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By Ankit Gupta
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Updated on 13 Oct 2025, 18:06 IST
The chapter Money and Credit in CBSE Class 10 Economics is one of the most practical and interesting topics in the syllabus. It explains how money became the most common medium of exchange and how the system of credit supports people and the economy. To help students prepare effectively, money and credit class 10 MCQs, money and credit class 10 question and answers, and other exercises make learning simple and exam-ready.
In ancient times, people used the barter system to exchange goods, but it was difficult because it required a double coincidence of wants. This problem led to the use of money — a universally accepted medium of exchange. The chapter describes the evolution of money, from coins and paper currency to digital payments and online banking. By solving class 10th money and credit MCQs, students understand how money makes trade and transactions easier in today’s world.
The second part of the chapter focuses on credit, which means borrowing money to meet needs or invest in productive activities. Credit can help people grow financially, but it can also lead to problems if it is not managed properly. The chapter explains the difference between formal credit sources like banks and cooperatives, and informal sources like moneylenders. Understanding this difference is a key learning outcome tested in money and credit class 10 MCQs.
This topic also highlights the importance of Self-Help Groups (SHGs) and financial inclusion. These concepts show how collective efforts and access to banking services can improve lives, especially in rural areas. Practicing money and credit class 10 question and answers or money and credit MCQs helps students remember how credit can be both a benefit and a risk.
1) What does “double coincidence of wants” mean?
a) When what one person wants to sell matches what another person wants to buy.
b) When two people want to sell the same thing.
c) When two people want to buy the same thing.
d) None of these.
Answer: (a)
2) In a barter system, where goods are traded directly, a double coincidence of wants is necessary.
a) False
b) True
Answer: (b)
3) In India, who issues currency notes for the Central Government?
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a) Reserve Bank of India (RBI)
b) Ministry of Finance
c) Finance Commission
d) None of these
Answer: (a)
4) Which statement is correct?
a) Only the RBI can issue currency in India.
b) The law makes rupees legal tender that must be accepted for payments.
c) No one can legally refuse rupee payments in India.
d) All of these.
Answer: (d)
5) Indian banks keep about ____ of their deposits in cash.
a) 25%
b) 20%
c) 15%
d) 5%
Answer: (c)
6) Banks use most of their deposits to:
a) Give loans
b) Invest in infrastructure
c) Keep in foreign banks
d) None of these
Answer: (a)
7) The main income of banks comes from the difference between the interest they charge on loans and the interest they pay on deposits.
a) True
b) False
Answer: (a)
8) In villages, most people borrow money mainly for:
a) Buying land
b) Building houses
c) Medical needs
d) Crop farming
Answer: (d)
9) Which of these can be used as collateral?
a) Animals
b) Land
c) Bank deposits
d) All of these
Answer: (d)
10) The terms of credit include:
a) Interest rate
b) Documents required
c) Collateral
d) All of these
Answer: (d)
11) Which statement is true?
a) Cooperative members share resources for mutual benefit.
b) Cooperatives are another source of low-cost loans in rural areas.
c) Cooperatives can be for farmers, weavers, or workers.
d) All of these.
Answer: (d)
12) Examples of informal loans:
a) Moneylenders
b) Traders
c) Cooperatives
d) Only (a) and (b)
Answer: (d)
13) As of 2012, the main source of credit in rural India was:
a) Moneylenders
b) Commercial banks
c) Cooperative societies
d) Friends and relatives
Answer: (a)
14) Which statement is false?
a) No body monitors informal lenders.
b) RBI controls unfair lending by moneylenders.
c) Informal lenders usually charge lower interest.
d) Both (b) and (c).
Answer: (d)
15) Which statement is true?
a) Banks don’t report lending details to RBI.
b) RBI doesn’t supervise banks.
c) RBI checks that banks keep required cash reserves.
d) None of these.
