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Money and Credit Class 10 Worksheet Economics Chapter 3

Multiple Choice Questions
Q1: A person can withdraw money from a bank by issuing a cheque. What is a cheque?
(a) Loan taken by the bank.
(b) Loan taken by the depositor from the bank.
(c) Paper instructing the bank to pay a specific amount.
(d) Paper valid to withdraw money

Q2: Which one of the following is not a formal source of credit?
(a) Commercial Banks
(b) State Bank of India
(c) Employers
(d) Co-operatives

Q3: All the banks actas mediator between _________ and _________.
(a) rural people, urban people
(b) literates, illiterates
(c) people, government
(d) depositors, borrowers

Q4: Organised credit is also called
(a) informal credit
(b) formal credit
(c) cooperative credit
(d) none of these

Q5: A porter making pots, wants to exchange pots for wheat. Lukily, he meets a farmer who has wheat and is willing to exchange it for the pots. What is this situation known as?
(a) Incidence of wants
(b) Double coincidence of wants
(c) Barter system of wants
(d) None of the above

Q6: Organised credit is also called
(a) informal credit
(b) formal credit
(c) cooperative credit
(d) none of these

Q7: Modern form of money is linked with which system?
(a) Accounts system
(b) Finance system
(c) Banking system
(d) None of the above.

Q8: Which one of the following does not come under terms of credit?
(a) Interest rate
(b) Employment
(c) Collateral
(d) Mode of repayment.

Q9: What are electronic banking services?
(a) ATM
(b) Debit Card
(c) Credit Card
(d) All of the above.

Q10: A person can withdraw money by issuing a cheque. What is a cheque?
(a) Loan taken by the bank.
(b) Loan taken by the depositor from the bank.
(c) Paper instructing the bank to pay a specific amount.
(d) Paper valid to withdraw money

Fill in The Blanks
Direction: Complete the following statements with appropriate word(s).
Q1: Modern forms of money include _______ (gold coins/ paper notes)

Q2: Deposits in bank accounts withdrawn on demand are called _____ .

Q3: _____ issues currency notes on behalf of the Central Government.

Q4: Majority of the credit needs of the _____ households are met from informal sources.

Q5: _____ is an asset that the borrower owns and uses as a guarantee until the loan is repaid to the lender.

True & False

Direction: Read each of the following statements and write if it is true or false.
Q1: In a SHG, most of the decisions regarding savings and loan activities are taken by government.

Q2: The collateral demand that lenders make loans against are vehicle and building of the borrower.

Assertion And Reason Type Questions
Direction Mark the option which is most suitable :‘
Q1: Assertion: In India, no individual can refuse to accept a payment made in rupees.
Reason: Rupee is the legal tender in India.
(a) If Both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If Both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If Assertion is true, but reason is false.
(d) If Both assertion and reason are false.

Q2: Assertion: Banks keep only a small proportion of their deposits as cash with themselves.
Reason: Banks in India these days hold about 15 per cent of their deposits as cash.

(a) If Both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If Both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If Assertion is true, but reason is false.
(d) If Both assertion and reason are false.

Q3: 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.

(a) If Both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If Both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If Assertion is true, but reason is false.
(d) If Both assertion and reason are false.

Q4: Assertion: Collateral is an asset that the borrower owns (such as land, building, vehicle, livestock, deposits with banks) and uses this as a guarantee to a
Reason: Collateral is given as the lender can sell the collateral to recover the loan amount if the borrower fails to repay the loan.

(a) If Both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If Both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If Assertion is true, but reason is false.
(d) If Both assertion and reason are false.

Q5: 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.

(a) If Both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If Both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If Assertion is true, but reason is false.
(d) If Both assertion and reason are false.

Very Short Answer Type Questions
Q1: Give any two examples of informal sector of credit. 

Q2: How does the use of money make it easier to exchange things? Give an example. 

Q3: How do the deposits with the banks become their source of income? 

Q4: Compare formal sector loans with informal sector loans regarding interest only. 

Q5: What do people do with extra money?

Q6: Why do we consider demand deposits as money?

Q7: What does higher cost of borrowing means?

Q8: When is crucial for the country’s development?

Q9: How do the SHGs help borrowers?

Q10: Prove with an argument that there is a great need to expand formal sources of credit in rural India.

