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Important Questions (1 Mark): Money & Credit - Class 10 MCQ


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15 Questions MCQ Test Social Studies (SST) Class 10 - Important Questions (1 Mark): Money & Credit

Important Questions (1 Mark): Money & Credit for Class 10 2024 is part of Social Studies (SST) Class 10 preparation. The Important Questions (1 Mark): Money & Credit questions and answers have been prepared according to the Class 10 exam syllabus.The Important Questions (1 Mark): Money & Credit MCQs are made for Class 10 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Important Questions (1 Mark): Money & Credit below.
Solutions of Important Questions (1 Mark): Money & Credit questions in English are available as part of our Social Studies (SST) Class 10 for Class 10 & Important Questions (1 Mark): Money & Credit solutions in Hindi for Social Studies (SST) Class 10 course. Download more important topics, notes, lectures and mock test series for Class 10 Exam by signing up for free. Attempt Important Questions (1 Mark): Money & Credit | 15 questions in 20 minutes | Mock test for Class 10 preparation | Free important questions MCQ to study Social Studies (SST) Class 10 for Class 10 Exam | Download free PDF with solutions
Important Questions (1 Mark): Money & Credit - Question 1

System of exchanging goods for goods is called :

Detailed Solution for Important Questions (1 Mark): Money & Credit - Question 1

The correct answer is C as System of exchanging goods for goods is called barter system. Moreover this system prevailed in old times

Important Questions (1 Mark): Money & Credit - Question 2

Banks use the major portion of the deposits to ______.

Detailed Solution for Important Questions (1 Mark): Money & Credit - Question 2

The primary business model of banks involves accepting deposits from the public and then using a major portion of these deposits to extend loans to individuals, businesses, and other entities. This is how banks earn interest income. Options (b) and (c) may be part of a bank's activities but do not represent the major use of deposits. Therefore, option (a) is correct.

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Important Questions (1 Mark): Money & Credit - Question 3

Terms of credit are with respect to :

Detailed Solution for Important Questions (1 Mark): Money & Credit - Question 3

The mode through which the borrower will repay the loan must be clearly mentioned. Interest rate, collateral and documentation requirement and the mode of repayment together comprise what is called the terms of credit.

Important Questions (1 Mark): Money & Credit - Question 4

Credit or loan refers to an agreement between :

Detailed Solution for Important Questions (1 Mark): Money & Credit - Question 4

Credit or Loan Agreement

  • Lender and Borrower: Credit or loan refers to an agreement between a lender, who provides funds, and a borrower, who receives the funds with the promise to repay them at a later date.
  • Consumer and Producer: While consumers may borrow money to purchase goods or services, the agreement is still primarily between the lender and borrower.
  • Government and Tax Payer: In some cases, governments may provide loans to taxpayers, but this is not the primary definition of credit or loan agreements.

 

Therefore, the correct answer is Option A: lender and borrower. This relationship is at the core of credit and loan agreements, where one party provides funds while the other party agrees to repay them with interest.

 

Important Questions (1 Mark): Money & Credit - Question 5

In rural areas, the main demand for credit is for ________.

Detailed Solution for Important Questions (1 Mark): Money & Credit - Question 5

In rural areas, agriculture is often the main occupation. Credit is predominantly required for inputs into crop production, such as seeds, fertilizers, and irrigation facilities. While options (a), (b), and (c) are valid reasons for seeking credit, they do not represent the main demand in rural contexts, where agricultural needs predominate. Thus, option (d) is correct.

Important Questions (1 Mark): Money & Credit - Question 6

An asset that the borrower uses as a repayment guarantee to a lender is termed as a :

Detailed Solution for Important Questions (1 Mark): Money & Credit - Question 6

Collateral as a Repayment Guarantee:

  • Definition: Collateral is an asset that a borrower offers to a lender as a guarantee for repayment of a loan. It serves as a form of security for the lender in case the borrower defaults on the loan.
  • Types of Collateral: Collateral can come in various forms such as real estate, vehicles, equipment, inventory, or even cash savings.

 

Overall, collateral plays a crucial role in the lending process by providing security for lenders and increasing the likelihood of loan approval for borrowers.

