Economics Chapter-3 Money and Credit: 1-Mark Quiz

Economic Concepts

• Barter system refers to the exchange of goods for goods without using money.
• 'Debt Trap' denotes a situation where an individual cannot repay debts due to high-interest rates and ends up borrowing more to cover existing debts.

Currency and Financial Institutions

• The Reserve Bank of India (RBI) is responsible for issuing currency in India.
• The National Sample Survey Organization (NSSO) primarily conducts surveys to collect data on various sectors of the economy, including employment and household consumption.

Historical Context

• The gold mohar coin was brought into circulation by the Gupta Empire, highlighting the significance of trade and coinage in India's history.
• The All India Debt and Investment Survey conducted by the NSSO in 2003 assessed the debt levels and investments of households across the nation.

Loan Sectors and SHGs

• Agencies like banks and formal financial institutions are not part of the informal loan sector, which consists of unregulated money lenders.
• In self-help groups (SHGs), decision-making regarding savings and loan activities is primarily made by the members collectively.

Features of Indian Coins and Credit Sources

• Gupta coins are distinguished by their unique designs and inscriptions, often showcasing the rulers and their achievements.
• The main source of credit for affluent urban households in India is through formal financial institutions like banks rather than informal loans.

Rural Credit Dependency

• In 2003, approximately 40% of rural households in India relied on money lenders for credit, indicating considerable dependence on informal lending.
• A typical self-help group consists of 10 to 20 members, promoting collective savings and financial decision-making.

Banking Reserves

• Banks hold around 4% of total deposits as cash reserves, ensuring liquidity and stability within the banking system.

Formal vs. Informal Sector

• A key feature that distinguishes the formal sector from the informal sector is regulatory oversight; formal sectors are subject to government regulations while informal sectors operate without formal agreements.

Test your knowledge of Economics Chapter-3 Money and Credit with these 1-mark multiple-choice questions. From barter to currency issuance, challenge yourself with these important concepts.