MCQ
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
2. Who issues the currency notes in India?
(a) Currency notes are issued by the Finance Commission.
(b) All the nationalized banks can issue the currency notes.
(c) Only Reserve Bank of India can issue currency notes.
(d) Any individual or organization can issue currency notes with the permission
of the govt.
3. 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.
4. Which among the following banks issues currency notes on behalf of the
Central Government in India?
(a) RBI
(b) State Bank of India
(c) Bank of India
(d) Central Bank of India
5. Which one of the following is a modern form of currency?
(a) Paper notes
(b) Gold
(c) Silver
(d) Copper
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
7. 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
8. What do the banks do with the deposits which I they accept from the
customers?
(a) Banks use these deposits for charitable activities.
(b) Banks use a major portion of deposits to extend loans.
(c) Banks use deposits to give bonus to their employees.
(d) Banks use deposits to set up more branches in the country.
9. System of exchanging goods for goods is called :
(a) monetary system
(b) credit system
(c) barter system
(d) exchange system
10. Which of the following is the main informal source of credit for rural
households in India?
(a) Friends
(b) Relatives
(c) Landlords
(d) Moneylenders
11. What is the main source of income of a bank?
(a) Bank charges that the depositors pay for ; keeping their money safe is the
main ; source of the bank’s income.
(b) The difference between what is charged from the borrowers and paid to the
depositors is the main source of bank’s income.
(c) Banks earn huge amounts of money by investing the money of the
depositors in various company shares.
(d) The Government of India gives huge amounts of money to the banks to help
their smooth functioning.
12. 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
13. 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
14. An agreement in which the lender supplies the borrower with money, goods
or services in return for the promise of future payment refers to
(a) Debt
(b) Deposit
(c) Credit
(d) Collateral
15. 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
16. Grameen Bank of Bangladesh was started in
(a) 1960s
(b) 1970s
(c) 1980s
(d) 1990s
17. Which body (authority) supervises the functioning of formal sources of
loans?
(a) Finance Ministry
(b) Head Office of each Bank
(c) Reserve Bank
(d) Cooperative Societies
18. Terms of credit are with respect to :
(a) interest rate
(b) collateral
(c) documentation
(d) All of the above
19. In a SHG, most of the decisions regarding loan activities are taken by
(a) Banks
(b) Members
(c) Non-government organisation
(d) Cooperative
20. Money-lenders usually demand a ‘security’ from the borrower. What is the
formal word used for the ‘security’, such as land, vehicle, livestock, building,
etc.?
(a) Deposit
(b) Collateral
(c) Credit
(d) Guarantee
21. Regional Rural Banks were set up in __.
(a) 1969
(b) 1979
(c) 1989
(d) 1999
22. In which country is the Grameen Bank meeting the credit needs of over 6
million poor people?
(a) Bhutan
(b) Sri Lanka
(c) Bangladesh
(d) Nepal
23. Which of the following is not an informal source of credit?
(a) Money-lender
(b) Relatives and Friends
(c) Commercial Banks
(d) Traders
24. A typical Self Help Group usually has
(a) 100-200 members
(b) 50-100 members
(c) less than 10 members
(d) 15-20 members
25. What portion of deposits are kept by the banks for their day to day
transaction?
(a) 10%
(b) 15%
(c) 20%
(d) 25%
26. Who supervises the credit activities of lenders in the informal sector?
(a) Central Bank of India
(b) Commercial banks
(c) Moneylenders
(d) None of the above
27. 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.
28. 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
29. 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
30. Which one of the following is not a modern form of money?
(a) Demand Deposits
(b) Paper currency
(c) Coins
(d) Precious metals
