Money and Credit MCQ Quiz

30 questions

1. What is money?

   1. Commercial bank
   2. It supports investment and reduces exploitation
   3. They lend much of the rest
   4. Accepted medium of exchange

2. What is barter?

   1. Direct exchange of goods
   2. Asset pledged to secure a loan
   3. Funds or resources received now and repaid later
   4. They may lack acceptable assets

3. What is double coincidence of wants?

   1. Accept deposits and provide loans
   2. Both traders want each other’s goods
   3. Finance inputs before harvest income
   4. Lack of access to formal loans

4. How does money solve this?

   1. Contract specifying repayment terms
   2. Direct exchange of goods
   3. It acts as a common medium of exchange
   4. Credit from regulated institutions

5. What is a demand deposit?

   1. Bank deposit withdrawable on demand
   2. Funds or resources received now and repaid later
   3. They can be used for payments
   4. They pool savings and provide small loans

6. Why are demand deposits money?

   1. Asset pledged to secure a loan
   2. Contract specifying repayment terms
   3. They can be used for payments
   4. Interest rates may be high

7. What is a cheque?

   1. Land or property
   2. It acts as a common medium of exchange
   3. Save and lend to members
   4. Instruction to a bank to make a payment

8. What is collateral?

   1. Lack of access to formal loans
   2. To assess identity and credit risk
   3. Asset pledged to secure a loan
   4. Instruction to a bank to make a payment

9. Give an example of collateral.

   1. Accept deposits and provide loans
   2. Land or property
   3. Funds or resources received now and repaid later
   4. Lack of access to formal loans

10. What is interest?

    1. Collateral may be enforced against
    2. Credit from unregulated sources
    3. Cost paid for borrowing money
    4. Bank is regulated; moneylender is generally informal

11. What is formal credit?

    1. Contract specifying repayment terms
    2. Accept deposits and provide loans
    3. To assess identity and credit risk
    4. Credit from regulated institutions

12. What is informal credit?

    1. Instruction to a bank to make a payment
    2. Credit from unregulated sources
    3. Regulate and supervise banks
    4. Direct exchange of goods

13. Why can informal credit be expensive?

    1. Commercial bank
    2. Instruction to a bank to make a payment
    3. Interest rates may be high
    4. Access to useful financial services

14. What is RBI’s role?

    1. Regulate and supervise banks
    2. They pool savings and provide small loans
    3. Access to useful financial services
    4. Accepted medium of exchange

15. Why do banks keep only some deposits as cash?

    1. They lend much of the rest
    2. Asset pledged to secure a loan
    3. Finance inputs before harvest income
    4. Commercial bank

16. What is credit?

    1. Bank is regulated; moneylender is generally informal
    2. Accepted medium of exchange
    3. Access to useful financial services
    4. Funds or resources received now and repaid later

17. How can credit help farmers?

    1. Bank is regulated; moneylender is generally informal
    2. Contract specifying repayment terms
    3. Finance inputs before harvest income
    4. Direct exchange of goods

18. Name a formal credit institution.

    1. Commercial bank
    2. They can be used for payments
    3. They pool savings and provide small loans
    4. Instruction to a bank to make a payment

19. Why are self-help groups useful?

    1. Instruction to a bank to make a payment
    2. Credit from unregulated sources
    3. Direct exchange of goods
    4. They pool savings and provide small loans

20. What do SHGs mainly do?

    1. Bank deposit withdrawable on demand
    2. Save and lend to members
    3. Cost paid for borrowing money
    4. Finance inputs before harvest income

21. Why is affordable credit important?

    1. Bank is regulated; moneylender is generally informal
    2. Land or property
    3. It supports investment and reduces exploitation
    4. They can be used for payments

22. What is a loan agreement?

    1. Access to useful financial services
    2. Contract specifying repayment terms
    3. Instruction to a bank to make a payment
    4. They may lack acceptable assets

23. What can happen if a secured loan is not repaid?

    1. It supports investment and reduces exploitation
    2. Cost paid for borrowing money
    3. Credit from unregulated sources
    4. Collateral may be enforced against

24. Why do banks ask for documents?

    1. To assess identity and credit risk
    2. Bank is regulated; moneylender is generally informal
    3. It supports investment and reduces exploitation
    4. Save and lend to members

25. Bank vs moneylender?

    1. Save and lend to members
    2. Instruction to a bank to make a payment
    3. Bank is regulated; moneylender is generally informal
    4. Credit from unregulated sources

26. Why may poor borrowers use informal credit?

    1. Access to useful financial services
    2. Interest rates may be high
    3. Funds or resources received now and repaid later
    4. Lack of access to formal loans

27. What is a benefit of formal credit?

    1. More transparent and regulated terms
    2. Asset pledged to secure a loan
    3. Instruction to a bank to make a payment
    4. Save and lend to members

28. What is financial inclusion?

    1. Collateral may be enforced against
    2. Funds or resources received now and repaid later
    3. Access to useful financial services
    4. To assess identity and credit risk

29. Why can collateral exclude poor borrowers?

    1. Accepted medium of exchange
    2. Credit from unregulated sources
    3. They may lack acceptable assets
    4. They can be used for payments

30. What is a main bank function?

    1. Accept deposits and provide loans
    2. They lend much of the rest
    3. They pool savings and provide small loans
    4. They can be used for payments

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