Money and Credit Test

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Money and Credit Test - 1

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Weekly Quiz Competition

Question 1
1 / -0

Why are transactions made in money?

A
It can be easily exchanged for any service or commodity.

B
It is difficult to predict the value of a commodity using other reference.

C
Both 1 and 2

D
None of these

Solution

A person holding money can easily exchange it for any commodity or service that he or she might want. Thus, everyone prefers to receive payments in money and then exchange the money for things that they want.
Question 2
1 / -0

Double coincidence of wants is the feature of

A
money system

B
barter system

C
transaction system

D
exchange system

Solution

Double coincidence of wants means that both the parties have to agree to sell and buy each commodities. In a barter system where goods are directly exchanged without the use of money, double coincidence of wants is an essential feature.
Question 3
1 / -0

Consider the following statements. Which of the them is NOT true?

A
Not everyone prefers to receive payments in money.

B
Money eliminates the need for double coincidence of wants.

C
Money is known as medium of exchange

D
Before the introduction of coins, other objects were used as money.

Solution

A person holding money can easily exchange it for any commodity or service that he or she might want. Thus, everyone prefers to receive payments in money and then exchange the money for things that they want.
Question 4
1 / -0

Which/who among the following issues currency notes?

A
Finance Ministry

B
Reserve Bank of India

C
State bank of India

D
President of India

Solution

In India, the Reserve Bank of India issues currency notes on behalf of the Central Government. As per Indian law, no other individual or organisation is allowed to issue currency notes.
Question 5
1 / -0

Consider the following statements and choose the correct option.

Assertion (A): Workers deposit the extra cash they have, in banks
Reason (R): Banks accept the deposits, and pay interest on it

A
Both A and R are true, and R is the correct explanation of A.

B
Both A and R are true, but R is not the correct explanation of A.

C
Only A is true, and R is false.

D
Only A is false, and R is true.

Solution

Workers who receive their salaries at the end of each month have extra cash at the beginning of the month. They deposit it with the banks by opening a bank account in their name. Banks accept the deposits and also pay an interest rate on the deposits. In this way people's money is safe with the banks and it earns an interest.
Question 6
1 / -0

Consider the following statements and choose the correct option.

Assertion (A): Demand deposit lends the essential characteristics of money
Reason (R): The facility of cheques makes it possible to directly settle payments without the use of cash.

A
Both A and R are true, and R is the correct explanation of A.

B
Both A and R are true, but R is not the correct explanation of A.

C
Only A is true, and R is false.

D
Only A is false, and R is true.

Solution

Demand deposits offer the facility of cheques, which lends it the essential characteristics of money. Payments can be made by cheques instead of cash. The facility of cheques against demand deposits makes it possible to directly settle payments without the use of cash.
Question 7
1 / -0

Which among the following is NOT mandatory to be quoted while writing a cheque?

A
Account number

B
Amount

C
Date

D
ATM Pin

Solution

The cheque must contain information of the Account number, Date, and the amount. ATM Pin must not be mentioned on the cheque. Infact, it is to be kept confidential, to avoid misuse.
Question 8
1 / -0

Which among the following cannot be used to spend/withdraw money?

A
Debit card

B
ATM card

C
Aadhar Card

D
Credit card

Solution

Aadhaar is a 12-digit unique identity number that can be obtained by residents of India, based on their biometric and demographic data. It cannot be used to spend/withdraw money.
Question 9
1 / -0

What do the banks do with the deposits which they accept from the public?

A
They keep all of the cash with themselves.

B
They give some of the cash to the government.

C
They use a portion of deposits to give loans.

D
They use it to pay salaries to their employees.

Solution

There is a huge demand for loans for various economic activities and banks use the major portion of the deposits to extend loans.
Question 10
1 / -0

Which among the following is/are the main source(s) of income for a bank?

A
Difference between interest charged from borrowers, and what is paid to depositors

B
Difference between money the government gives to a bank and what is paid to depositors

C
The government pays money to the bank for providing its services

D
All of these

Solution

Banks charge a higher interest rate on loans than what they offer on deposits. The difference between what is charged from borrowers and what is paid to depositors is their main source of income.
Question 11
1 / -0

Credit plays a vital role in business. Which among the following does not explain the role of credit in business?

