Money and Credit — Class 10 MCQs with Answers
Class 10 CBSE Economics · Chapter 3
62 practice questions · 20 Easy · 22 Medium · 20 Hard · Updated
Jump to the 6 solved questions
Practise the most important Class 10 CBSE Economics questions from Chapter 3, "Money and Credit". You get 6 timed quizzes made from 62 NCERT-based MCQs, with answers and explanations. The questions are split into 20 Easy, 22 Medium and 20 Hard. Warm up on the basics, then move on to the exam-level questions that top scorers in CBSE Board exams get right.
To score well in "Money and Credit", focus on dates, cause and effect, and reading maps and sources. Each MCQ here is timed and uses exam-style marking (+4 correct, −1 wrong, 0 skipped). This helps you stay accurate when time is short, just as real papers need. Every question has a short explanation, so a wrong answer becomes a quick lesson. It is the fastest way to fix gaps before a test.
Use this chapter for focused revision. Start with the Easy set to check your basics on Money and Credit, then move to Medium and Hard to practise applying them. Your accuracy, streaks and XP save automatically. This chapter also adds to your overall Class 10 Economics mastery score. Try the 6 sample questions below: tap an option to see the answer and a worked explanation. Sign in free to start practising.
Money and Credit — important questions & MCQs with answers (Class 10 Economics)
6 solved questions from this chapter's difficulty levels, each with its answer and explanation. Tap an option to check yourself.
0 of 6 answered
- Q1 of 6Easy
Money replaced the system of:
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Answer: Barter
Explanation: Money solved the 'double coincidence of wants' problem.
- Q2 of 6Easy
RBI in India stands for:
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Answer: Reserve Bank of India
Explanation: The chapter names the Reserve Bank of India (RBI) as the body that issues currency notes on behalf of the central government and supervises the functioning of formal sources of loans.
- Q3 of 6Medium
Banks are able to give loans because:
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Answer: They keep only a small part of deposits as cash reserve and lend out the rest
Explanation: Banks keep a small portion of deposits as reserve to meet withdrawals and use the major part to extend loans, earning the difference in interest.
- Q4 of 6Medium
Interest rate, collateral, documentation and the mode of repayment together make up the:
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Answer: Terms of credit
Explanation: Every loan carries terms of credit — interest, collateral, documents and repayment conditions — which vary from one lender to another.
- Q5 of 6Hard
Consider these statements about bank loans to Self Help Groups: I. After a year or two, if the group is regular in savings, it becomes eligible for a bank loan. II. If one member fails to repay, the other members leave it to the bank to follow up. III. The loan is sanctioned in the name of the group and is meant to create self-employment opportunities for the members. Which of the statements is/are correct?
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Answer: I and III only
Explanation: A regular SHG becomes eligible for a bank loan after a year or two, and the loan is given in the group's name to create self-employment. The group is responsible for repayment, and non-repayment by any member is followed up seriously by the other members, so II is wrong.
- Q6 of 6Hard
Read the passage and answer the question. It is festival season two months from now. The shoe manufacturer Salim has received an order from a large trader in town for 3,000 pairs of shoes, to be delivered in a month. To finish on time he must hire more workers and buy raw materials, so he obtains loans from two sources. Which of the following correctly names Salim's two sources of credit?
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Answer: Leather on credit, and a cash advance from the large trader
Explanation: Salim asked the leather supplier to supply leather now and promised to pay him later, and he obtained a loan in cash from the large trader as advance payment for 1000 pairs of shoes.
Money and Credit notes: key concepts (Class 10 Economics)
This chapter explains why money replaced barter, its modern forms, and how banks and credit work. It covers the terms of credit and collateral, contrasts formal sources supervised by the RBI with high-interest informal lenders, and shows how Self-Help Groups and microfinance bring affordable credit to the rural poor.
| Formal | Informal | |
|---|---|---|
| Lenders | Banks and cooperatives | Moneylenders, traders, employers, relatives |
| Supervision | Supervised by the RBI | No organisation supervises them |
| Interest | Lower | Much higher; any rate they choose |
| Papers and collateral | Proper documents and collateral needed | Often no collateral; no records kept |
| Rural credit, 2019 | Commercial banks 51%, cooperatives 10% | Moneylenders 23% |
| Urban households | Rich: 83% of their loans | Poor: 54% of their loans |
| Borrower | Lender | Interest | Other terms |
|---|---|---|---|
| Shyamal | Agricultural trader | Three per cent per month | Must sell his crop to the trader |
| Arun | Bank | 8.5 per cent per annum | Repays after harvest; fresh loan against cold storage receipt |
| Rama | Landowner-employer | 5 per cent per month | Repays by working for him |
| Megha | Bank | 12 per cent a year | House papers as collateral; job and salary records as documents |
- 1People with surplus funds deposit them in a bank
- 2The bank keeps about 5 per cent of deposits as cash for withdrawals
- 3It uses the major portion of deposits to give loans
- 4Borrowers pay a higher interest rate than depositors receive
- 5The difference is the bank's main source of income
- 115 to 20 members, mostly from one neighbourhood, meet and save regularly
- 2Each saves Rs 25 to Rs 100 or more, as they are able
- 3Members decide the purpose, amount, interest and repayment of loans to members
- 4After a year or two of regular saving, the group can get a bank loan
- 5The loan is in the group's name, for self-employment; members follow up repayment
- Double coincidence of wants
- In barter both parties must want each other's goods for an exchange to happen; money removes this need by serving as a medium of exchange.