 

Important Questions (1 Mark): Money & Credit - Question 7

Currency is issued in India by :

Detailed Solution for Important Questions (1 Mark): Money & Credit - Question 7

Issuance of Currency in India

  • Reserve Bank of India: The Reserve Bank of India is the sole authority responsible for issuing currency in India. It is the central banking institution that controls the monetary policy of the country.
  • Commercial Banks: While commercial banks play a significant role in the distribution and circulation of currency, they do not have the authority to issue currency. They obtain currency from the Reserve Bank of India for their banking operations.
  • Regional Rural Banks: Regional Rural Banks also do not have the authority to issue currency. They operate under the supervision of the Reserve Bank of India and other regulatory bodies.
  • Nationalised Banks: Nationalised banks, like commercial banks, do not have the authority to issue currency. They rely on the Reserve Bank of India for the supply of currency notes and coins.

 

Therefore, the correct answer is that currency in India is issued by the Reserve Bank of India.

 

Important Questions (1 Mark): Money & Credit - Question 8

Which of the following is an example of collateral?

Detailed Solution for Important Questions (1 Mark): Money & Credit - Question 8

Collateral is an asset that a borrower offers to a lender as security for a loan. If the borrower fails to repay the loan, the lender has the right to seize the collateral. Livestock, land, and deposits with banks are all common forms of collateral, as they can be easily valued and sold by the lender if necessary. Therefore, option (d) "All of the above" is the correct answer.

Important Questions (1 Mark): Money & Credit - Question 9

Which of the following are examples of informal sector loans?

Detailed Solution for Important Questions (1 Mark): Money & Credit - Question 9

The informal sector includes those sources of credit that are not regulated by formal financial institutions and government policies. Moneylenders and traders often provide loans without formal procedures and documentation, thus falling into the category of informal sector loans. Cooperatives, however, are considered part of the formal sector because they are organized groups that operate under specific regulations. Therefore, option (d) "Only (a) and (b)" is correct.

Important Questions (1 Mark): Money & Credit - Question 10

Rate of interest charged by moneylenders as compared to that charged by banks is :

Detailed Solution for Important Questions (1 Mark): Money & Credit - Question 10

D is the correct option.A moneylender's loan will generally have a higher APR (Annual Percentage Rate) than a loan from a credit union or a bank. The APR will be at least 23% and may be much more in some cases.

Important Questions (1 Mark): Money & Credit - Question 11

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

Detailed Solution for Important Questions (1 Mark): Money & Credit - Question 11

Cooperative societies are formal sources of credit because they are regulated entities that pool resources from their members to provide loans and other financial services. Unlike traders, moneylenders, and borrowing from friends and relatives, cooperatives operate under specific legal frameworks and guidelines, making them part of the formal financial system. Thus, option (b) is correct.

Important Questions (1 Mark): Money & Credit - Question 12

What is the main function of modern currency?

Detailed Solution for Important Questions (1 Mark): Money & Credit - Question 12

Modern currency primarily serves the function of facilitating exchange by acting as a widely accepted medium of payment, eliminating the need for the double coincidence of wants, and enabling smoother economic transactions.

Important Questions (1 Mark): Money & Credit - Question 13

What is the primary function of collateral in a loan agreement?

Detailed Solution for Important Questions (1 Mark): Money & Credit - Question 13

Collateral in a loan agreement serves as a guarantee for the lender, ensuring that if the borrower fails to repay the loan, the lender has the right to sell the asset or collateral to recover the outstanding amount. This reduces the lender's risk and provides security for the loan.

Important Questions (1 Mark): Money & Credit - Question 14

What is an example of collateral used for borrowing?

Detailed Solution for Important Questions (1 Mark): Money & Credit - Question 14

Collateral is an asset that the borrower owns and uses as a guarantee to a lender until the loan is repaid. Common examples of collateral used for borrowing include land, building, vehicle, livestock, and deposits with banks.

Important Questions (1 Mark): Money & Credit - Question 15

Assertion (A): Money serves as a medium of exchange, unit of account, and store of value.

Reason (R): Credit facilitates borrowing and lending, contributing to economic activities.

Detailed Solution for Important Questions (1 Mark): Money & Credit - Question 15
  • The Assertion that money serves as a medium of exchange, unit of account, and store of value is true. Money indeed plays these crucial roles in an economy.
  • The Reason that credit facilitates borrowing and lending, contributing to economic activities is also true. Credit enables individuals and businesses to access funds for various purposes.
  • Moreover, the Reason is the correct explanation of the Assertion. Money, by serving as a medium of exchange, is complemented by credit, which allows for borrowing and lending, thus contributing to economic activities.
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