Money and Credit

14 solved questions from Class 10 Economics, each with the full working. Tap any question to see the step-by-step solution.

• 1 Which of the following is NOT a function of money? easy MCQ 1 mark Functions of money
• 2 If the required reserve ratio set by the RBI is 4%, what is the maximum increase in the money supply that can result from an injection of Rs. 10,000 by the commercial banks? medium 3 marks Money multiplier and reserve ratio
• 3 Explain how the Reserve Bank of India (RBI) uses open market operations to control the money supply in the economy. medium 4 marks Open market operations
• 4 What is the primary topic or theoretical principle explored in 'Money and Credit' (Class 10 ECONOMICS)? medium MCQ Chapter Core Principle
• 5 Which key mechanism or analytical rule is highlighted in 'Money and Credit'? medium MCQ Key Analytical Mechanism
• 6 Define 'liquidity' as it relates to money and illustrate the definition with one practical example. easy 1 mark Liquidity of money
• 7 Total reserves of commercial banks are Rs. 2,00,000. The required reserve ratio is 10%. The RBI conducts an open‑market sale of government securities worth Rs. 20,000 to these banks. Assuming banks lend out all excess reserves, calculate the net change in the money supply after the multiplier effect. medium 2 marks Money multiplier and open market operation
• 8 Explain two ways in which commercial banks create credit in the economy. For each way, give a brief example illustrating the process. medium 3 marks Credit creation by banks
• 9 Define the money multiplier and give its formula. easy 1 mark Money multiplier concept
• 10 Which of the following is NOT a function of money? easy MCQ 1 mark Functions of money
• 11 Total deposits in the banking system are Rs. 1,00,000. The RBI conducts an open‑market purchase of government securities worth Rs. 5,000, thereby injecting this amount into the system. If the required reserve ratio is 5 % and banks lend out all excess reserves, calculate the total change in the money supply after the multiplier effect. medium 2 marks Open market operations and money multiplier
• 12 Total deposits in the banking system are Rs. 3,00,000. The RBI conducts an open‑market purchase of government securities worth Rs. 6,000, injecting this amount into the system. If the required reserve ratio is 6%, and banks lend out all excess reserves, calculate the total change in the money supply after the multiplier effect. medium 2 marks Money multiplier
• 13 Which of the following expressions correctly represents the money multiplier when the required reserve ratio is expressed as a decimal? easy MCQ 1 mark Money multiplier
• 14 Describe how fractional reserve banking expands the money supply, and compute the total increase in money supply when the banking system has total deposits of Rs. 5,00,000, the required reserve ratio is 10%, and the RBI purchases government securities worth Rs. 3,000. hard 5 marks Fractional reserve banking