Class 10 Economics Chapter “Money and Credit” MCQs: Test your preparation of the chapter “Money and Credit” with the MCQs given here. Click here to reach out to more Economics study material.
MCQs: Money and Credit
Read the following questions and then select the correct options as answers.
1. What is meant by double coincidence of wants?
- A. Each of two persons wanting to buy what the other wants to sell
- B. Two people want to buy the same thing by a coincidence
- C. Two people want to sell the same thing by a coincidence
- D. Two people offer the same barter exchange by a coincidence
2. Identify the condition when both the parties in a barter economy agree to sell and buy each other’s commodities?
- A. Double trade
- B. Mutual barter
- C. Mutual compromise
- D. Double coincidence of wants
3. Since money acts as an intermediary in the exchange process, what is the other term given to it?
- A. Medium of barter
- B. Token of trade
- C. Substitute of commodities
- D. Medium of exchange
4. Which of the following mediums of exchanges cannot be legally refused in settling transactions in India?
- A. Dollar
- B. Euro
- C. Yen
- D. Rupee
5. A paper instructing the bank to pay a specific amount from the person’s account to the person whose name is written on the paper is called __________ .
- A. Currency
- B. Demand deposit
- C. Loan
- D. Cheque
Find the incorrect option.
- A. Demand deposits share the essential features of money.
- B. With demand deposits, payments can be made without cash.
- C. safe mode of monetary transaction.
- D. Demand deposit facility is like a cheque.
6. What percent of total deposits must banks retain in cash as a reserve to pay depositors who may withdraw funds?
- A. 5 per cent
- B. 25 per cent
- C. 35 per cent
- D. 15 per cent
7. Where do banks get the money to extend loans?
- A. Reserve bank of India
- B. Foreign banks
- C. Deposits made by customers
- D. Government
8. How many members does a self-help group usually have?
- A. 15–20
- B. 35–40
- C. 5–10
- D. 25–30
9. For which three of the following reasons are loans made available to SHG members?
- A. Meeting working capital needs
- B. Releasing mortgaged land
- C. Personal loans for child’s marriage
- D. Acquiring assets like sewing machine
- E. Buying properties
10. What is the term for an agreement in which a lender supplies a borrower with money, goods or services in return for the promise of future payment?
- A. Liability
- B. Deposit
- C. Asset
- D. Credit
Answers:
- A. Each of two persons wanting to buy what the other wants to sell (In a barter system, goods and services are exchanged for other goods and services without using money. Double coincidence of wants is essential to barter transactions as each of two sides must want to buy what the other has to sell. For example, a potter who wants to buy rice has to find a rice seller who wants to buy pots.)
- D. Double coincidence of wants (When one person wants to sell something that is exactly what another person wants to buy, it is a coincidence. When the other person too wants to sell something that the first wants, it is a double coincidence. Exchanges in a barter system rely on double coincidence of wants. )
- D. Medium of exchange (Since money acts as an intermediary in the exchange process, it is called a medium of exchange.)
- D. Rupee (The law in India authorises the use of the Rupee as a medium of payment that cannot be refused in settling transactions in India.)
- D. Cheque (A paper instructing the bank to pay a specific amount from the person’s account to the person whose name is written on the paper is called a cheque.)
- D. 15 per cent (People deposit money in the bank. Banks keep a small portion of deposits as cash with them. They hold about 15 % of deposits as cash in order to pay the depositors who may come anytime to withdraw money from the bank.)
- C. Deposits made by customers (Banks make loans out of the money deposited by their customers, or account holders.)
- A. 15–20 (A typical SHG has 15–20 members, usually belonging to one neighbourhood, who meet and save regularly.)
- A, B and D (Small loans are often sanctioned in the name of the group and are provided to members for reasons such as releasing their mortgaged lands, meeting their working capital needs and acquiring assets like sewing machines)
- D. Credit (Credit refers to an agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future payment. )
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