A
Credit helps to meet ongoing expenses of production.

B
Credit helps to make a goodwill with the buyer.

C
Credit helps to complete production in time.

D
Credit helps to increase earnings.

Solution

Credit does not help to make a goodwill with the buyer. It is the behaviour of the seller, and the quality of goods manufactured by him, which develop his goodwill.
Question 12
1 / -0

Consider the following statements.

Statement I: Farmers usually take crop loans at the beginning of the season and repay the loan after harvest.
Statement II: Repayment of the loan is crucially dependent on the income from farming.
Statement III: Credit always improves earnings and hence, proves a boon.

Which of the following statements is/are True?

A
Statement I only

B
Statement III only

C
Statements I and II only

D
Statements II and III only

Solution

Sometimes the loan repayment becomes difficult. In that case, the credit, instead of improving earning, leaves the person worse off, and the person gets involved in a debt-trap. So, statements III is not correct.
Question 13
1 / -0

Which among the following cannot be used as a guarantee to the lender, until the loan is repaid?

A
Land titles

B
Deposit with banks

C
Crops

D
Livestock

Solution

Land, building, vehicle, livestocks, deposits with banks, etc are some examples of collaterals. Crops cannot be used as collateral.
Question 14
1 / -0

Sushma wants to take a loan for building a house. Which among the following need(s) to be deposited with the bank for taking a house loan?

A
Documents showing employment record

B
Documents mentioning salary of the borrower

C
Papers of the new house

D
All of the above

Solution

Sushma has to submit to the bank, documents showing her employment records and salary before the bank agrees to give her the loan. The bank will retain the papers of the new house as collateral, which will be returned to Sushma only when she repays the entire loan with interest.
Question 15
1 / -0

Consider the following statements.

Statement I: Cooperative societies are major source of cheap credit for urban areas.
Statement II: Members of a cooperative pool their resources for cooperation in certain areas.

Which of the statements given above is/are NOT correct?

A
Statement I only

B
Statement II only

C
Both I and II

D
None of these

Solution

Besides banks, the other major source of cheap credit in rural areas are the cooperative societies (or cooperatives). Members of a cooperative pool their resources for cooperation in certain areas.
Cooperative societies are playing significant role in this and share a major credit in the growth of rural sector which along with government and private sectors contribute to the overall economy of India. Cooperatives cover more than 97% of Indian villages, some run by its members and some by the government.

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Re-Attempt Weekly Quiz Competition

Money and Credit Test - 1

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Money and Credit Test - 1

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SHARING IS CARING

Question 1

It can be easily exchanged for any service or commodity.

It is difficult to predict the value of a commodity using other reference.

Both 1 and 2

None of these

Solution

Question 2

money system

barter system

transaction system

exchange system

Solution

Question 3

Not everyone prefers to receive payments in money.

Money eliminates the need for double coincidence of wants.

Money is known as medium of exchange

Before the introduction of coins, other objects were used as money.

Solution

Question 4

Finance Ministry

Reserve Bank of India

State bank of India

President of India

Solution

Question 5

Both A and R are true, and R is the correct explanation of A.

Both A and R are true, but R is not the correct explanation of A.

Only A is true, and R is false.

Only A is false, and R is true.

Solution

Question 6

Both A and R are true, and R is the correct explanation of A.

Both A and R are true, but R is not the correct explanation of A.

Only A is true, and R is false.

Only A is false, and R is true.

Solution

Question 7

Account number

Amount

Date

ATM Pin

Solution

Question 8

Debit card

ATM card

Aadhar Card

Credit card

Solution

Question 9

They keep all of the cash with themselves.

They give some of the cash to the government.

They use a portion of deposits to give loans.

They use it to pay salaries to their employees.

Solution

Question 10

Difference between interest charged from borrowers, and what is paid to depositors

Difference between money the government gives to a bank and what is paid to depositors

The government pays money to the bank for providing its services

All of these

Solution

Question 11

Credit helps to meet ongoing expenses of production.

Credit helps to make a goodwill with the buyer.

Credit helps to complete production in time.

Credit helps to increase earnings.

Solution

Question 12

Statement I only

Statement III only

Statements I and II only

Statements II and III only

Solution