MONEY AND CREDIT

Which of the following statements is true?

• As per Indian law, apart from RBI, no other individual or organisation is allowed to issue currency.

• The law legalises the use of rupees as a medium of payment that cannot be refused in settling transactions in India

• No individual in India can legally refuse a payment made in rupees.

• All of the above.

Which of the following are examples of informal sector loans?

• Moneylenders

• Traders

  
  

• Cooperatives

• Only (a) and (b)

___________ of the loans taken by poor households in the urban areas are from informal sources.

• 85 per cent

• 70 per cent

• 65 per cent

• 50 per cent

Which of the following could lead to a debt trap?

• The high-interest rate for borrowing can mean that the amount to be repaid is greater than the income of the borrower.

• Higher cost of borrowing means a larger part of the earnings of the borrowers is used to repay the loan.

• The high-interest rate for borrowing can mean that the amount to be repaid is lesser than the income of the borrower.

Assertion (A): Collateral is an asset that the borrower owns (such as land, building, vehicle, livestock, or deposits with banks) and uses this as a guarantee to a lender until the loan is repaid.

Reason (R): Collateral is given as the lender can sell the collateral to recover the loan
amount if the borrower fails to repay the loan.

• • Both assertion and reason are true, and reason is the correct explanation of
    assertion.

• • Both assertion and reason are true, but reason is not the correct explanation of
    assertion.

• • Assertion is true, but reason is false.

• • Both assertion and reason are false.