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Assertion & Reason Test: Money & Credit - 2 - Class 10


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15 Questions MCQ Test Social Studies (SST) Class 10 - Assertion & Reason Test: Money & Credit - 2

Assertion & Reason Test: Money & Credit - 2 for Class 10 2023 is part of Social Studies (SST) Class 10 preparation. The Assertion & Reason Test: Money & Credit - 2 questions and answers have been prepared according to the Class 10 exam syllabus.The Assertion & Reason Test: Money & Credit - 2 MCQs are made for Class 10 2023 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Assertion & Reason Test: Money & Credit - 2 below.
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Assertion & Reason Test: Money & Credit - 2 - Question 1

In the question given below, there are two statements marked as Assertion (A) and Reason (R). Read the Statements and choose the correct option:

Assertion (A) : Banks keeps a small proportion of their deposits as cash with themselves.

Reason (R) : This is kept to meet the loan requirements of the people.

Detailed Solution for Assertion & Reason Test: Money & Credit - 2 - Question 1
Banks keep only a small proportion of their deposits as cash with themselves. This is kept as a provision to pay the depositors who might come to withdraw money from the bank on any given day.
Assertion & Reason Test: Money & Credit - 2 - Question 2

In the question given below, there are two statements marked as Assertion (A) and Reason (R). Read the Statements and choose the correct option:

Assertion (A) : Banks give loans not only to profit making businesses but also to small cultivators.

Reason (R) : The RBI supervises the functioning of formal sources of loans.

Detailed Solution for Assertion & Reason Test: Money & Credit - 2 - Question 2
The Reserve Bank of India supervises the functions of banks in the following ways: It ensures that the banks give loans not just to profit-making businesses and traders but also to small cultivators, small scale industries, to small borrowers etc.
Assertion & Reason Test: Money & Credit - 2 - Question 3

In the question given below, there are two statements marked as Assertion (A) and Reason (R). Read the Statements and choose the correct option:

Assertion (A) : Periodically, banks have to submit information to the finance Minister on how much they are lending, to whom, at what interest rate, etc.

Reason (R) : The finance Minister monitors the banks in actually maintaining cash balance.

Detailed Solution for Assertion & Reason Test: Money & Credit - 2 - Question 3
The Reserve Bank of India sees that the banks maintain a minimum cash balance out of the deposits they receive. It monitors that the banks actually maintain the cash balance.
Assertion & Reason Test: Money & Credit - 2 - Question 4

Find the incorrect option:

Detailed Solution for Assertion & Reason Test: Money & Credit - 2 - Question 4
People deposit their savings in banks. They can withdraw their money whenever required. Because the deposits in the bank account can be withdrawn on demand, these deposits are called demand deposits. Cheques against a deposit settle payments without the use of direct cash.
Assertion & Reason Test: Money & Credit - 2 - Question 5

Find the incorrect option:

Assertion & Reason Test: Money & Credit - 2 - Question 6

Find the incorrect option:

Detailed Solution for Assertion & Reason Test: Money & Credit - 2 - Question 6
Commercial banks lend money to for-profit companies and other organizations every day. In fact, business lending makes up a large portion of a commercial bank's operations. This makes a commercial bank different from an investment bank, although the same institution can include commercial and investment branches.
Assertion & Reason Test: Money & Credit - 2 - Question 7

Direction: Mark the option which is most suitable:

Assertion : The modern currency is used as a medium of exchange; however, it does not have a use of its own.

Reason : Modem currency is easy to carry

Detailed Solution for Assertion & Reason Test: Money & Credit - 2 - Question 7
The modern currency is used as a medium of exchange because it is accepted and authorized as a medium of exchange by a country’s government.
Assertion & Reason Test: Money & Credit - 2 - Question 8

Direction: Mark the option which is most suitable:

Assertion : The Reserve Bank of India supervises the functioning of formal sources of loans.

Reason : The RBI sees that the banks give loans not just to profit-making businesses and traders but also to small cultivators, small scale industries, to small borrowers etc.

Detailed Solution for Assertion & Reason Test: Money & Credit - 2 - Question 8
The RBI oversees the functioning of commercial banks. The reason statement substantiates the assertion but it is not the explanation for the assertion.
Assertion & Reason Test: Money & Credit - 2 - Question 9

Direction: Mark the option which is most suitable:

Assertion : The terms of deposit are same for all credit arrangements.

Reason : Credit arrangements are very complex process so to remove the complexities same terms of deposits are used.

Detailed Solution for Assertion & Reason Test: Money & Credit - 2 - Question 9
The terms of credit vary substantially from one credit arrangement to another. They may vary depending on the nature of the lender and the borrower.
Assertion & Reason Test: Money & Credit - 2 - Question 10

Direction: Mark the option which is most suitable:

Assertion : Credit would be useful or not depending on the risk involved in a situation.

Reason : The chance of benefiting from credit is highest in the agriculture sector.

Detailed Solution for Assertion & Reason Test: Money & Credit - 2 - Question 10
Whether credit would be useful or not depends on the risks in the situation and whether there is some support, in case of loss.
Assertion & Reason Test: Money & Credit - 2 - Question 11

Direction: Mark the option which is most suitable:

Assertion : Rohan took credit in the form of advance payment from a buyer and he delivered the goods to the buyer on time and also earned profit. The credit made Rohan better off in this situation.

Reason : Credit can never push a person into a debt trap.

Detailed Solution for Assertion & Reason Test: Money & Credit - 2 - Question 11
The credit made Rohan better off in this situation, however, Rohan would have been worse off if he had failed to deliver the goods on time or he had made a loss in the production process. The latter two situations may have caused Rohan to fall in a debt trap
Assertion & Reason Test: Money & Credit - 2 - Question 12

Direction: Mark the option which is most suitable:

Assertion : Banks charge a higher interest rate on loans than what they offer on deposits.

Reason : The difference between what is charged from borrowers and what is paid to depositors is their main source of income.

Detailed Solution for Assertion & Reason Test: Money & Credit - 2 - Question 12
Banks in India hold about 15 percent of their deposits as cash as the remaining deposits are used to provide loans. The interest charged on Loans is higher than the interest paid on deposits and the difference between the two interest rates is the major source of income for banks.
Assertion & Reason Test: Money & Credit - 2 - Question 13

Direction: Mark the option which is most suitable:

Assertion : Banks keep only a small proportion of their deposits as cash with themselves.

Reason : Banks in India these days hold about 15 percent of their deposits as cash.

Detailed Solution for Assertion & Reason Test: Money & Credit - 2 - Question 13
Banks keep only a small proportion of their deposits as cash with themselves because they use the major portion of the deposits to extend loans as there is a huge demand for Loans for various economic activities.
Assertion & Reason Test: Money & Credit - 2 - Question 14

Direction: Mark the option which is most suitable:

Assertion : The facility of demand deposits makes it possible to settle payments without the use of cash.

Reason : Demand deposits are paper orders which make it possible to transfer money from one person’s account to another person’s account.

Detailed Solution for Assertion & Reason Test: Money & Credit - 2 - Question 14
The facility of cheques against demand deposits makes it possible to directly settle payments without the use of cash. Since demand deposits are accepted widely as a means of payment, along with currency, they constitute money in the modern economy.
Assertion & Reason Test: Money & Credit - 2 - Question 15

Direction: Mark the option which is most suitable:

Assertion : In India, no individual can refuse to accept a payment made in rupees.

Reason : Rupee is the legal tender in India.

Detailed Solution for Assertion & Reason Test: Money & Credit - 2 - Question 15
The law legalizes the use of rupee as a medium of payment that cannot be refused in settling transactions in India.
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