NCERT MCQ Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit

NCERT MCQ Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit for Session 2025-26 are designed to help students master core concepts. It contains the topics like modern forms of money, banking, credit, collateral and sources of loans. These multiple-choice questions are based strictly on the updated NCERT textbook and provide clarity through concise answers. Practicing these MCQs regularly boosts confidence, improves accuracy and prepares students for school exams, board pattern tests and concept-based questions in real-life scenarios.
Class 10 Economics Chapter 3 NCERT Solutions
Class 10 Multiple Choice Questions
Class 10 Social Science MCQ

Money and Credit Class 10 Economics Chapter 3 MCQs

Q1. What is double coincidence of wants?

[A]. One party has money, other has goods
[B]. Both parties want each other’s goods
[C]. Both parties have money
[D]. None of these

Q2. The main advantage of money over barter is

[A]. It is a form of gold
[B]. It can only be used for goods
[C]. It eliminates double coincidence of wants
[D]. It is made of metal

Q3. Modern currency is accepted as a medium of exchange because

[A]. It can be eaten
[B]. It is made of precious metals
[C]. It is authorised by the government
[D]. It is produced by traders

Q4. Demand deposits are

[A]. Fixed deposits
[B]. Shares in a company
[C]. Deposits that cannot be withdrawn
[D]. Deposits that can be withdrawn anytime

Class 10 Economics Chapter 3 Objective Questions

Q5. Who issues currency notes in India?

[A]. Reserve Bank of India
[B]. State Bank of India
[C]. Central Government
[D]. Ministry of Finance

Q6. The main source of income for banks is

[A]. Tax collection
[B]. Deposits only
[C]. Selling goods
[D]. Charging higher interest on loans than on deposits

Q7. What is collateral?

[A]. A form of money
[B]. Interest on deposits
[C]. Security against a loan
[D]. Repayment schedule

Q8. Informal lenders include

[A]. SHGs
[B]. Moneylenders and traders
[C]. Reserve Bank of India
[D]. Banks and cooperatives

Class 10 Economics Chapter 3 Money and Credit MCQ

In Class 10 Economics Chapter 3, Money and Credit, students learn how money replaced the old barter system. Earlier, people exchanged goods directly, like shoes for wheat. But this required both parties to want exactly what the other had — a problem known as the double coincidence of wants. With money, this issue was solved. Now people use coins, notes, bank deposits, cheques and even digital transfers to buy and sell goods or services easily. Class 10 Economics Chapter 3 explains how modern money works, especially with banks playing a big role in keeping and lending money. Understanding this makes daily transactions, banking and online payments more meaningful. Multiple Choice Questions (MCQs) in this chapter help test your understanding of these basic concepts quickly and sharply. Practicing MCQs can improve your grasp on definitions, examples and differences between forms of money, making your exam preparation faster and more effective.

Q9. Which of the following is a formal source of credit?

[A]. Banks
[B]. Friends
[C]. Relatives
[D]. Moneylenders

Q10. Self Help Groups (SHGs) are mainly formed to

[A]. Issue currency
[B]. Charge high interest
[C]. Pool savings and give loans to members
[D]. Promote trade

Q11. In rural areas, the majority of credit needs are met by

[A]. Banks
[B]. SHGs only
[C]. NGOs only
[D]. Moneylenders and informal sources

Q12. A debt trap occurs when

[A]. Money is borrowed from banks
[B]. There is no interest charged
[C]. The borrower cannot repay the loan
[D]. The borrower earns enough to repay
Class 10 Economics Chapter 3 MCQ Solutions

Q13. Credit is considered successful when

[A]. It increases the borrower’s earnings
[B]. No interest is charged
[C]. It pushes the borrower into debt
[D]. It is taken from informal sources

Q14. Which one is not a feature of demand deposits?

[A]. Earn interest
[B]. Issued by government only
[C]. Enable cheque payments
[D]. Can be withdrawn anytime

Q15. The main reason poor households borrow from informal sources is

[A]. High interest rate
[B]. Easy access and no collateral needed
[C]. Supervision by RBI
[D]. Strict documentation

Q16. What is the main function of the Reserve Bank of India regarding banks?

[A]. Pools savings of SHGs
[B]. Supplies crops to farmers
[C]. Supervises their lending activities
[D]. Gives informal loans
Importance of Class 10 Economics Chapter 3 MCQs

Credit is another major theme in this chapter. Credit means borrowing money for some time and returning it later with interest. It can be helpful or harmful depending on the situation. The story of Salim, the shoe manufacturer, shows how credit helped him grow his business. But Swapna’s story shows how poor credit terms pushed her into a debt trap. Students also learn about formal and informal sources of credit like banks, moneylenders and cooperatives. Class 10 Economics Chapter 3 discusses terms of credit, the need for collateral and how organisations like SHGs (Self Help Groups) help poor women borrow without security. This topic is very important in real life. It teaches you how loans work, when to take them and what to avoid. Practicing MCQs from this chapter helps you revise these real-life concepts in an easy way. MCQs test your memory, logic and application – which are all needed not just for exams, but for making smart financial decisions in the future.

Q17. Who are the main beneficiaries of SHG bank loans?

[A]. Rural women
[B]. Traders
[C]. Rich men
[D]. Government officials

Q18. When a bank gives a loan, it usually asks for

[A]. No documents
[B]. Interest free period
[C]. A guarantee from a friend
[D]. Collateral

Q19. Why do formal sources charge lower interest than informal ones?

[A]. They charge no interest
[B]. They are supervised and not-for-profit
[C]. They are not regulated
[D]. They do not give loans to poor people

Q20. Grameen Bank is famous for

[A]. Lending to rich businessmen
[B]. Issuing currency
[C]. Providing credit to poor women in Bangladesh
[D]. Only lending to government employees

What topics should I focus on while solving Class 10 Economics Chapter 3 MCQ to score better in exams?

While solving Class 10 Economics Chapter 3 MCQ, focus on understanding key topics like the role of money as a medium of exchange, the need for banking systems and the difference between formal and informal sources of credit. Also, learn the terms of credit, collateral and demand deposits. These topics frequently appear in MCQs because they test both factual knowledge and application. Pay close attention to examples like Salim’s shoe business or Swapna’s farming story—these help you understand how credit works in real life. MCQs based on these concepts not only help in scoring well but also prepare you to think economically in real situations.

Why is it useful to regularly practice Class 10 Economics Chapter 3 MCQ during revision?

Regular practice of Class 10 Economics Chapter 3 MCQ is a great way to reinforce important concepts without long hours of theory reading. MCQs test your memory, logic and concept clarity in a quick format. Repeated practice helps identify weak spots, like confusing formal and informal credit or misunderstanding the idea of collateral. It also prepares you for tricky questions that test the deeper meaning of economic terms. More importantly, MCQs cover diverse angles—from daily use of money to government-issued currency to the role of the RBI—ensuring your revision is well-rounded and exam-ready. Over time, this builds both confidence and speed.

How do Class 10 Economics Chapter 3 MCQ help in understanding real-life financial decisions?

Class 10 Economics Chapter 3 MCQ are not just useful for exams—they help you relate school learning to real-life situations. For example, when you answer a question about why formal credit is safer than informal loans, you understand the importance of borrowing from banks instead of moneylenders. Similarly, knowing what collateral is can help you or your family make better choices when applying for a loan. These MCQs bring real-life economic challenges—like debt traps, rising interest rates and access to credit—into simple questions. This makes the learning practical, showing how classroom knowledge connects to everyday money matters.