Short Answer Type Questions 
Q1: Why is cheap and affordable credit important for the country’s development? Explain any three reasons.
or
“Cheap and affordable credit is crucial for the country’s development.” Assess the statement.

Q2: Explain any three loan activities of banks in India.

Q3: Why do banks ask for collateral while giving credit to a borrower?

Q4: What comprises ‘terms of credit’?

Q5: “Supervision of the functioning of formal sources of loans is necessary”.

Q6: “There is a great need to expand formal sources of credit in rural India.” Examine the statement.

Q7: Describe the utility of Cheque.

Q8: “The credit activities of the informal sector should be discouraged.” Support the statement with arguments.

Q9: ‘Credit has its own unique role for development.’ Justify the statement with arguments.

Q10: “Poor households still depend on informal source of credit.” Support the statement with examples.
or
“Most of the poor household still depend on the informal sector for loans, both in rural and urban areas of India.” Support the statement with three examples.

Long Answer Type Questions
Q1: What are self-help groups? How are they emerging as an import ant source of credit? Explain.
or
‘Self-Help Groups’ help borrowers to overcome the problems of lack of collateral.” Examine the statement.

Q2: How do SHG’s act to provide a platform for women to address their various social issues?

Q3: “Banks are playing an important role in the development of the Indian economy.” Support the statement with examples.

Q4: How can the formal sector loans be made beneficial for the poor farmers and workers? Suggest any five measures.

Q5: What are Self-Help Groups? How do they work? Explain.

Q6: What is credit? How does credit play a vital and positive role? Explain with an example.

Q7: Why are banks necessary for a country?

Q8: In what ways does the Reserve Bank of India supervise the functioning of banks? Why is this necessary? 
OR
How does Reserve Bank of India play a crucial role in controlling the formal sector loans. Explain.

Q9: When does credit push the borrower into a debt-trap? Explain with the help of an example.

Q10: What are the merits and demerits of credit ?
OR
‘‘Credit is useful as well as harmful, it depends on the risk involved.’’ Support the statement with examples.

The document Money and Credit Class 10 Worksheet Economics Chapter 3 is a part of the Class 10 Course Social Studies (SST) Class 10.
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FAQs on Money and Credit Class 10 Worksheet Economics Chapter 3

1. What is the concept of credit?
Ans. Credit is the ability to borrow money or obtain goods or services with the understanding that you will pay for them later. It is a form of trust between the lender and the borrower, where the borrower receives immediate benefits but has the obligation to repay the borrowed amount or value in the future.
2. How does credit affect our economy?
Ans. Credit plays a crucial role in our economy as it promotes consumption and investment. When people have access to credit, they can purchase goods and services even when they do not have enough money at that moment. This increases demand, which in turn stimulates production and economic growth. However, excessive credit can also lead to overborrowing and financial instability.
3. What are the different types of credit?
Ans. There are various types of credit, including: 1. Consumer Credit: This includes loans and credit cards that individuals use for personal expenses. 2. Commercial Credit: This is credit extended to businesses for their operations, such as trade credit or business loans. 3. Secured Credit: This type of credit is backed by collateral, such as a house or car, which can be repossessed if the borrower fails to repay the debt. 4. Unsecured Credit: This type of credit does not require collateral and is based on the borrower's creditworthiness. 5. Revolving Credit: This allows borrowers to repeatedly access a certain amount of credit, such as a credit card, as long as they make regular payments.
4. What is the role of the central bank in managing credit in an economy?
Ans. The central bank plays a crucial role in managing credit in an economy. It formulates and implements monetary policy to regulate the availability and cost of credit. The central bank uses various tools, such as interest rates and reserve requirements, to control the money supply and influence borrowing and lending activities. By managing credit, the central bank aims to maintain price stability, promote economic growth, and prevent financial crises.
5. What are the advantages and disadvantages of using credit?
Ans. Advantages of using credit: - Immediate access to goods and services without having to pay the full amount upfront. - Ability to make large purchases or investments that would otherwise be difficult to afford. - Opportunity to build a credit history, which can be beneficial for future borrowing. Disadvantages of using credit: - Accumulation of debt if the borrowed amount is not repaid on time. - Interest charges and fees, which increase the overall cost of credit. - Potential damage to credit score if payments are missed or delayed. - Temptation to overspend and live beyond one's means, leading to financial stress.
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