Money and Credit

Which one of the following is a formal source of credit?

• Traders

• Cooperative societies

• Moneylenders

• Friends and relatives

Which one of the following is the appropriate meaning of collateral?

• It is the sum total of money borrowed from banks.

• The amount borrowed from friends.

• It is an asset of the borrower used as guarantee to a lender.

• The amount invested in a business.

Which one of the following is the newer way of providing loans to the rural poor, particularly women?

• Cooperative Banks

• Grameen Banks

• Self-Help Groups

• Moneylenders

Banks use the major portion of the deposits to

• Extend loans

• Invest in infrastructure

• Deposit in foreign banks

• None of the above

Which of the following statements are correct?

• Members of a cooperative pool their resources for cooperation in certain areas.

• Besides banks, the other major source of cheap credit in rural areas is the cooperative societies.

• There are several types of cooperatives possible such as farmers’ cooperatives, weavers cooperatives, industrial workers cooperatives.

• All of the above statements are true.

Which of the following statements is false

• There is no organization which supervises the credit activities of lenders in the informal sector.

• RBI stops the money lenders from using unfair means to get their money back.

• Compared to the formal lenders, most of the informal lenders charges much lesser interest on loans

• All of the above

Name the system in which the double coincidence of wants is an essential feature.

• Barter system

• Money economy

• Global economy

• None of these

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.

• both (a) and (b)

Since money acts as an intermediate in the exchange process, it is called

• Medium of trade

• Medium of Exchange

• Medium of Business

• Medium of transaction

The modern currency is without any use of its own, then why is it accepted as a medium of exchange?

• Because it is convenient

• It has digital and manual system

• It can be used in foreign exchange

• Is authorized by the government of the country