Important 30 multiple-choice questions (MCQs) of CBSE Class 10 Economics Chapter 3 : Money and credit
Chapter 3: Money and Credit:
- 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 - Which
of the following is NOT a characteristic of money?
- A)
Durability
- B)
Divisibility
- C)
Scarcity
- D)
Complexity
Answer: D) Complexity - What
type of money has intrinsic value?
- A)
Fiat money
- B)
Commodity money
- C)
Representative money
- D)
Banknotes
Answer: B) Commodity money - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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) - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 | |
2 | Sectors of Indian economy | |
3 | Money and credit | |
4 | Globalisation and the Indian economy | |
5 | Consumer rights |
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