NCERT Class 7 Social Science Part 2 Chapter 8 MCQs, Banks and the Magic of Finance, introduces the institutions and systems that help money move through the economy. These MCQs cover bank accounts, deposits, loans, interest, compounding, payment methods and shares. Practise reading simple transactions and calculating totals when the question supplies a rate and time period. The explanations also clarify the roles of the RBI and other institutions, along with precautions against digital fraud. Attempt the questions before checking the answers. Use each explanation to understand the concept and the stated assumptions, especially when comparing savings, borrowing and forms of business finance.
Class 7 SST Part 2 Chapter 8 MCQs Set-wise Answers
Class 7 Social Science Part 2 Chapter 8 MCQs Set 1
Q1. What does financial infrastructure include?
[A]. Only schools and playgrounds
[B]. Only roads and bridges
[C]. Banks, payment systems and other financial institutions
[D]. Only rivers and mountains
Q2. How do banks connect people with surplus money and people who need funds?
[A]. They require every saver to find a borrower personally
[B]. They accept deposits and provide loans
[C]. They prevent businesses from making payments
[D]. They use deposits only to print textbooks
Q3. Which type of account is described as suitable for individuals who save regularly?
[A]. A company’s share certificate
[B]. A savings account
[C]. A stock exchange trading floor
[D]. A current account designed for frequent business transactions
Q4. Which account is described as useful for businesses making frequent payments?
[A]. A company share certificate
[B]. A fixed deposit kept untouched for several years
[C]. A household’s cash envelope
[D]. A current account
Q5. What is a fixed deposit in the chapter’s explanation?
[A]. Money deposited for an agreed fixed period
[B]. Money that must be withdrawn every morning
[C]. A share that guarantees ownership of an entire company
[D]. A payment made only through a QR code
Class 7 Social Science Part 2 Chapter 8 MCQs Set 2
Q6. In the chapter’s example, what is one year’s interest on ₹1,000 at 6% per year?
[A]. ₹6
[B]. ₹60
[C]. ₹1,060
[D]. ₹600
Q7. What does compounding mean?
[A]. Earning interest on an amount that includes earlier interest
[B]. Earning interest only on cash spent immediately
[C]. Dividing all deposits equally among four people
[D]. Removing every interest payment from an account
Q8. What is the main purpose of a bank passbook?
[A]. Listing every shareholder of every company
[B]. Replacing the need to record payments
[C]. Displaying only a bank’s building design
[D]. Recording deposits, withdrawals and account transactions
Q9. In the account explanation in this chapter, what does a credit entry indicate?
[A]. Money received into the account
[B]. Money taken out of the account
[C]. A cheque book running out of pages
[D]. A bank branch changing its address
Q10. What obligation accompanies taking a bank loan?
[A]. Becoming the owner of the bank automatically
[B]. Keeping the amount without any repayment duty
[C]. Receiving interest from the bank for borrowing
[D]. Repaying the borrowed amount with the agreed interest
Class 7 Social Science Part 2 Chapter 8 MCQs Set 3
Q11. In the chapter’s simplified ₹200 example, why does the bank receive ₹6 more in interest than it pays?
[A]. It receives ₹4 and pays ₹10
[B]. It pays the original deposit twice
[C]. It charges no interest to the borrower
[D]. It receives ₹10 in loan interest and pays ₹4 in deposit interest
Q12. What is the full name of NABARD?
[A]. National Bank for Agriculture and Rural Development
[B]. National Bank for Art and Regional Defence
[C]. National Board for Airports and Railway Design
[D]. National Bureau for Accounts and Revenue Distribution
Q13. Which institution is India’s central bank?
[A]. A local cooperative shop
[B]. The Bombay Stock Exchange
[C]. An individual company’s sales office
[D]. The Reserve Bank of India
Q14. What does ATM stand for?
[A]. Account Transfer Ministry
[B]. Agricultural Trade Market
[C]. Automated Teller Machine
[D]. Automatic Tax Manual
Q15. What is a cheque used for?
[A]. Showing ownership of a railway station
[B]. Recording the height of a building
[C]. Instructing a bank to make a payment from an account
[D]. Replacing every form of personal identification
Class 7 Social Science Part 2 Chapter 8 MCQs Set 4
Q16. What happens when a customer pays using a debit card at a shop?
[A]. The payment never appears in any transaction record
[B]. Money is deducted from the customer’s linked bank account
[C]. The customer becomes a shareholder in the shop
[D]. The shop automatically gives the customer a bank loan
Q17. Which organisation launched UPI in 2016, according to the chapter?
[A]. The National Payments Corporation of India
[B]. The Bombay Stock Exchange
[C]. The Industrial Finance Corporation of India
[D]. The National Bank for Agriculture and Rural Development
Q18. What does owning a share in a company represent?
[A]. Ownership of every business in the same town
[B]. A promise that the share price can never fall
[C]. Part-ownership of the company
[D]. A guaranteed loan repayment from the government
Q19. Where are shares bought and sold?
