MULTIPLE CHOICE
QUESTIONS
Q.1. System of exchanging goods for goods is called :
(a) monetary
system
(b) credit
system
(c) barter
system
(d) exchange
system
Ans.
(c)
Q.2. Money
(a) eliminates
double-coincidence of wants
(b) acts as a
common measure of value
(c) acts as a
standard of deferred payments
(d) all the
above
Ans.
(d)
Q.3. 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
Ans.
(c)
Q.4. What are the modern forms of money?
(a) Currency
(b) Plastic
money
(c) Demand
deposits (d) All the above
Ans.
(d)
Q.5. Terms of credit are with respect to :
(a) interest
rate (b) collateral
(c)
documentation (d) all the above
Ans.
(d)
Q.6. Credit or loan refers to an agreement
between :
(a) lender and
borrower
(b) consumer and
producer
(c) government
and tax payer
(d) all the
above
Ans.
(c)
Q.7. The formal sector meets only about _______ of the credit needs of rural
people :
(a) 25% (b) 52%
(c) 75% (d) 15%
Ans.
(b)
Q.8. The part of the total deposits which a bank keeps with itself in cash is
(a) zero
(b) a small
proportion
(c) a big
proportion
(d) 100 percent
Ans.
(b)
Q.9. An asset that the borrower uses as a repayment guarantee to a lender is
termed as a :
(a) deposit (b)
collateral
(c) advance (d)
all the above
Ans.
(b)
Q.10. Currency is issued in India by :
(a) commercial
banks
(b) regional
rural banks
(c) nationalised
banks
(d) Reserve Bank
of India
Ans.
(d)
Q.11. Who supervises the credit activities of lenders in the informal sector?
(a) Central Bank
of India
(b) Commercial
banks
(c) Moneylenders
(d) None
Ans.
(d)
Q.12. Rich households in urban areas avail cheap credit from
(a) formal
sources (b) informal sources
(c) government
(d) all the above
Ans.
(a)
Q.13. Productive loans by farmers are taken
(a) to buy
seeds, fertilisers, implements
etc.
(b) for
celebration of marriages
(c) for storage
of foodgrains in godowns
(d) none of the
above
Ans.
(a)
Q.14. Which of the following is not a source of rural credit?
(a) Regional
rural banks
(b) Moneylenders
(c) Traders
(d) Government
Ans.
(d)
Q.15. Rate of interest charged by moneylenders as compared to that charged by
banks is :
(a) lower (b)
same
(c) slightly
higher (d) much higher
Ans.
(d)
Q.16. Regional Rural Banks were set up in
________.
(a) 1969 (b)
1979
(c) 1989 (d)
1999
Ans.
(a)
Q.17. A Self-Help Group usually has :
(a) 5-10 members
(b) 10-15 members
(c) 15-20
members (d) 20-25 members
Ans.
(c)
Q.18. When was the KCC (Kisan Credit Card) scheme introduced?
(a) 1969 (b)
1979
(c) 1987-88 (d)
1998-99
Ans.
(d)
Q.19. Which state accounts for maximum percentage of SHGs (self-help groups) in
bank credit?
(a) Andhra
Pradesh (b) Tamil Nadu
(c) Kerala (d)
Karnataka
Ans.
(a)
Q.20.
_________ are widely accepted as a medium of exchange.
(a) Rupee notes
(b) Gold coins
(c) Silver coins
(d) All the above
Ans.
(a)
Q.21. Majority of the credit needs of the poor households are met from
(a) formal
sources
(b) informal
sources
(c) self-help
groups
(d) none of the
above
Ans.
(b)
Q.22. Who supervises the functioning of formal sources of loans?
(a) RBI (Reserve
Bank of India)
(b) Central
government
(c) State
government
(d) None
Ans.
(a)
Q.23. Which of the following is a major reason which prevents the poor from
getting bank loans?
(a) Absence of
collateral (security)
(b)
Non-repayment of loans
(c) Higher
interest rates
(d)
Documentation
Ans.
(a)
Q.24. Who helps the borrowers to overcome the problem of lack of collateral?
(a) Self-help
group (SHG)
(b) State
government
(c) Employers
(d) Moneylenders
Ans.
(a)
Q.25. Formal sources of credit include
(a) banks (b)
moneylenders
(c) employers
(d) all the above
Ans.
(a)
Q.26. Which of the following is not a modern form of money?
(a) Paper notes
(b) Demand deposits
(c) Silver coins
(d) None of the
above
Ans.
(c)
PREVIOUS YEARS’
QUESTIONS
Q.1. Which of the following is not an advantage of self-help group?
(a) Grant of timely loans
(b) Reasonable
interests
(c) A platform
to discuss various issues
(d) Does not
help women to become self-reliant.
Ans.
(d)
Q.2. What do you mean by collateral?
(a) It is the total sum of money with a
person
(b) It is the
things kept in the locker
(c) It is the
guarantee given by the lender to the borrower.
(d) It is the
security to a lender until the loan is repaid
Ans.
(c)
Q.3. Identify the formal source of credit.
