CBSE Class 7 > Class 7 Notes > Social Science - New NCERT ( Part 1 and Part 2) > Unit Test: Banks and the Magic of Finance
Unit Test: Banks and the Magic of Finance
M.M: 30
Attempt all questions.
- Question numbers 1 to 5 carry 1 mark each.
- Question numbers 6 to 8 carry 2 marks each.
- Question numbers 9 to 11 carry 3 marks each.
- Question numbers 12 & 13 carry 5 marks each.
Q1. Fill in the blank:
A __________ is a financial institution that collects money from people in the form of deposits and lends money to people or borrowers as loans. (1 Mark)
Q2. Which of the following bank accounts does not earn interest? (1 Mark)
(i) Savings Account
(ii) Current Account
(iii) Fixed Deposit Account
(iv) All accounts earn interest
Q3. What does RBI stand for? (1 Mark)
Q4. What is a cheque? (1 Mark)
Q5. In which year was the UPI launched in India? (1 Mark)
Q6. What is financial infrastructure? Explain briefly. (2 Marks)
Q7. Explain the difference between debit and credit in a bank passbook. (2 Marks)
Q8. What was the purpose of the Pradhan Mantri Jan Dhan Yojana launched in 2014? (2 Marks)
Q9. Explain how compound interest works with an example. (3 Marks)
Q10. Describe the three types of bank accounts. (3 Marks)
Q11. What is a stock exchange, and what happens there? Explain with reference to India. (3 Marks)
Q12. How do banks make money? Explain with an example. (5 Marks)
Q13. What is UPI and how does it work? Explain its benefits. (5 Marks)
The document Unit Test: Banks and the Magic of Finance is a part of the Class 7 Course Social Science Class 7 - New NCERT ( Part 1 and Part 2).
All you need of Class 7 at this link: Class 7
FAQs on Unit Test: Banks and the Magic of Finance
| 1. What are the primary functions of banks? |  |
Ans. The primary functions of banks include accepting deposits from customers, providing loans to individuals and businesses, facilitating financial transactions, and offering various financial services such as savings accounts, fixed deposits, and investment products. Banks also play a key role in the economy by managing the money supply and providing credit.
| 2. How do banks create money? | |
Ans. Banks create money through a process called fractional reserve banking. When a bank receives deposits, it is required to keep only a fraction of those deposits as reserves and can lend out the remainder. This lending process increases the overall money supply in the economy because the money lent out can be deposited in other banks, allowing for further loans to be made.
| 3. What is the significance of interest rates in banking? | |
Ans. Interest rates are significant in banking as they determine the cost of borrowing and the return on savings. When interest rates are high, borrowing becomes more expensive, which can reduce spending and investment. Conversely, low interest rates encourage borrowing and spending, stimulating economic growth. Banks adjust their interest rates based on economic conditions and central bank policies.
| 4. What role do banks play in the economy? | |
Ans. Banks play a crucial role in the economy by facilitating the flow of money and credit. They act as intermediaries between savers and borrowers, enabling individuals and businesses to access funds for investments and consumption. Additionally, banks contribute to economic stability by managing risks and providing financial services that support trade and commerce.
| 5. What are some common types of bank accounts? | |
Ans. Common types of bank accounts include savings accounts, which allow individuals to save money and earn interest; current accounts, which are used for daily transactions and typically do not earn interest; and fixed deposit accounts, where money is deposited for a fixed term at a higher interest rate. Each type of account serves different financial needs and purposes.
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Apr 21, 2026 Last updated
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Document Description: Unit Test: Banks and the Magic of Finance for Class 7 2026 is part of Social Science Class 7 - New NCERT ( Part 1 and Part 2) preparation. The notes and questions for Unit Test: Banks and the Magic of Finance have been prepared according to the Class 7 exam syllabus. Information about Unit Test: Banks and the Magic of Finance covers topics like and Unit Test: Banks and the Magic of Finance Example, for Class 7 2026 Exam. Find important definitions, questions, notes, meanings, examples, exercises and tests below for Unit Test: Banks and the Magic of Finance.
Introduction of Unit Test: Banks and the Magic of Finance in English is available as part of our Social Science Class 7 - New NCERT ( Part 1 and Part 2) for Class 7 & Unit Test: Banks and the Magic of Finance in Hindi for Social Science Class 7 - New NCERT ( Part 1 and Part 2) course. Download more important topics related with notes, lectures and mock test series for Class 7 Exam by signing up for free. Class 7: Unit Test: Banks and the Magic of Finance
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