Directions:- In the following questions, the Assertions (A) and Reason(s) (R) have been put forward. Read both statements carefully and choose the correct answer from the below:
- (a) Both assertion and reason are true, and reason is the correct explanation of
assertion. - (b) Both assertion and reason are true, but reason is not the correct explanation of
assertion. - (c) Assertion is true, but reason is false.
- (d) Both assertion and reason are false.
1.) Assertion (A): Collateral is an asset that the borrower owns (such as land, building, vehicle, livestock, deposits with banks) and uses this as a guarantee to a lender until the loan is repaid.
Reason (R): Collateral is given as the lender can sell the collateral to recover the loan
amount if the borrower fails to repay the loan.
Answer – (a) Both assertion and reason are true, and reason is the correct explanation of assertion.
2.) 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.
Answer – (a) Both assertion and reason are true, and reason is the correct explanation of assertion.
3.) Assertion (A): Credit would be useful or not depends on the risk involved in a situation.
Reason (R): The chance of benefitting from credit ishighest in agriculture sector.
Answer – (c) Assertion is true, but reason is false.
4.) Assertion (A): Banks keep only a small proportion of their deposits as cash with
themselves.
Reason (R): Banks in India these days hold about 15 per cent of their deposits as cash.
Answer – (b) Both assertion and reason are true, but reason is not the correct explanation of assertion.
5.) Assertion (A): The terms of deposit are same for all credit arrangements.\
Reason (R): Credit arrangements are very complex process so to remove the
complexities same terms of deposits are used
Answer – (d) Both assertion and reason are false.
6.) Assertion (A): The facility of demand deposits makes it possible to settle payments
without the use of cash.
Reason (R) : Demand deposits are paper orders which make it
possible to transfer money from one person’s account to another person’s account.
Answer – (d) Both assertion and reason are false.
7.) Assertion (A): The Reserve Bank of India supervises the functioning of formal sources of loans.
Reason (R): The RBI sees that the banks give loans not just to profit-making businesses
and traders but also to small cultivators, small scale industries, to small borrowers etc.
Answer – (b) Both assertion and reason are true, but reason is not the correct explanation of assertion.
8.) Assertion (A): In India, no individual can refuse to accepta payment made in rupees.
Reason (R): Rupee is the legal tender in India
Answer – (a) Both assertion and reason are true, and reason is the correct explanation of assertion.
9.) Assertion (A): Sohan took credit in the form of advance payment from a buyer and he
delivered the goods to the buyer on time and also earned profit. The credit made sohan better off in this situation.
Reason (R): Credit can never push a person into a debt trap.
Answer – (c) Assertion is true, but reason is false.
10.) Assertion (A): The modern currency is used as a medium of exchange; however, it does not have a use of its own.
Reason (R): Modern currency is easy to carry
Answer – (b) Both assertion and reason are true, but reason is not the correct explanation of assertion.
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