(a) Cooperative societies
(b) Moneylenders
(c) Traders
(d) Landlords
Ans.
(a)
Q.4. Which one of the following is not a modern form of money?
(a) Demand
Deposits
(b) Paper
currency
(c) Coins
(d) Precious
metals
Ans.
(d)
Q.5. Which one of the following authorizes money as a medium of exchange?
(a) Reserve Bank of India
(b) Self Help
Groups
(c) The Central
Government
(d) The
President of India.
Ans.
(a)
Q.6. Which of the following is not true regarding the in convenience of Barter
Exchange ?
(a) Lack of
double coincidence of want
(b) Absence of
divisibility
(c) Difficulty
in storing wealth
(d) Availability
of money as a medium of
exchange.
Ans.
(d)
Q.7. Which one of the following is NOT an informal sector loans for poor rural
household in India ?
(a) Commercial
Banks
(b) Moneylenders
(c) Traders
(d) Landlords
Ans.
(a)
Q.8. Which one of the following is the important characteristic of modern form
of currency?
(a) It is made
from precious metal
(b) It is made
from thing of everyday use
(c) It is
authorized by the commercial banks
(d) It is
authorized by the Government of the country
Ans.
(d)
Q.9. Which one of the following constitutes money in modern day economy?
(a) Gold (b) Silver
(c) Interest (d)
Demand Deposits
Ans.
(d)
Q.10. In a SHG most of the decisions regarding loan activities are taken by
(a) Banks (b) Member
(c)
Non-government organizations
(d) Cooperatives
Ans.
(b)
Q.11. Which one of the following is a major reason that prevents the poor from
getting loans from the banks?
(a) Lack of capital
(b) Not
affordable due to high rate of interest
(c) Absence of
collateral security
(d) Absence of
mediators
Ans.
(c)
Q.12. Which one of the following agencies issues currency notes on behalf of the
government of India ?
(a) Ministry of
Finance
(b) Reserve Bank
of India
(c) State Bank
of India
(d) World Bank
Ans.
(c)
Q.13. Formal Sources of credit include :
(a) money lenders (b) co-operatives
(c) Employers
(d) Finance
companies
Ans.
(b)
Q.14. Anything which is generally accepted by the people in exchange of goods
and services is called :
(a) money (b)
barter
(c) credit (d)
loans
Ans.
(b)
Q.15. Terms of credit does not include :
(a) interest
rate (b) collateral
(c) cheque (d)
mode of repayment
Ans.
(c)
Q.16. Banks do not give loans :
(a) to small
farmers
(b) to marginal
farmers
(c) to
industries
(d) without
proper collateral and
documents
Ans.
(d)
Q.17. The functioning of the formal sources of credit are supervised by :
(a) Government
of India
(b) Reserve Bank
of India
(c) Ministry of
finance
(d) State Bank
of India
Ans.
(b)
Q.18. Which one of the following is NOT a formal source of credit?
(a) Commercial
Banks
(b) State Bank
of India
(c) Employers
(d)
Co-operatives
Ans.
(c)
Q.19. Which one of the following is not included in the terms of credit?
(a) Rate of
Interest
(b) Mode of
payment
(c) Rate of
saving
(d) Collateral
Ans.
(c)
Q.20. Which is not the main source of credit from the following for rural
households in India ?
(a) Traders
(b) Relatives
and friends
(c) Commercial
Banks
(d) Money
landers
Ans.
(a)
Q.21. Cheap and affordable credit results in which one of the following ?
(a) Slow
economic growth
(b) Creating a
debt trap
(c) Poverty
(d) Good
economic growth
Ans.
(d)
Q.22. Deposits in bank accounts withdrawn on demand are called :
(a) Fixed
deposit
(b) Recurring
deposit
(c) Demand
deposit
(d) None of
these
Ans.
(c)
Q.23. 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
Ans.
(c)
Q.24. When both parties agree to sell and buy each other’s commodities it is
known as :
(a) measure of
value
(b) double
coincidence of wants
(c) store of
value (d) credit
Ans.
(b)
Q.25. Which among these is an essential feature of barter system ?
(a) Money can
easily exchange any commodity
(b) It is based
on double co-incidence of wants
(c) It is
generally accepted as a medium of exchange of goods with money
(d) It acts as a
measure and store of value
Ans.
(b)
Q.26. Which one of the following is the main source of credit for the rich
households?
(a) Informal
(b) Formal
(c) Both formal
and informal
(d) Neither
Formal nor informal
Ans.
(b)
Q.27. Why bank deposits are known as demand deposits ?
(a) Deposits
with the banks
(b) People have
the provision to withdraw the money when they require.
(c) Deposits
with the banks cannot be withdrawn.
(d) People have
the provision to withdraw the money only by cash.
Ans.
(b)
Q.28. Which households take more loans from the formal sector ?
(a) Poor
households and rich household.
(b) Well off
households and households with few assets.
(c) Poor
households and well off households
(d) Well off
households and rich households.
Ans.
(d)
Q.29. What portion of deposits are kept by the banks for their day to day
transaction ?
(a) 10% (b) 15%
(c) 20% (d) 25%