Question Paper
Class / Subject: Class 7 (CBSE) · Social Science
Chapter: Chapter 20 — Chapter 20: Banks and the Magic of Finance
Time Allowed: 32 minutes
Max Marks: 16
1. What do banks accept from people? [1]
(A) Deposits
(B) Only loans
(C) Nothing
(D) Only complaints
2. What do banks pay on deposits? [1]
(A) Interest
(B) Nothing
(C) Only fees
(D) Penalties
3. What do banks provide to those needing money? [1]
(A) Loans
(B) Only deposits
(C) Nothing
(D) Only advice
4. What do banks charge on loans? [1]
(A) Interest
(B) Nothing
(C) Only deposits
(D) Only fees for saving
5. What can loans help people do? [1]
(A) Buy a home or start a business
(B) Nothing useful
(C) Only save money
(D) Avoid spending
6. What do banks facilitate? [1]
(A) Transactions like transfers and bill payments
(B) Nothing
(C) Only loans
(D) Only deposits
7. What do banks connect? [1]
(A) Savers and borrowers
(B) Nothing
(C) Only rich people
(D) Only businesses
8. Why are banks important for the economy? [1]
(A) They help money flow efficiently, supporting growth
(B) No reason
(C) They have no role
(D) Only for storing cash
9. What is credit creation? [1]
(A) The process where banks create money through lending
(B) Printing new currency notes
(C) Only accepting deposits
(D) Only closing bank accounts
10. What does a bank do with most of a deposit? [1]
(A) Lends it out to borrowers
(B) Keeps it all as reserve
(C) Destroys it
(D) Gives it away
11. What happens to loaned money? [1]
(A) It often gets re-deposited elsewhere
(B) It disappears
(C) It becomes worthless
(D) Nothing happens to it
12. What is the money multiplier effect? [1]
(A) The expansion of total money through repeated lending
(B) A type of tax
(C) A type of loan penalty
(D) A banking mistake
13. Who regulates this money creation process in India? [1]
(A) The Reserve Bank of India
(B) Only individual banks
(C) No one regulates it
(D) Only the government's tax department
14. Why is this process regulated? [1]
(A) To ensure banks maintain enough reserves and stability
(B) No reason
(C) To confuse the economy
(D) To reduce all lending
15. What must banks keep as reserve? [1]
(A) A small portion of deposits
(B) All of the deposits
(C) None of the deposits
(D) Only loans
16. Why is this concept important to understand? [1]
(A) It shows how banks influence the money supply
(B) No reason
(C) Only for economists
(D) It's not useful