Class 10 Economics Important MCQs - Chapter 3: Money and Credit

Important 30 multiple-choice questions (MCQs) of CBSE Class 10 Economics Chapter 3 : Money and credit

Chapter 3: Money and Credit:

  1. What is the primary function of money?
    • A) Store of value
    • B) Medium of exchange
    • C) Unit of account
    • D) All of the above
      Answer: D) All of the above
  2. Which of the following is NOT a characteristic of money?
    • A) Durability
    • B) Divisibility
    • C) Scarcity
    • D) Complexity
      Answer: D) Complexity
  3. What type of money has intrinsic value?
    • A) Fiat money
    • B) Commodity money
    • C) Representative money
    • D) Banknotes
      Answer: B) Commodity money
  4. Which of the following is considered a form of credit?
    • A) Cash
    • B) Loans
    • C) Bonds
    • D) Both B and C
      Answer: D) Both B and C
  5. The Reserve Bank of India (RBI) is responsible for:
    • A) Issuing currency
    • B) Regulating the banking sector
    • C) Controlling inflation
    • D) All of the above
      Answer: D) All of the above
  6. Which of the following is a function of commercial banks?
    • A) Accepting deposits
    • B) Providing loans
    • C) Facilitating payments
    • D) All of the above
      Answer: D) All of the above
  7. What is the term for the interest rate at which the central bank lends to commercial banks?
    • A) Repo rate
    • B) Reverse repo rate
    • C) Bank rate
    • D) SLR
      Answer: A) Repo rate
  8. Which of the following is a disadvantage of using credit?
    • A) Increased purchasing power
    • B) Potential for debt accumulation
    • C) Convenience in transactions
    • D) Building a credit history
      Answer: B) Potential for debt accumulation
  9. What is the primary purpose of a savings account?
    • A) To earn high returns
    • B) To provide liquidity
    • C) To facilitate investments
    • D) To store cash securely
      Answer: B) To provide liquidity
  10. Which of the following is an example of a non-banking financial institution (NBFI)?
    • A) Commercial bank
    • B) Cooperative bank
    • C) Insurance company
    • D) Central bank
      Answer: C) Insurance company
  11. What does the term 'liquidity' refer to in finance?
    • A) The ability to convert assets into cash quickly
    • B) The amount of cash available
    • C) The profitability of an investment
    • D) The risk associated with an investment
      Answer: A) The ability to convert assets into cash quickly
  12. Which of the following is a function of money in an economy?
    • A) Facilitating trade
    • B) Measuring economic performance
    • C) Acting as a standard of deferred payment
    • D) All of the above
      Answer: D) All of the above
  13. What is the primary role of the central bank in an economy?
    • A) To provide loans to individuals
    • B) To regulate the money supply and maintain financial stability
    • C) To manage government accounts
    • D) To facilitate international trade
      Answer: B) To regulate the money supply and maintain financial stability
  14. Which of the following is a type of credit instrument?
    • A) Cheque
    • B) Demand draft
    • C) Promissory note
    • D) All of the above
      Answer: D) All of the above
  15. What is the term for the process of creating money through lending?
    • A) Money laundering
    • B) Money creation
    • C) Credit creation
    • D) Inflation
      Answer: C) Credit creation
  16. Which of the following is a feature of a fixed deposit account?
    • A) High liquidity
    • B) Fixed interest rate
    • C) No minimum balance requirement
    • D) Unlimited withdrawals
      Answer: B) Fixed interest rate
  17. What is the primary reason for the existence of credit?
    • A) To increase savings
    • B) To facilitate immediate consumption
    • C) To reduce inflation
    • D) To promote investment
      Answer: B) To facilitate immediate consumption
  18. Which of the following is a risk associated with credit?
    • A) Default risk
    • B) Interest rate risk
    • C) Inflation risk
    • D) All of the above
      Answer: D) All of the above
  19. What is the term for the minimum amount of reserves that banks must hold against deposits?
    • A) Cash reserve ratio (CRR)
    • B) Statutory liquidity ratio (SLR)
    • C) Bank rate
    • D) Repo rate
      Answer: A) Cash reserve ratio (CRR)
  20. Which of the following is a primary source of credit for small businesses?
    • A) Venture capital
    • B) Personal savings
    • C) Bank loans
    • D) All of the above
      Answer: D) All of the above
  21. What is the impact of high inflation on the value of money?
    • A) Increases its value
    • B) Decreases its value
    • C) Has no impact
    • D) Stabilizes its value
      Answer: B) Decreases its value
  22. Which of the following is a method of payment that does not involve cash?
    • A) Credit card
    • B) Debit card
    • C) Electronic funds transfer
    • D) All of the above
      Answer: D) All of the above
  23. What is the primary purpose of a credit rating?
    • A) To assess the risk of lending to an individual or organization
    • B) To determine the interest rate on loans
    • C) To evaluate the profitability of a business
    • D) To measure economic growth
      Answer: A) To assess the risk of lending to an individual or organization
  24. Which of the following is a feature of a credit card?
    • A) Requires immediate payment
    • B) Allows for deferred payment
    • C) Has no spending limit
    • D) Is a form of cash
      Answer: B) Allows for deferred payment
  25. What is the term for the interest rate charged by banks on loans?
    • A) Deposit rate
    • B) Lending rate
    • C) Savings rate
    • D) Base rate
      Answer: B) Lending rate
  26. Which of the following is a disadvantage of using credit cards?
    • A) Convenience
    • B) High-interest rates
    • C) Building credit history
    • D) Rewards programs
      Answer: B) High-interest rates
  27. What is the role of microfinance institutions?
    • A) To provide large loans to corporations
    • B) To offer financial services to low-income individuals and small businesses
    • C) To manage government funds
    • D) To regulate the banking sector
      Answer: B) To offer financial services to low-income individuals and small businesses
  28. Which of the following is a consequence of excessive credit creation?
    • A) Economic growth
    • B) Inflation
    • C) Increased savings
    • D) Financial stability
      Answer: B) Inflation
  29. What is the primary function of a cheque?
    • A) To serve as a form of credit
    • B) To facilitate cash transactions
    • C) To transfer money from one bank account to another
    • D) To act as a loan agreement
      Answer: C) To transfer money from one bank account to another
  30. Which of the following is a key indicator of a country's economic health?
    • A) Money supply
    • B) Credit availability
    • C) GDP growth rate
    • D) All of the above
      Answer: D) All of the above.

CBSE CLASS 10 ECONOMICS IMPORTANT QUESTIONS (MCQS)

S.No

Chapter Name

MCQs

1

Development

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2

Sectors of Indian economy

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3

Money and credit

Click here

4

Globalisation and the Indian economy

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5

Consumer rights

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