Answer: (c)
16) About ____ of loans to poor urban households come from informal sources.
a) 85%
b) 70%
c) 65%
d) 50%
Answer: (a)
17) About ____ of loans to rich urban households come from formal sources.
a) 20%
b) 10%
c) 15%
d) 90%
Answer: (d)
18) About ____ of loans to well-off urban families come from formal sources.
a) 54%
b) 64%
c) 72%
d) 90%
Answer: (c)
Do Check: CBSE Class 10 Social Science Notes
19) About ____ of loans to poor urban families come from informal sources.
a) 72%
b) 28%
c) 53%
d) 47%
Answer: (c)
20) What can cause a debt trap?
a) When high interest makes repayment higher than income.
b) When most income goes to repay costly loans.
c) When the repayment is less than income.
d) Both (a) and (b).
Answer: (d)
21) What is money?
A) A medium of exchange
B) A store of value
C) A unit of account
D) All of these
Answer: (D)
22) Difference between money and credit:
A) Money is a loan; credit is a payment.
B) Money is physical; credit is virtual.
C) Money is used for exchange; credit is a promise to pay later.
D) Money stores value; credit doesn’t.
Answer: (C)
23) What is a credit transaction?
A) Exchanging money for goods/services.
B) Exchanging goods for goods.
C) Lending money for future repayment.
D) Lending goods for repayment later.
Answer: (C)
24) What is collateral?
A) Property pledged as loan security.
B) Old currency.
C) Loan insurance.
D) Government bond.
Answer: (A)
25) What is the Reserve Bank of India?
A) India’s central bank.
B) Biggest commercial bank.
C) Stock market regulator.
D) International economic agency.
Answer: (A)
26) What is a credit score?
A) A measure of loan repayment ability.
B) The interest on a loan.
C) The borrowed amount.
D) The loan period.
Answer: (A)
27) What is the interest rate?
A) The rate for trading goods.
B) The rate charged on borrowing or lending money.
C) The currency exchange rate.
D) The rate of production.
Answer: (B)
28) Difference between secured and unsecured loans:
A) Secured loans need collateral; unsecured don’t.
B) Secured loans have higher interest.
C) Secured loans are easier to get.
D) Secured loans don’t need repayment.
Answer: (A)
29) What is inflation?
A) A fall in prices.
B) A rise in prices.
C) A fall in money supply.
D) An increase in money supply.
Answer: (B)
30) What is deflation?
A) A fall in prices.
B) A rise in prices.
C) A fall in money supply.
D) A rise in money supply.
Answer: (A)
31) Who is a debtor?
A) A lender
B) A borrower
C) An investor
D) A saver
Answer: (B)
32) Who is a creditor?
A) A lender
B) A borrower
C) An investor
D) A saver
Answer: (A)
33) What is barter?
A) Exchanging goods or services without money.
B) Ancient currency.
C) Stock regulator.
D) Economic organisation.
Answer: (A)
34) What is the role of commercial banks?
A) Issue currency
B) Regulate stock market
C) Provide loans and financial services
D) Promote global trade
Answer: (C)
35) Difference between cash credit and overdraft:
A) Cash credit is short-term; overdraft is long-term.
B) Cash credit is backed by collateral; overdraft is not.
C) Cash credit is for individuals; overdraft for businesses.
D) Cash credit is a credit limit; overdraft allows borrowing beyond that limit.
Answer: (D)
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Most MCQs test your understanding of basic terms like money, credit, collateral, formal and informal sources of credit, and the functions of the Reserve Bank of India (RBI). You may also get conceptual questions on double coincidence of wants and barter system.
Focus on key definitions (money, credit, collateral, loan, etc.), and go through important statistics such as the percentage of formal and informal loans in rural and urban areas. Revising NCERT book exercises and previous year questions helps a lot.
Key topics include:
In CBSE exams, 1–2 MCQs usually come from Money and Credit. However, in school-level or class tests, this chapter can have a full set of 10–20 MCQs since it’s concept-based and easy to test through objective questions.
Remember:
Creating a short summary chart or flashcards helps you recall them quickly during revision.