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Money and Credit Test - 8

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Money and Credit Test - 8
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Weekly Quiz Competition
  • Question 1
    1 / -0
    _________ costs of borrowing increase the debt-burden.
    Solution
    • Higher costs of borrowing increase the debt burden.
    • Informal sources of credit charges higher rates of interest
    • Due to higher rate of interest the informal sources of credit are generally exploitative in nature.
  • Question 2
    1 / -0
    Which of the following is the main source of credit for the rich household?
    Solution

    Formal Sector : It includes loans from banks and cooperatives. RBI supervises their functions of giving loans. Rich urban households depend largely on formal sources of credit. Lower rate of interest on loans is charged as compared to informal sources of credit.

  • Question 3
    1 / -0
    A 'debt trap' means _____.
    Solution
    • Debt trap is a situation where the debtor will not be able to repay the debt incurred.
    • Debt trap situation may arise due to the higher interest rates or change in terms and conditions of debt incurred.
    • Normally, debt trap will result in default of payments or bankruptcies.
  • Question 4
    1 / -0
    What is the name of the success story that met the credit needs of the poor, at reasonable rates, in Bangladesh?
    Solution
    Grameen Bank of Bangladesh is one of the biggest success stories in reaching the poor to meet their credit needs at reasonable rates. Started in the 1972 as a small project, Grameen Bank now has over 6 million borrowers in about 40,000 villages spread across Bangladesh. Almost all of the borrowers are women and belong to poorest sections of the society. These borrowers have proved that not only are poor women reliable borrowers, but that they can start and run a variety of small income generating activities successfully.
  • Question 5
    1 / -0
    Formal sources of credit do not include _____.
    Solution
    1. Formal sources of credit do not include employers as there is no role of these employers all these works are related to banks and the cooperatives.
    2. Employers     are there merely to serve the bank staff and do the work as it is asked to do by their owner.


  • Question 6
    1 / -0
    Modern forms of money include ________.
    Solution
    1. Modern forms of money include currency — paper notes and coins.
    2. Unlike the things that were used as money earlier, modern currency is not made of precious metals such as gold, silver, and copper.

  • Question 7
    1 / -0
    Indian currency was last devalued in _______.
    Solution
    In 1991, India still had a fixed exchange system, where the rupee was pegged to the value of a basket of currencies of major trading partners. India started having balance of payments problems since 1985, and by the end of 1990, it found itself in serious economic trouble. The government was close to default and its foreign exchange reserves had dried up to the point that India could barely finance three weeks’ worth of imports. As in 1966, India faced high inflation and large government budget deficits.This led the government to devalue the rupee. At the end of 1991, the Indian Rupee was devalued considerably.
    India devalued its rupee in 1966 and 1991.
  • Question 8
    1 / -0
    Cheque is a _____.
    Solution
    1. Cheque is an instrument in writing containing an unconditional order, addressed to a banker, sign by the person who has deposited money with the banker, requiring him to pay on demand a certain sum of money only to or to the order of a certain person or to the bearer of the instrument.
    2. Optional money refers to non-legal tender money which does not enjoy any statutory backing but it is generally accepted by the people in final payments and in settlements of cash transactions. It consists of credit instruments like bills of exchange, cheques, handiest, etc.
  • Question 9
    1 / -0
    Since money acts as an intermediate in the exchange process, it is called _____.
    Solution
    1. Money is the medium of exchange in the modern times.
    2. It can be used as a unit of account and store of value as well.
    3.money acts as an intermediate in the exchange process, it is called a medium of exchange.
  • Question 10
    1 / -0
    First gold coins were introduced during the reign of _____.
    Solution
    The world’s first coins were Greek, made in Lydia about 640 BC. The earliest Indian coins were silver, and it was not until about 100 AD that the Kushan emperor Vima Kadaphises introduced the first Indian gold coin, which was a gold dinar bearing the image of Shiva. So India’s history of issuing gold coins dates back almost 2,000 years.
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