Students can Download Economics Chapter 3 Money and Credit Questions and Answers, Notes Pdf, KSEEB Solutions for Class 10 Social Science helps you to revise the complete Karnataka State Board Syllabus and to clear all their doubts, score well in final exams.
Karnataka State Syllabus Class 10 Social Science Economics Chapter 3 Money and Credit
Class 10 Social Science Money and Credit Textbook Exercise Questions and Answers
I. Fill In The Blanks With Suitable Answers:
Question 1.
Barter is exchange of goods for __________.
Answer:
Goods
Question 2.
Cheque is a form of money __________.
Answer:
Bank
Question 3.
The Reserve Bank of India was established in the year __________.
Answer:
Pst April 1935
Question 4.
The currency of Japan is __________.
Answer:
Yen
Question 5.
Government of India nationalized 14 commercial Banks in
Answer:
1969
Question 6.
Narrow moncy comprises of __________ and __________.
Answer:
M.I and M.2
Question 7.
Inflation occurs when the supply of money is __________ than the availability of goods and services in a country.
Answer:
Higher
II. Answer The Following Questions.
Question 1.
What is Barter system?
Answer:
In the primitive stage, people exchanged goods for goods without the use of money.
Question 2.
Explain the meaning and functions of money.
Answer:
Money is anything which is widely accepted in payment for goods or in discharger of other business obligations.
The function of money:
1) Primary or main functions:
a) The medium of exchange or means of payment
b) Measure of value
2) Secondary functions:
a) Standard of deferred payments
b) Store of value
c) Transfer of value
Question 3.
Explain the functions of RBI.
Answer:
Functions of RBI:
- Monopoly of note issue
- Banker to Government
- Bankers bank
- National clearinghouse
- Controller of credit
- Custodian of Foreign exchange reserves
- Promotion of banking habits
Question 4.
Explain the various concepts of money supply used in India.
Answer:
In India, four measures of money supply are used to measure the monetary stock, viz., M1, M2, M3 and M4.
They are defined as follows:
M1 = currency notes and coins + net demand deposits held in commercial banks;
M2 = Mj + Savings deposits with Post Office savings banks;
M3 = Mj + Net time deposits of commercial banks; and
M4 = M3 + Total deposits with Post Office savings banks.
For the purposes of monetary management, M1 and M2 are referred to as narrow money, and M3 and M4 as broad money.
Question 5.
Discuss the various credit control methods adopted by RBI.
Answer:
Credit Control Measures are broadly classified into two types, namely
(a) Quantitative Credit Control Measures
(b) Qualitative Credit Control Measures.
(a) Quantitative Credit Control Measures: They comprise of the following:
- Bank Rate Policy.
- Open Market Operations.
- Varying Reserve Requirements.
(b) Qualitative Credit Control Measures:
- Change in lending margins
- The ceiling on credit or credit rationing
- Moral suasion
- Direct Action
Thus RBI aim at restricting the availability of credit through various measures for the purpose of regulating the money supply and the consequent effects on prices and growth of the economy.
Class 10 Social Science Money and Credit Additional Questions and Answers
Multiple Choice Questions
Question 1.
Money is anything which is widely accepted in payment for goods or in the discharge of other business deligations said by __________.
a) Crowther.
b) Roosevelt
c) Robinson
d) Robertson
Answer:
d) Robertson:
Question 2.
Teeth were used as commodity money in __________.
a) Greece
b) Rome
c) China
d) India
Answer:
c) China
Question 3.
Rupeei India Pound __________.
a) England
b) Japan
c) Europe
d) China
Answer:
a) England
Question 4.
Example to Bank money is __________.
a) Cheques
b) Drafts
c) Deposits
d) All the above
Answer:
d) All the above
Question 5.
The Indian Banking Regulation Act implemented in __________.
a) 1949
b) 1969
c) 1972
d) 1974
Answer:
a) 1949
Question 6.
Co-operative societies regulated by __________.
a) Regional Banks
b) Regional Rural Banks
c) Reserve Bank of India
d) Regional Co-operative Bank
Answer:
c) Reserve Bank of India
Question 7.
Reserve Bank of India was nationalized on __________.
a) 1st January 1969
b) 1st January 1949
c) 1st February 1976
d) 1st February 1980
Answer:
b) 1st January 1949
Question 8.
RBI regulates the activities of Banks and guides them so we called as __________.
a) Bankers to Government
b) Custodians
c) Controller of credit
d) Bankers Bank
Answer:
d) Bankers Bank
Question 9.
The oldest existing Central Bank is Sweden’s Riks Bank established in __________.
a) 1668
b) 1913
b) 1694
d) 1949
Answer:
a) 1668
Question 10.
The ratio of their deposits which the banks are required to keep with RBI is called __________.
a) Reverse Repo Rate
b) Repo Rate
c) Cash Reserve Ratio
d) Statutory Liquidity
Answer:
c) Cash Reserve Ratio
Three Marks Questions
Question 1.
Write the importance of Banks
Answer:
- Banks play an important role in economic development
- They mobilize the savings of the public and make.
- Theses available for investors, thereby, helping the process of capital formation.
- Banks provide a convenient way of remittance of money through the accounts of the customers.
- Banks offer higher rates of interest on fixed deposits
- They give loans to borrowers at lower rates of interest.
- They also discount the bills of exchange.
- They lend money to agriculture, industry, and service activities for their development.
- They issue demand, drafts, credit cards.
- The banks also invest the funds on securities of the government.
Question 2.
“Regulation of money supply” is very important in Banking” How?
Answer:
- Currency notes and coins issued by the monetary authority of the country form the money supply in-country at any given time.
- Apart from currency notes and coins, the balance in savings or current account deposits is also considered as money.
- The currency and demand deposits forms the total money in circulation with the public at any point of time.
- M1 = currency notes and coins + net demand deposits held in commercial banks.
M2 = M1 + Savings deposits with post office saving banks
M3 = MI + Net time deposits of commercial banks
M4 = M3 + Total deposits with post office savings banks - In order to regulate the price situation, the RBI varies the supply of currency.
Question 3.
Explain briefly the quantitative credit control measures.
Answer:
The quantitative credit control measures directly affect the quantity of money available to the business and people.
- Bank Rate Policy: The bank rate is the rate at which the RBI lends funds to banks. RBI also varies the Repo rate and reverse Repo rate.
- Open Market Operations: The sale of government securities to banks reduces their reserves and vice-versa.
- Varying Reserve Requirements (Legal Reserve Ratio): Cash Reserve Ratio (CRR) Statutory Liquidity Ratio (SLR)
Question 4.
Write Qualitative Credit Control measures.
Answer:
- Change in lending margins: The percentage value of the security required to be kept with the bank for getting a loan is called the margin.
- The ceiling on credit or credit rationing: The RBI fixes the maximum amount of credit given to a particular use or sector.
- Moral suasion: Moral suasion is a method of persuading commercial banks to advance the credit or reduce the credit to certain activities.
- Direct action: Direct control consists of the measures taken by the central banks against commercial banks and financial institutions when all other methods prove ineffective.