Assertion Reason: Money and Credit, Class X

1. Assertion (A): Banks use the major portion of the deposits to extend loans. Reason (R): There is a huge demand for loans for various economic activities.

A) Both Assertion (A) and Reason (R ) are true and Reason (R ) is the correct explanation of assertion (A).
B) Both Assertion (A) and Reason (R ) are true and Reason (R ) is not the correct explanation of assertion (A).
C) Assertion (A) is true but Reason (R ) is false.
D) Assertion (A) is false but Reason (R ) is true

... Answer is A)

2. Assertion (A): In one situation credit helps to decrease earnings and therefore the person is beeter off than before. Reason (R): In another situation, becasuse of the crop failure, credit pushes the person into a debt trap.

A) Both Assertion (A) and Reason (R ) are true and Reason (R ) is the correct explanation of assertion (A).
B)Both Assertion (A) and Reason (R ) are true and Reason (R ) is not the correct explanation of assertion (A).
C) Assertion (A) is true but Reason (R ) is false.
D) Assertion (A) is false but Reason (R ) is true

... Answer is D)

3. Assertion (A): If the brower fails to repay the loan, the lender does have the right to sell the asset or collateral to obtain payment. Reason (R): Property such as titles, deposits with banks, livestock are some common examples of colleteral

A) Both Assertion (A) and Reason (R ) are true and Reason (R ) is the correct explanation of assertion (A).
B) Both Assertion (A) and Reason (R ) are true and Reason (R ) is not the correct explanation of assertion (A).
C) Assertion (A) is true but Reason (R ) is false.
D) Assertion (A) is false but Reason (R ) is true

... Answer is D)


4. Assertion (A): Interest rate, collateral and documentation requirement and the mode of repayment together comprises what is called the terms of credit. Reason (R): The various types of loans can be conveniently grouped as formal sector loans and informal sector loans.

A) Both Assertion (A) and Reason (R ) are true and Reason (R ) is the correct explanation of assertion (A).
B) Both Assertion (A) and Reason (R ) are true and Reason (R ) is not the correct explanation of assertion (A).
C) Assertion (A) is true but Reason (R ) is false.
D) Assertion (A) is false but Reason (R ) is true

... Answer is B)

5.  Assertion (A): Higher cost of borrowing means a larger part of the earnings of the borrowers is used to repay the loan. Reason (R): The modern currency is without any use of its own.

A) Both Assertion (A) and Reason (R ) are true and Reason (R ) is the correct explanation of assertion (A).
B) Both Assertion (A) and Reason (R ) are true and Reason (R ) is not the correct explanation of assertion (A).
C) Assertion (A) is true but Reason (R ) is false.
D) Assertion (A) is false but Reason (R ) is true

... Answer is B)

6. Assertion (A): No individual or organisation is allowed to issue currency notes in India. Reason (R): In India, only RBI issues currency notes on behalf of the Central Government.

A) Both Assertion (A) and Reason (R ) are true and Reason (R ) is the correct explanation of assertion (A).
B) Both Assertion (A) and Reason (R ) are true and Reason (R ) is not the correct explanation of assertion (A).
C) Assertion (A) is true but Reason (R ) is false.
D) Assertion (A) is false but Reason (R ) is true

... Answer is A)

7. Banks keep a small proportion of their deposits as cash with themselves. Reason (R): This is kept to meet the loan requirements of the people.

A) Both Assertion (A) and Reason (R ) are true and Reason (R ) is the correct explanation of assertion (A).
B) Both Assertion (A) and Reason (R ) are true and Reason (R ) is not the correct explanation of assertion (A).
C) Assertion (A) is true but Reason (R ) is false.
D) Assertion (A) is false but Reason (R ) is true

... Answer is C)


8. Assertion (A): Banks give loans not only to profit-making businesses but also to small cultivators. Reason (R): The RBI supervises the functioning of formal sources of loans.

A) Both Assertion (A) and Reason (R ) are true and Reason (R ) is the correct explanation of assertion (A).
B) Both Assertion (A) and Reason (R ) are true and Reason (R ) is not the correct explanation of assertion (A).
C) Assertion (A) is true but Reason (R ) is false.
D) Assertion (A) is false but Reason (R ) is true

... Answer is B)

9. Periodically, banks have to submit information to the Finance Minister on how much they are lending, to whom, at what rate of interest etc. Reason (R): The RBI monitors the banks about maintaining cash balance with them.

A) Both Assertion (A) and Reason (R ) are true and Reason (R ) is the correct explanation of assertion (A).
B) Both Assertion (A) and Reason (R ) are true and Reason (R ) is not the correct explanation of assertion (A).
C) Assertion (A) is true but Reason (R ) is false.
D) Assertion (A) is false but Reason (R ) is true

... Answer is D)

10. Assertion (A): The facility of demand deposits makes it possible to settle payments without the use of cash. Reason (R): Cheques are paper orders which make it possible to transfer money from one person's account to another person's account.

A) Both Assertion (A) and Reason (R ) are true and Reason (R ) is the correct explanation of assertion (A).
B) Both Assertion (A) and Reason (R ) are true and Reason (R ) is not the correct explanation of assertion (A).
C) Assertion (A) is true but Reason (R ) is false.
D) Assertion (A) is false but Reason (R ) is true

... Answer is D)

11. Assertion (A): Banks charge a higher interest rate on loans than what they offer on deposits. Reason (R): The difference between what is charged from borrowers and what is paid to depositors is their main source of income.

A) Both Assertion (A) and Reason (R ) are true and Reason (R ) is the correct explanation of assertion (A).
B) Both Assertion (A) and Reason (R ) are true and Reason (R ) is not the correct explanation of assertion (A).
C) Assertion (A) is true but Reason (R ) is false.
D) Assertion (A) is false but Reason (R ) is true

... Answer is A)

12. Assertion: In barter system, goods are exchange with money. Reason (R): Money is defined as medium of exchange.

A) Both Assertion (A) and Reason (R ) are true and Reason (R ) is the correct explanation of assertion (A).
B) Both Assertion (A) and Reason (R ) are true and Reason (R ) is not the correct explanation of assertion (A).
C) Assertion (A) is true but Reason (R ) is false.
D) Assertion (A) is false but Reason (R ) is true

... Answer is D)

13. Statement 1: When both the parties in a barter economy have to agree to sell and buy each other's commodities is known as double coincidence of wants. Statement 2: It is money that can act as a medium of exchange.

A)Both the statements are true
B) Both the statements are false
C) Statements 1 is true and statements 2 is false
D)

... Answer is A)


14. Statement 1: Borrowers are those who take loans from the bank. Statement 2: The person who deposits money in the banks are called lender.

A) Both the statements are true
B) Both the statements are false
C) Statements 1 is true and statements 2 is false
D) Statements 1 is false and statements 2 is true

... Answer is C)

15. Statement 1: Banks and co-operatives are called formal sources of credit. Statement 2: RBI supervises the formal sources of credit.

A) Both the statements are true
B) Both the statements are false
C) Statements 1 is true and statements 2 is false
D) Statements 1 is false and statements 2 is true

... Answer is A)