Money and Credit Class 10 MCQ Quiz – Test Your Knowledge

Are you preparing for your CBSE Class 10 Social Science board exam? This MCQ quiz on "Money and Credit" will help you revise key concepts like forms of money, the role of credit, formal and informal sources of credit, and the impact of credit on the economy.

About the Quiz

Chapter Name: Money and Credit
Subject: Social Science (Economics)
Book: NCERT Class 10 Economics
Question Type: Multiple Choice Questions (MCQs)
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✔ Quick revision for CBSE exams
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Chapter 3 - Money and Credit

1 / 15

Mohan is an agricultural laborer. There are several months in a year when he has no work and needs credit to meet his daily expenses. He depends upon his employer, the landowner for credit who charges an interest rate of 5 percent per month. Mohan repays the money by working physically for the landowner on his farmland. Over the years his debt will –

Be totally repaid - as he is repaying the debt in the form of physical labor

Increase - because of increasing interest and non-payment of the monthly amount

Remain constant - as he is working for the employer but is repaying less

Reduce - as the amount equivalent to his salary is being counted as monthly repayment

2 / 15

Rehman is a poor agricultural labor and needs a loan for cultivation on his small piece of land.

Which of the following would DEFINITELY offer him a fair interest rate and flexible terms of credit?

village moneylender

cooperative society

commercial bank

rich landowner

3 / 15

Credit (loan) refers to an agreement in which the lender supplies the borrower with money, goods, or services in return for the promise of _____.

No payment

Collateral

Future payment

Payment made

4 / 15

In India, who issues the currency notes on behalf of the central government?

Reserve Bank of India

State Bank of India

Finance Minister of India

None

5 / 15

Rohan has taken a loan of Rs.5 lakhs from the bank to purchase a house at a 12% rate of interest. He has to submit papers about the new house and salary records to the bank. What is this process called?

Principal Amount

Interest Rate

Installments

Collateral

6 / 15

Rita has taken a loan of Rs.7 lakhs from the bank to purchase a car. The annual interest rate on the loan is 14.5 percent and the loan is to be repaid in 3 years in monthly installments. The bank retained the papers of the new car as collateral, which will be returned to Rita only when she repays the entire loan with interest.

Analyze the loan information given above, considering one of the following correct options.

Terms of credit

Interest on loan

Deposit criteria

Mode of re-payment

7 / 15

What is the main difference between formal and informal sources of credit?

Formal sources charge a higher rate of interest, while informal sources charge a lower rate of interest.

Formal sources are supervised by the RBI, while informal sources are not supervised by any organization.

Formal sources require collateral, while informal sources do not require collateral.

Formal sources provide loans only to large-scale industries, while informal sources provide loans to small-scale industries and rural households.

8 / 15

What is a "debt trap"?

A situation where an individual or organization has too much money and cannot spend it

A situation where an individual or organization becomes trapped in a cycle of debt that they are unable to escape from

A situation where an individual or organization has too many assets and cannot manage them

A situation where an individual or organization has too many loans and cannot repay them

9 / 15

What is the role of Self-Help Groups (SHGs) in rural society?

They help borrowers overcome the problem of lack of collateral.

They provide loans to small-scale industries and rural households.

They provide a platform for discussing and acting on social issues.

All of the above.

10 / 15

What are the main terms of credit?

Interest rate, collateral, documentation requirement, mode of repayment, and time period

Collateral, documentation requirement, and mode of repayment

Interest rate, collateral, and documentation requirement

Interest rate, mode of repayment, and time period

11 / 15

How do banks earn income from deposits?

By paying a higher interest rate on deposits

By investing in stocks and shares

By charging a fee for depositing money

By charging a higher rate of interest on loans than what they offer on deposits

12 / 15

What is the primary function of money?

Standard of deferred payments

All of the above

Medium of exchange

Credit creation

13 / 15

Most agricultural laborers like Mohan depend upon loans from the informal sector. Which of the following statements about this sector is correct –

There is govt. bodies to supervise the informal sector

Cost of informal loans to the borrower is quite high

Money lenders use fair means to get their money back

Money lenders ask for a reasonable rate of interest

14 / 15

What is a potential negative economic implication of an economy without the concept of credit?

Increased access to funds for starting businesses

Increased financial flexibility and convenience

Limited access to funds for starting businesses or making investments

Increased capacity of savings

15 / 15

Why is modern currency accepted as a medium of exchange?

Because it is backed by gold reserves

Because it is used by all countries

Because it is accepted by international organizations

Because it is authorized by the government

Your score is

The average score is 62%

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Key Topics Covered in the Quiz

✔ Functions of Money
✔ Types of Credit – Formal & Informal
✔ Role of Banks & Self Help Groups (SHGs)
✔ Impact of Credit on Borrowers
✔ Collateral and Terms of Credit

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