Chapter Exam

Chapter 20 ECONOMICS : Money and Credit — Online MCQ Test

Q: What is the primary function of money in an economy?

Answer: A. To act as a medium of exchange — Money serves as a medium of exchange, eliminating the need for the double coincidence of wants.

Q: Which of the following is considered a 'modern form' of money?

Answer: B. Paper currency — Paper currency and coins are the modern forms of money that do not have intrinsic value like gold or silver.

Q: Which of the following is NOT an informal source of credit?

Answer: C. Commercial banks — Commercial banks are regulated by the RBI and are formal sources of credit, unlike moneylenders.

Q: If a farmer takes a loan for agriculture and the crop fails due to pests, the loan repayment becomes a burden. This is an example of:

Answer: A. Debt trap — When a borrower cannot repay a loan and takes a new loan to pay off the old one, it leads to a debt trap.

SOCIAL STUDIES · CLASS 10 · Andhra State Board

Practice Chapter 20 ECONOMICS : Money and Credit with a free chapter-wise online MCQ test for Andhra State Board CLASS 10 SOCIAL STUDIES. This chapter covers: This chapter details money modern forms banking functions formal informal credit sources self-help groups and credit systems in India.. AI-generated questions from basic to board-exam level, with instant results and explanations.

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Chapter 20 ECONOMICS : Money and Credit — Important Questions & Answers (FAQ)

Frequently asked questions from Andhra State Board CLASS 10 SOCIAL STUDIES — Chapter 20 ECONOMICS : Money and Credit, with answers and explanations. These are sample questions; the exam has its own separate question set.

What is the primary function of money in an economy?

A. To act as a medium of exchange ✓
B. To increase taxes
C. To provide free services
D. To control population

Answer: A. To act as a medium of exchange
Money serves as a medium of exchange, eliminating the need for the double coincidence of wants.

Which of the following is considered a 'modern form' of money?

A. Gold coins
B. Paper currency ✓
C. Cattle
D. Grain

Answer: B. Paper currency
Paper currency and coins are the modern forms of money that do not have intrinsic value like gold or silver.

Which of the following is NOT an informal source of credit?

A. Moneylenders
B. Friends and relatives
C. Commercial banks ✓
D. Landlords

Answer: C. Commercial banks
Commercial banks are regulated by the RBI and are formal sources of credit, unlike moneylenders.

If a farmer takes a loan for agriculture and the crop fails due to pests, the loan repayment becomes a burden. This is an example of:

A. Debt trap ✓
B. Credit union
C. Investment capital
D. Barter system

Answer: A. Debt trap
When a borrower cannot repay a loan and takes a new loan to pay off the old one, it leads to a debt trap.

Imagine a situation where a village has no banks, and people rely only on a local moneylender. What is the most likely long-term effect on the village economy?

A. Economic growth increases due to easy money
B. Farmers get trapped in a cycle of debt, leading to lower consumption and investment ✓
C. The village becomes self-sufficient
D. Interest rates will decrease over time

Answer: B. Farmers get trapped in a cycle of debt, leading to lower consumption and investment
Lack of formal credit limits investment capacity and traps the poor in debt, hindering economic development.

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