CBSE Questions for Class 10 Economics Money And Credit Quiz 1 - MCQExams.com

• Higher costs of borrowing increase the debt burden.
• Informal sources of credit charges higher rates of interest
  
• Due to higher rate of interest the informal sources of credit are generally exploitative in nature.

• In rural areas farmers take credit for crop production.
• Farmers usually lend from co-operative societies or banks or from money lenders if banks are not available.
• Usually, co-operative banks charge lower interest rates as compared to money lenders.
  

• Debt trap is a situation where the debtor will not be able to repay the debt incurred.
• Debt trap situation may arise due to the higher interest rates or change in terms and conditions of debt incurred.
• Normally, debt trap will result in default of payments or bankruptcies.
  

Formal Sector : It includes loans from banks and cooperatives. RBI supervises their functions of giving loans. Rich urban households depend largely on formal sources of credit. Lower rate of interest on loans is charged as compared to informal sources of credit.

• Money lenders are the indigenous bankers.
• They usually lend money to people at higher rates of Interest.
  
• Money lenders lending system is mostly unregulated in India.

• About 60% of the Indian population is dependent on agriculture.
• Most of the Indian farmers are small and marginal farmers.
• Rural farmers savings are very less.
• Rural farmers seek credit for the production of crops as there are no savings left with them from the last year.
  

• 
  1:Credit refers to a loan, an agreement in which the lender supplies the borrower with money, goods or services which is to be returned in future
  2:Terms of credit include interest rate, collateral (security) and documentation related to the lending of money.

• In the olden times, People exchanged services and goods for other services and goods in return.
• The problem of double coincidence of wants arise due to the above mentioned exchange of goods system.
• The problem was solved with the introduction of money..
• Money is used medium of exchange and for storage of value.
• The correct option is D.
  

• Credit means agreement between borrower and lender by which borrower lends money, goods and services in return for the promise of future payment.
• If credit not repaid by the borrower then they are termed as defaulters.
• Credit history of the borrowers will be affected.
• In India, RBI supervises the credit of banking system.
  

• In Modern times paper notes and coins are used as medium of exchange.
• Paper notes and coins are printed and circulated by RBI in India except One Rupee notes and coins.
• One Rupee coins are printed by the Finance Ministry.
• Only paper notes and coins printed by Government are authorised to use.
  

• In the olden times, people exchanged services and goods for other services and goods in return.
• The problem of double coincidence of wants arose due to the exchange of goods system.
• The problem was solved with the introduction of money..
• Money is used medium of exchange and for storage of value.

(i) It is accepted as a medium of exchange because the currency is authorised by the government of the country.
(ii) In India, the Reserve Bank of India issues currency notes on behalf of the Central Government.
(iii) As per Indian law, no other individual or organisation is allowed to issue currency.
(iv) Moreover, the law legalises the use of rupee as a medium of payment that cannot be refused in settling transactions in India.
(v) No individual in India can legally refuse a payment made in rupees. Hence this rupee is widely accepted as a medium of exchange.