20.

Money and Credit

1.Which one of the following is a formal source of credit?
(a) Traders
(b) Cooperative societies
(c) Moneylenders
(d) Friends and relatives
Answer: (b) Cooperative societies
2.All the banks act as mediator between _________ and _________.
(a) rural people, urban people
(b) literates, illiterates
(c) people, government
(d) depositors, borrowers
Answer: (d) depositors, borrowers
3.Which of the following is not a feature of Self Help Groups (SHGs)?
(a) It consists of 15-20 members or more.
(b) Here members pool their savings which acts as collateral.
(c) Loans are given at nominal rate of interest.
(d) It is an informal source of credit.
Answer: (d) It is an informal source of credit.
4.Organised credit is also called
(a) informal credit
(b) formal credit
(c) cooperative credit
(d) none of these
Answer: (b) formal credit
5.Which one of the following is the appropriate meaning of collateral?
(a) It is the sum total of money borrowed from banks.
(b) The amount borrowed from friends.
(c) It is an asset of the borrower used as guarantee to a lender.
(d) The amount invested in a business.
Answer: (c) It is an asset of the borrower used as guarantee to a lender.
6.Which one of the following is the newer way of providing loans to the rural
poor, particularly women?
(a) Cooperative Banks
(b) Grameen Banks
(c) Self-Help Groups
(d) Moneylenders
Answer: (c) Self-Help Groups
7.Which of the following statements is false
(a) There is no organization which supervises the credit activities of lenders in
the informal sector.
(b) RBI stops the money lenders from using unfair means to get their money
back.
(c) Compared to the formal lenders, most of the informal lenders charge much
lesser interest on loans
(d) All of the above
Answer: (d) All of the above
8.Banks use the major portion of the deposits to
(a) Extend loans
(b) Invest in infrastructure
(c) Deposit in foreign banks
(d) None of the above
Answer: (a) Extend loans
9.Name the system in which the double coincidence of wants is an essential
feature.
(a) Barter system
(b) Money economy
(c) Global economy
(d) None of these
Answer: (a) Barter system
10.Double coincidence of wants means ____________.
(a) What a person desires to sell is exactly what the other person wishes to buy.
(b) What a person desires to sell is exactly what the other person also wishes to
sell.
(c) What a person desires to buy is exactly what the other person also wishes
to buy.
(d) None of the above.
Answer: (a) What a person desires to sell is exactly what the other person
wishes to buy.
11.Since money acts as an intermediate in the exchange process, it is called
(a) Medium of trade
(b) Medium of Exchange
(c) Medium of Business
(d) Medium of transaction
Answer: (b) Medium of Exchange
12.............refers to an agreement in which the lender supplies the borrower
with money, goods or services in return for the promise of future payment.
(a) Debit
(b) Cash transaction
(c) Credit
(d) Trade
Answer: (c) Credit
13.People also have the provision to withdraw the money as and when they
require the deposits in the bank accounts to be withdrawn, what are these
deposits called?
(a) Fixed deposits
(b) Savings
(c) Demand deposits
(d) Demand drafts
Answer: (c) Demand deposits
14.Banks use the major portion of the deposit to:
(a) Keep reserve so that people may withdraw
(b) Meet their routine expenses
(c) Extend loans
(d) Meet renovation of the bank
Answer: (c) Extend loans
15.At present which form of money is increasingly used apart from paper
money?
(a) Commodity money
(b) Metallic money
(c) Plastic money
(d) All the above
Answer: (c) Plastic money