CBSE Class 10 Social Science Money and Credit MCQs Set 05

Answer: (b) Reserve Bank of India

Explanation:
1. Currency notes in India are issued by the Reserve Bank of India (RBI), the country's central bank.

Teacher's Note:
a) RBI issues India's currency notes.
b) SBI and 'Central Bank of India' are commercial banks, not the issuing authority.

Answer: (c) Cheque

Explanation:
1. This instrument is a cheque, which instructs the bank to pay a specified amount to the named payee from the account holder's funds.

Teacher's Note:
a) A cheque instructs the bank to pay a named person from the account holder's funds.
b) It allows payment without handling cash directly.

Answer: (d) Demand deposit facility is like a cheque

Explanation:
1. Demand deposits themselves are a form of money held in a bank account; a cheque is merely the instrument used to access or transfer that deposit, so describing the deposit facility itself as 'being like a cheque' is the imprecise, incorrect statement among the options.

Teacher's Note:
a) A demand deposit is money held in an account, not the cheque instrument itself.
b) The other three statements correctly describe demand deposits as safe, cash-free, money-like holdings.

Answer: (c) (iii), (ii), (i), (iv)

Explanation:
1. Workers first have extra cash at the start of the month (iii); they deposit it in a bank account (ii); banks accept this deposit and pay interest (i); and depositors can withdraw it whenever needed (iv).

Teacher's Note:
a) Correct order: extra cash → deposit → bank pays interest → withdrawal as needed.
b) This traces a typical salaried worker's monthly banking cycle.

Answer: (a) It is widely accepted

Explanation:
1. Money functions as a medium of exchange because it is widely accepted by everyone as payment — its form (notes/coins) or issuer (RBI) is secondary to this universal acceptability.

Teacher's Note:
a) Universal acceptability is what makes money a medium of exchange.
b) Being issued by RBI or taking the form of notes and coins is secondary to this acceptability.

Answer: (d) Asset as guarantee for a loan

Explanation:
1. Collateral is an asset that a borrower owns and offers to the lender as a guarantee of loan repayment.

Teacher's Note:
a) Collateral is an asset pledged as security for a loan.
b) If the loan isn't repaid, the lender has the right to sell the collateral to recover the money.

Answer: (a) Credit

Explanation:
1. This arrangement — money, goods or services now in exchange for a promise to pay later — is called credit.

Teacher's Note:
a) Credit is money/goods/services given now for a promise of future repayment.
b) Interest is the cost charged for extending that credit, not the arrangement itself.

Answer: (c) Both (a) and (b)

Explanation:
1. Swapna's crop failed, and because she could not repay her loan, she fell into a debt trap — both outcomes happened to her, unlike Salim who repaid his loan successfully.

Teacher's Note:
a) Swapna's crop failure led directly to a debt trap.
b) This contrasts with Salim's low-risk, successfully repaid working-capital loan.

Answer: (b) Terms of credit

Explanation:
1. The combination of interest rate, repayment period and collateral together make up the 'terms of credit' for this loan — not any single element alone.

Teacher's Note:
a) Interest rate + repayment period + collateral together define the 'terms of credit'.
b) No single detail alone (like just the interest rate) captures the full terms.