- Currency
- Notes and coins that everyone accepts as money; in India currency is issued by the Reserve Bank of India on behalf of the central government.
- Demand deposits
- Money deposited in bank accounts that can be withdrawn on demand; it counts as money and can be paid to others by cheque without using cash.
- Cheque
- A paper instructing the bank to pay a stated sum from the writer's account to another person, letting people settle payments without handling cash.
- Credit
- An agreement where the lender supplies money, goods or services to the borrower in return for a promise of future repayment with interest.
- Terms of credit
- The interest rate, collateral, documentation and mode of repayment together; every loan carries terms that vary with the lender and borrower.
- Collateral
- An asset (land, building, vehicle, jewellery) the borrower pledges as a guarantee until the loan is repaid; the lender can sell it on default.
- Formal sources of credit
- Banks and cooperatives whose lending the Reserve Bank of India supervises; they charge lower interest and require proper documentation.
- Informal sources of credit
- Moneylenders, traders, employers and relatives outside RBI supervision; they often charge very high interest and can lead to a debt-trap.
- Debt-trap
- When a borrower cannot repay because of high interest and must borrow again, so credit worsens rather than improves their situation.
- Self-Help Groups (SHGs)
- Groups of usually 15-20 members, often women, who save regularly, pool funds and lend to members; the group itself decides loans, purpose and terms.
- Microfinance / Grameen Bank
- Small collateral-free loans to the poor via SHGs and bodies like Bangladesh's Grameen Bank, expanding formal credit and cutting dependence on moneylenders.
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Money and Credit — FAQs
What are the key concepts in Class 10 Economics Money and Credit?+
This chapter explains why money replaced barter, its modern forms, and how banks and credit work. It covers the terms of credit and collateral, contrasts formal sources supervised by the RBI with high-interest informal lenders, and shows how Self-Help Groups and microfinance bring affordable credit to the rural poor. Key ideas include Double coincidence of wants, Currency, Demand deposits, Cheque, Credit, Terms of credit.
What does Class 10 Economics Chapter 3 (Money and Credit) cover on XamBaaz?+
It has 62 NCERT-based MCQs on "Money and Credit": 20 Easy, 22 Medium and 20 Hard. Together they make 6 timed quizzes, and you never get the same set twice. Every question has an instant explanation. They help you prepare for CBSE Board exams.
Are these "Money and Credit" questions free to practise?+
Yes. Sign in with Google to practise "Money and Credit" free. Full unlimited access is ₹999/year. One year from the day you pay. You stay in Class 10 till 31 March; on 1 April your account moves up to Class 11 and the rest of your year carries over. No chapter is charged separately.
How should I revise "Money and Credit" for the exam?+
Start with the Easy quiz to check your basics, then try Medium and Hard to practise applying them. There are 6 timed quizzes on this chapter, so you can come back for a fresh set instead of one you have seen. Read each explanation, retry the questions you miss, and track your accuracy until it stays high.
Are these "Money and Credit" MCQs available with answers?+
Yes. 6 sample questions are on this page with answers: tap an option, or "Show answer", to see the correct option and a step-by-step explanation. Sign in free with Google to start practising, with instant scoring.
Is there negative marking in the "Money and Credit" quizzes?+
Yes. The timed quizzes use exam-style marking: +4 for a right answer, −1 for a wrong one and 0 for a skip. MHT-CET and CBSE board papers have no negative marking. Our mocks for those are scored their way.
What are the important questions from Money and Credit (Class 10 Economics)?+
The questions that matter most test Double coincidence of wants, Currency, Demand deposits, Cheque, Credit, Terms of credit. This page shows 6 solved important MCQs with answers and explanations. Sign in to practise all 62 questions on the chapter as timed quizzes.
Is there an online quiz for Money and Credit?+
Yes — Class 10 Economics Money and Credit has timed online quizzes at Easy, Medium and Hard levels, with instant scoring and a worked explanation on every question. The first quiz on the chapter is free.
Are there question answers and extra questions for Money and Credit (Class 10 Economics)?+
Yes. This page has 6 solved questions on Money and Credit, each with the correct answer and a short explanation. Sign in to practise all 62 questions on the chapter as timed quizzes.
Are there assertion–reason and case study questions for Money and Credit (Class 10 Economics)?+
Yes. The Money and Credit question bank has 5 assertion–reason questions and 5 case-based (case study) questions in the CBSE board format, alongside the regular MCQs. Each comes with the answer and a worked explanation. Sign in to practise them in timed quizzes.