Test: Financial Literacy- 1 - Class 6 MCQ

Money is a recognized medium of exchange in the economy. It serves as an asset that can be stored and used in the form of currency or value. It facilitates transactions and allows individuals to buy goods and services. Unlike the barter system, money simplifies trade by providing a universally accepted means of exchange.

Currency is the physical form of money, representing coins and paper money. Each country typically issues its own currency, authorized by the central bank. In India, the currency is issued by the Government of India (GoI) and the Reserve Bank of India (RBI) in the form of Indian Rupees.

A bank is a government-authorized financial institution that serves as a custodian of money deposited by account holders. It collects funds and extends loans to individuals and businesses, charging interest on the loans.

An account in banking is a repository of funds held by a bank on behalf of the account holder. It is identified by a unique account number issued to the account holder.

Savings in financial terms refer to the amount of money that remains after expenses are made. It represents the portion of income that is not spent and is typically set aside for future needs or emergencies.

Investment refers to acquiring assets with the objective of generating income or appreciation. Investors seek to earn returns on their investments, either through dividends, interest, or capital gains.

The historical method of trading goods before the invention of money is known as the Barter System. In this system, individuals exchanged goods and services directly without the need for a recognized medium of exchange.

'Needs' in the context of economics refer to essential requirements in life, such as food, clothing, and shelter. These are the fundamental necessities for survival and well-being.

The primary focus of trade in financial activities is buying and selling various goods and services between two or more people involved in the transaction. Trade can occur between individuals, organizations, and even countries.

The ancient trading route that connected China and Central Asia is known as the Silk Road. This route facilitated the exchange of various goods and commodities, contributing to the development of trade and cultural interactions.