value: Grains had an intrinsic value as a source of food and nutrition. This made them a valuable commodity that could be traded for other goods and services.

Overall, grains were an important form of currency in the agricultural stage because they were durable, portable, universal, divisible, and had intrinsic value. As societies became more complex and trade expanded, other forms of currency such as coins and paper money were developed, but grains remained an important commodity for trade and exchange.

The Reserve Bank of India (RBI) prints and manages currency in India, whereas the Indian government regulates what denominations to circulate. The Indian government is solely responsible for minting coins. The RBI is permitted to print currency up to 10,000 rupee notes.

Collateral

Collateral is an asset that a borrower offers to a lender as a form of security for a loan. It serves as a guarantee that the lender will be able to recoup the loan amount in case the borrower fails to repay.

Importance of Collateral

- Collateral provides a sense of security to the lender, reducing the risk associated with lending money.
- It allows borrowers to access loans at lower interest rates or with more favorable terms than they would without collateral.
- The value of the collateral is assessed by the lender to determine the maximum loan amount that can be provided.

Types of Collateral

- Real estate (such as a house or land)
- Vehicles (such as cars, trucks, or motorcycles)
- Investments (such as stocks, bonds, or mutual funds)
- Equipment (such as machinery or tools)
- Inventory (such as goods or products)

Benefits for Borrowers

- Collateral can help borrowers qualify for larger loan amounts or better interest rates.
- It can provide access to financing options that may not be available otherwise.
- Repaying a loan with collateral can help build or improve the borrower's credit score.

Risks for Borrowers

- If the borrower fails to repay the loan, they risk losing the collateral to the lender.
- Defaulting on a loan can have long-term negative effects on the borrower's credit history.
- Borrowers should carefully consider the terms and conditions of the loan agreement before using collateral.