Chapter 20: Banks and the Magic of Finance — Online MCQ Test
SOCIAL · Grade 7 · CBSE(NCERT)
Practice Chapter 20: Banks and the Magic of Finance with a free chapter-wise online MCQ test.
This chapter covers: Bank Savings Deposit Withdrawal Interest Loan ATM Digital banking Financial literacy Money Security.
AI-generated questions from basic to board-exam level, with instant results and explanations.
Chapter 20: Banks and the Magic of Finance — Important Questions & Answers
What is a bank?
- A. A place where people keep their money safe and get loans
- B. A shop that sells financial products
- C. An office that only gives out cash
- D. A government building for collecting taxes
Answer: A. A place where people keep their money safe and get loans
A bank is a financial institution that accepts deposits from people, keeps their money safe, and provides loans when needed.
A bank is a financial institution that accepts deposits from people, keeps their money safe, and provides loans when needed.
Which of the following is a deposit?
- A. Money you borrow from a bank
- B. Money you put into your bank account
- C. Money the bank pays you
- D. Money lost in a transaction
Answer: B. Money you put into your bank account
A deposit is money that a person puts into their bank account for safekeeping and to earn interest.
A deposit is money that a person puts into their bank account for safekeeping and to earn interest.
Why do people keep money in banks instead of at home?
- A. Banks pay them to keep money
- B. Banks provide safety, security, and earn interest on savings
- C. It is legally required
- D. Banks never lose money
Answer: B. Banks provide safety, security, and earn interest on savings
People keep money in banks because it is safer than keeping it at home, they earn interest on their savings, and banks have security measures to protect their funds.
People keep money in banks because it is safer than keeping it at home, they earn interest on their savings, and banks have security measures to protect their funds.
Which statement best explains why banks charge interest on loans?
- A. Banks are wealthy and don't need the money
- B. To compensate for the risk of lending and to maintain banking operations
- C. To punish borrowers
- D. Interest is optional
Answer: B. To compensate for the risk of lending and to maintain banking operations
Banks charge interest on loans to cover their operational costs, manage the risk that borrowers might default, and earn profit as a financial institution.
Banks charge interest on loans to cover their operational costs, manage the risk that borrowers might default, and earn profit as a financial institution.
A person has ₹1,00,000. They could spend it or deposit in a bank at 6% annual interest. Over 10 years, what is the main financial advantage of depositing?
- A. No advantage exists
- B. The money grows to approximately ₹1,79,084 through compound interest, approximately 79% gain
- C. Banks guarantee the money will double
- D. Interest stops after 5 years
Answer: B. The money grows to approximately ₹1,79,084 through compound interest, approximately 79% gain
With compound interest at 6% annually over 10 years, ₹1,00,000 grows significantly. This demonstrates the power of long-term savings and compound interest in wealth building.
With compound interest at 6% annually over 10 years, ₹1,00,000 grows significantly. This demonstrates the power of long-term savings and compound interest in wealth building.