Money and Credit quiz

Modern currency is accepted as a medium of exchange because:

Which of the following is not a form of collateral?

The Reserve Bank of India supervises the functioning of:

The Grameen Bank of Bangladesh was started by:

Banks in India hold about what percentage of their deposits as cash?

A debt trap occurs when:

Which of the following is an informal source of credit?

A cheque is a paper instructing the bank to:

SHGs usually have how many members?

Which of the following is a term of credit?

Why do lenders ask for collateral while lending? (2 marks)

How do banks mediate between those who have surplus money and those who need money? (2 marks)

Why is it necessary for the RBI to supervise formal lenders? (2 marks)

What are the main sources of income of a bank? (2 marks)

Why is cheap and affordable credit important for the country's development? (2 marks)

Why are moneylenders able to charge high rates of interest? (2 marks)

Explain with an example how a farmer may fall into a debt trap. (2 marks)

How does money act as a medium of exchange in a modern economy? (2 marks)

What are the advantages of digital payments over cash? (2 marks)

Why do SHGs not require collateral for loans to members? (2 marks)

Calculate the simple interest on a loan of Rs 1,20,000 at 8% per annum for 3 years, and the total amount to be repaid. If the borrower pays in 36 equal monthly instalments, what is each instalment? (3 marks)

A farmer borrows Rs 40,000 at 24% per annum from a trader who also buys his crop at a low price. A cooperative society offers a loan at 9% per annum. Calculate the interest saved in one year by borrowing from the cooperative. (3 marks)

A bank has total deposits of Rs 500 crore. It keeps 15% as reserves and lends the rest. Calculate the amount lent. If the average interest on loans is 11% and on deposits is 6.5%, calculate the bank's interest income, interest expense and net interest income. (3 marks)

A woman in an SHG borrows Rs 15,000 to buy a sewing machine at 1.5% per month for 10 months. Calculate the interest. If she earns Rs 4,000 a month by tailoring, how many months of earnings will be needed to repay the loan with interest? (3 marks)

Study the illustrative data of a village of 200 households: 80 borrowed from banks and cooperatives, 100 from moneylenders, traders and landlords, and 20 from relatives. Calculate the percentage of formal and informal borrowers, treating relatives as informal. What does this show? (3 marks)

Read the passage and answer the questions. Salim, a small shoe manufacturer, received an order for 3,000 pairs of shoes to be delivered within a month. To complete the order, he needed to hire more workers and buy raw materials. He took a loan from a bank. After delivering the order, he earned a good profit, repaid the loan and was better off than before. (i) Why did Salim need credit? (ii) How did the credit help him? (iii) Why is credit important for production? (5 marks)

Read the passage and answer the questions. Swapna, a small farmer, took a loan from a moneylender to meet the cost of cultivation, hoping that her harvest would help repay it. Midway through the season, the crop was hit by pests and failed. She could not repay the loan, and the debt grew. She had to sell part of her land to repay it. (i) What is meant by a debt trap? (ii) Why did Swapna fall into a debt trap? (iii) How could she have been protected from this situation? (5 marks)

Read the passage and answer the questions. Shyamali grows paddy on her small piece of land. She cannot get a loan from the bank because she has no documents of ownership. She borrows from a moneylender at 3% per month. Her neighbour Rama has joined a Self Help Group and has borrowed at a lower rate from the group to buy a buffalo. (i) Why could Shyamali not get a bank loan? (ii) How did Rama benefit from being in an SHG? (iii) Give two other benefits of SHGs for women. (5 marks)

Read the passage and answer the questions. Banks keep only a small proportion of their deposits as cash with themselves. They use the major portion to extend loans. 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. (i) Why do banks keep only a small portion of deposits as cash? (ii) What is the main source of income of banks? (iii) Why do people keep money in banks? (5 marks)

Read the passage and answer the questions. In 1970s Bangladesh, Professor Muhammad Yunus started a bank to give small loans to poor rural people without collateral. Today the Grameen Bank has millions of members, most of them women. Loans are given at reasonable rates, and almost all borrowers repay on time. (i) What is special about the Grameen Bank? (ii) Why are most of the members women? (iii) What award did Muhammad Yunus receive for this work, and in which year? (5 marks)

Explain the functions of money as a medium of exchange and as a measure of value. Why did barter fail? Trace the history of the forms of money from commodity money to modern digital payments. Draw a flowchart of the evolution of money. (6 marks)

Explain the terms of credit with examples. Why do the terms differ between formal and informal lenders? Draw a chart comparing the terms of credit of a bank and a moneylender. (6 marks)

Distinguish between formal and informal sources of credit. Why is it necessary for banks and cooperatives to increase their lending in rural areas? What role does the RBI play? (6 marks)

Describe the working of Self Help Groups and their role in empowering rural women. Draw a flowchart of how an SHG is organised and operates. Give one example of a successful SHG initiative. (6 marks)

'Credit can play a positive or negative role.' Explain this statement with two examples. Suggest measures the government can take to make credit cheap and accessible to the poor. (6 marks)