[A]. A local weather station
[B]. A railway control room
[C]. A municipal water tank
[D]. A stock exchange
Q20. What does OTP stand for?
[A]. Open Transfer Permit
[B]. One-Time Password
[C]. Ordinary Trade Price
[D]. Online Tax Plan
Class 7 Social Science Part 2 Chapter 8 MCQs Set 5
Q21. A fictional deposit of ₹1,000 earns 6% yearly, with interest added annually and no withdrawals. What is its value after two years?
[A]. ₹1,060
[B]. ₹1,123.60
[C]. ₹1,600
[D]. ₹1,120
Q22. Sahil keeps ₹10,000 for three years at 12% interest compounded annually. What total does he receive?
[A]. ₹13,600
[B]. ₹11,200
[C]. ₹12,544
[D]. ₹14,049.28
Q23. A passbook starts with ₹2,000, then records a ₹500 credit and a ₹300 debit. What is the new balance?
[A]. ₹2,200
[B]. ₹1,800
[C]. ₹2,800
[D]. ₹1,200
Q24. Rima buys tools for her bamboo business using a bank loan. What should she include in her financial planning?
[A]. Repayment of both the borrowed amount and agreed interest
[B]. The assumption that business loans are always gifts
[C]. Only the number of customers who admire the tools
[D]. A plan to ignore every repayment date
Q25. A caller claims to be a bank employee and asks for an OTP. Which response follows the chapter’s safety advice?
[A]. Send it together with the account password
[B]. Post it publicly to ask whether it is genuine
[C]. Do not share the OTP with the caller
[D]. Share it because the caller sounds confident
Class 7 Social Science Part 2 Chapter 8 MCQs Set 6
Q26. Why should someone avoid an unfamiliar link claiming to fix a bank account problem?
[A]. Unfamiliar links cannot affect a device
[B]. Clicking a link always increases the account balance
[C]. It may lead to harmful software or an attempt to steal information
[D]. Every message link is an official bank instruction
Q27. A company issues new shares to raise funds. How is this different from taking a loan?
[A]. A loan automatically gives every lender ownership of the whole company
[B]. Share buyers gain ownership, while a loan creates a repayment obligation
[C]. Every share must be repaid like a fixed loan on the same date
[D]. Both methods always guarantee the same return to everyone
Q28. A student says every share purchase guarantees a profit. Which chapter idea corrects this?
[A]. Share prices can rise or fall, producing gains or losses
[B]. Stock exchanges keep all prices permanently unchanged
[C]. Every company earns the same profit each year
[D]. A share is identical to cash stored at home
Q29. How can direct payment of a scholarship into a student’s bank account help?
[A]. It removes the need to identify the intended recipient
[B]. It turns the scholarship into a company share
[C]. It guarantees admission to every college
[D]. It can reduce dependence on intermediaries in transferring funds
Q30. Why do banks keep some funds available instead of lending all deposits?
[A]. Borrowers never need money from banks
[B]. Every deposited rupee must remain permanently unused
[C]. They need reserves to meet withdrawals and other obligations
[D]. Depositors are never allowed to request their money
Banks and Finance: Nine Concepts for Clear Revision
- Identify banks and payment systems as parts of financial infrastructure.
- Explain how deposits and loans connect savers with borrowers.
- Distinguish savings accounts, current accounts and fixed deposits.
- Calculate interest using the rate and period stated in a question.
- Explain compounding as interest calculated on a growing accumulated amount.
- Read credits and debits as money entering and leaving an account.
- Recognise the RBI’s central banking role and NABARD’s rural focus.
- Compare cash, cheques, debit cards and digital payment methods.
- Distinguish company ownership through shares from borrowing through loans.
Banking Practice: Details That Affect the Answer
- An interest amount is different from the final account balance.
- Annual compounding includes earlier interest in the next year’s calculation.
- A loan creates a repayment obligation under agreed terms.
- Share prices can fall as well as rise.
- Unexpected requests for passwords or OTPs may be attempts at fraud.
Work Through Finance Questions One Step at a Time
For Banks and the Magic of Finance MCQs, identify the starting amount, rate, period and any deposit or withdrawal before calculating. If interest compounds, update the balance at each stated interval. For non-numerical questions, ask whether the example concerns saving, payment, borrowing or ownership. These distinctions make the chapter’s financial vocabulary easier to use without assuming that every product works in the same way.
Finish Part 2 Chapter 8 with NCERT Finance Solutions
Refer to NCERT Solutions for Class 7 Social Science Chapter 8 (Part 2: Banks and the Magic of Finance) to practise the textbook’s numerical examples and explanations of banking and payments.
Recheck any calculation by separating the original amount from interest earned or charged. For digital-safety questions, identify which information must remain confidential. This combines careful arithmetic with the responsible use of financial services described in the lesson.
