Case Study Question 01

Economics- Understanding Economic Development

Chapter 3: Money and Credit

Class 10

Read the following passage carefully and answer the following questions:
Modern forms of money include currency — paper notes and coins. Unlike the things that were used as money earlier, modern currency is not made of precious metal such as gold, silver and copper. And unlike grain and cattle, they are neither of everyday use. The modern currency is without any use of its own. Then, why is it accepted as a medium of exchange? It is accepted as a medium of exchange because the currency is authorized by the government of the country. In India, the Reserve Bank of India issues currency notes on behalf of the central government. As per Indian law, no other individual or organization is allowed to issue currency. Moreover, the law legalizes the use of rupee as a medium of payment that cannot be refused in settling transactions in India. No individual in India can legally refuse a payment made in rupees. Hence, the rupee is widely accepted as a medium of exchange.

Question.1.
Modern forms of money include currency ___________________.

(a) Gold, silver and copper.
(b) Stone punch marks coins.
(c) Paper notes and coins.
(d) None of the above.

(c) Paper notes and coins.

Question.2.
Why modern currency is accepted as a medium of exchange?

(a) Because it is use by everyone.
(b) Because it is authorized by the government of the country.
(c) Because making of modern currency very easy .
(d) All of the above.

(b) Because it is authorized by the government of the country.

Question.3.
Which one of the following authorises money as a medium of exchange?

(a) Reserve Bank of India.
(b) State bank of India.
(c) Ministry of Finance.
(d) None of the above.

(a) Reserve Bank of India.

Question.4.
Give an example of Modern forms of money?

(a) Demand draft.
(b) Deposit form.
(c) ATM card.
(d) All of the above.

(d) All of the above.

Question.5.
Which among the following banks issues currency notes on behalf of the Central Government in India?

(a) RBI
(b) State Bank of India
(c) Bank of India
(d) Central Bank of India

(a) RBI

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