Chapter-Chapter 3. Money and Credit Economics class 10 in english Medium CBSE Notes

Assignments for Preparation

Practice the following questions carefully to strengthen your understanding of the chapter and prepare effectively for the CBSE Board Examination.

Multiple Choice Questions (MCQs)

1. The barter system is based on:

(a) Money
(b) Direct exchange of goods and services
(c) Banking system
(d) Credit

2. The main problem of the barter system is:

(a) Inflation
(b) Double coincidence of wants
(c) High interest rate
(d) Unemployment

3. Money mainly acts as a:

(a) Medium of Exchange
(b) Natural Resource
(c) Factor of Production
(d) Tax

4. Which is a modern form of money?

(a) Wheat
(b) Currency Notes
(c) Gold only
(d) Barter Goods

5. Demand deposits are kept in:

(a) Factories
(b) Banks
(c) Schools
(d) Markets

6. Demand deposits can be withdrawn:

(a) Only after one year
(b) Only with government permission
(c) Whenever required
(d) Only after maturity

7. Banks mainly earn income by:

(a) Collecting taxes
(b) Giving loans
(c) Selling goods
(d) Printing currency

8. Credit means:

(a) Donation
(b) Borrowing and lending of money
(c) Saving money only
(d) Payment of taxes

9. Which of the following is a term of credit?

(a) Interest Rate
(b) Rainfall
(c) Population
(d) Literacy Rate

10. Collateral means:

(a) Salary
(b) Security against a loan
(c) Tax Payment
(d) Deposit Slip

11. Which is a formal source of credit?

(a) Moneylender
(b) Friend
(c) Commercial Bank
(d) Trader

12. Which is an informal source of credit?

(a) Cooperative Bank
(b) Commercial Bank
(c) Moneylender
(d) Regional Rural Bank

13. The Reserve Bank of India is the:

(a) Commercial Bank
(b) Central Bank of India
(c) Foreign Bank
(d) Cooperative Bank

14. RBI regulates:

(a) Schools
(b) Industries only
(c) Banking System
(d) Agriculture

15. Which of the following generally charges the highest rate of interest?

(a) Commercial Bank
(b) Cooperative Bank
(c) Moneylender
(d) Regional Rural Bank

16. Self-Help Groups (SHGs) mainly consist of:

(a) Large Industries
(b) Government Officers
(c) Small Groups of People, mainly Women
(d) Exporters

17. Self-Help Groups encourage:

(a) Saving Habits
(b) Tax Collection
(c) Foreign Trade
(d) Imports

18. Formal credit is better because:

(a) It charges very high interest
(b) It follows RBI rules and regulations
(c) It is illegal
(d) It does not require repayment

19. Credit helps in:

(a) Increasing production and employment
(b) Reducing production
(c) Increasing pollution only
(d) Stopping business activities

20. Expanding formal credit is important because it:

(a) Increases exploitation
(b) Reduces dependence on moneylenders
(c) Stops banking services
(d) Reduces savings

Short Answer Questions (2–3 Marks)

1. What is the barter system? State any two limitations.

2. Explain the meaning of double coincidence of wants.

3. State any three functions of money.

4. What are demand deposits? Why are they considered money?

5. Explain how banks use the money deposited by people.

6. What is meant by collateral? Why is it required?

7. Differentiate between formal and informal sources of credit.

8. Explain any three advantages of Self-Help Groups (SHGs).

Long Answer Questions (5 Marks)

1. Explain the problems of the barter system. How does money solve these problems?

2. Describe the functions of commercial banks in the modern economy.

3. Explain the meaning of credit. Discuss how credit can be both useful and harmful.

4. Differentiate between formal and informal sources of credit with suitable examples.

5. Explain the role of the Reserve Bank of India (RBI) in regulating the banking system.

6. Describe the importance of Self-Help Groups (SHGs) in improving rural credit and financial inclusion.

CBSE Competency-Based Questions

1. A farmer borrows money from a moneylender at a very high rate of interest and fails to repay the loan due to crop failure. Identify the type of credit source and explain one problem faced by the farmer.

2. A shopkeeper deposits his daily earnings in a bank and later uses a cheque to make payments to a supplier. Explain how the banking system helps the shopkeeper.

3. Why is formal credit considered safer and more reliable than informal credit? Give suitable reasons.

4. A group of rural women starts saving ₹100 every month and later provides small loans to its members. Identify the organisation and explain its importance.

5. "Easy access to affordable credit is essential for economic development." Justify the statement with suitable examples.

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