Money and Credit

Which one of the following statements is most appropriate regarding transaction made in money?

• it is the easiest way

• it is safest way

• it is the cheapest way

• it promotes trade

Which one of the following is the new way of providing loans to the rural poor?

• Co-operative societies

• Traders

• Relatives and friends

• SHG's

Banks provide a higher rater of interest on which one of the following accounts?

• Saving account

• Current account

• Fixed deposits for long periods

• Fixed deposits for very short periods

Which one of the following is the main source of credit for rich urban households in India?

• Formal sector

• Informal sector

• Money lenders

• Traders

What is the main source of income for banks?

• Interest on loans

• Interest on deposits

• Difference between the interest charged on borrowers and depositors

• None of these

Which one of the following is an asset that the borrower owns and uses as a guarantee until the loan is repaid to the lender?

• Property

• Money

• Collateral

• Deposits

Why do banks keep a small proportion of the deposits as cash with themselves?

• To extend loan to the poor

• To extend loan facility

• To pay salary to their staff

• To pay the depositors who might come to withdraw money

Which one of the following is not a feature of money?

• Medium of exchange

• Lack of divisibility

• A store of value

• A unit of account

An agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future payment.

• Credit(loan)

• Chit fund

• Bank

• Cheque

Whether credit would be useful or not depends on

1. whether there is some support in case of loss
2. action of competitors
3. market response
4. risks in the situation

• 1 and 3

• 2 and 4

• 2 and 3

• 1 and 4