Money and Credit Quiz

False (B)

Supervising the functioning of loans in the formal sector.

<p>government</p> Signup and view all the answers

<p>Issues currency notes = Legalizes medium of exchange Supervises loans = Regulates formal lending Fixes interest rates = Guidelines for banks Maintains cash balance = Ensures liquidity for depositors</p> Signup and view all the answers

<p>Accessibility without collateral (C)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>A cheque is a paper instrument that instructs a bank to pay a specific amount from the account of the drawer to the payee.</p> Signup and view all the answers

<p>formal</p> Signup and view all the answers

<p>Cheque = A payment instrument instructing a bank to pay money SHGs = Groups that pool savings and provide loans to members Collateral = An asset pledged as security for a loan Interest Rate = The cost of borrowing money expressed as a percentage</p> Signup and view all the answers

<p>They are not regulated by any government organization. (C)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>higher</p> Signup and view all the answers

<p>Issuing currency notes (B)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>A type of bank deposit that can be withdrawn on demand.</p> Signup and view all the answers

<p>barter</p> Signup and view all the answers

<p>Insurance Companies (A)</p> Signup and view all the answers

<p>Demand Deposit = Withdrawn on demand Fixed Deposit = Held for a fixed term Recurring Deposit = Regular monthly savings Savings Deposit = Low-interest, accessible funds</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>Mediate between depositors and borrowers.</p> Signup and view all the answers

Formal sources of credit are regulated by the RBI (Reserve Bank of India) and charge lower interest rates than informal sources.

Informal sources of credit are not regulated by any government organization and often charge very high interest rates.

Groups of 15-20 people who pool savings, collectively decide on loans, and support each other in repayments.

Something that guarantees a loan. If the borrower defaults, the lender can take the collateral.

Rural areas often rely on informal lenders because formal lenders have limited access.

Poor access to banks, lack of collateral, and high accessibility of informal lenders push people towards informal credit sources.

Rural areas often have limited reach of banks and need more accessible credit options.

A written order to a bank to pay a certain amount from an account to someone else.

Deposits in banks are safe and earn interest, providing financial security and a return on savings.

Banks use deposits to lend money to businesses, supporting economic growth through job creation, increased production, and higher national income.

The RBI regulates the banking system, issues currency, and maintains financial stability in the country.

The RBI sets guidelines for banks to follow when setting interest rates on deposits and loans, influencing borrowing and lending costs.

Modern currency is backed by the government, issued by a central bank, and legalized as a medium of payment, making it universally accepted for transactions.

Trading goods and services directly for other goods and services, without using money. This was an early form of exchange.

A situation in a barter system where both parties must desire what the other party is offering to make a trade. It's hard to find!

Anything legalized by the government that acts as a medium of exchange (buying and selling) and measures the value of goods and services.

Generally accepted form of money, like coins and paper notes, issued by a country's central bank.

The central bank of India responsible for issuing currency notes on behalf of the government.

Money deposited in banks that can be withdrawn on demand. It's a common form of holding money.

Banks act as intermediaries between those who have extra funds (depositors) and those who need funds (borrowers). They help connect people who have saved with those who need to borrow.