Students revise important topics using Class 7 Social Science Extra Questions and Class 7 SST Part 2 Chapter 8 Banks and the Magic of Finance Extra Questions before exams.
Banks and the Magic of Finance Class 7 Extra Question Answer
Extra Questions of Banks and the Magic of Finance Class 7 SST Chapter 8
Banks and the Magic of Finance Class 7 Very Short Question Answer
Question 1.
What is a bank?
Answer:
A bank is a financial institution that accepts deposits and gives loans. It helps people manage money safely.
Question 2.
What is interest?
Answer:
Interest is extra money earned or paid on the principal amount. It is expressed as a percentage.
Question 3.
Define compounding.
Answer:
Compounding means earning interest on previously earned interest. It helps money grow faster.
Question 4.
What is UPI?
Answer:
UPI is a digital payment system that enables instant money transfers. It works using mobile phones.
Question 5.
What is a cheque?
Answer:
A cheque is a paper form used to pay someone from your bank account. It transfers money after processing.
Question 6.
Who is a depositor?
Answer:
A depositor is a person who keeps money in the bank. They earn interest on deposits.
Question 7.
What is the role of RBI?
Answer:
RBI regulates the banking system of India. It prints currency and sets interest rates.
Question 8.
What is a debit card?
Answer:
A debit card withdraws money directly from the bank account. It is used at ATMs and POS machines.
Question 9.
What is a share?
Answer:
A share is a unit of ownership in a company. Buying shares makes a person part-owner.
Question 10.
What is cyber fraud?
Answer:
Cyber fraud is when someone steals information to access money digitally. It often happens through fake calls or messages.
Banks and the Magic of Finance Class 7 Short Question Answer
Question 1.
Why do people save in banks?
Answer:
People save in banks to keep money safe. Banks pay interest, which helps savings grow. They also provide withdrawal facilities whenever needed. Saving in banks is safer than keeping cash at home.
Question 2.
Explain types of bank accounts.
Answer:
Savings accounts are for regular saving and give interest. Current accounts are used by businesses for frequent transactions. Fixed deposits lock money for a fixed time with higher interest. Each account has a specific purpose.
Question 3.
How do banks earn money?
Answer:
Banks pay low interest to depositors. They charge higher interest from borrowers. The difference is their income. This allows banks to function and provide services.
Question 4.
What is the role of UPI?
Answer:
UPI enables fast digital payments using a QR code or phone number. It transfers money instantly between bank accounts. It reduced dependence on cash. Today it is used widely across India.
Question 5.
Explain the function of RBI.
Answer:
RBI prints currency for India. It controls interest rates in banks. It supervises banking operations. RBI ensures the stability of the financial system.
Question 6.
What are financial institutions?
Answer:
Financial institutions include banks, post offices, and NABARD. They help people save and borrow money. They fund many sectors like agriculture and industries. They support economic growth.
Question 7.
What is the stock market?
Answer:
The stock market allows buying and selling of shares. Share prices rise and fall due to many factors. Investors earn profits if share prices rise. Companies raise funds by selling shares.
Question 8.
How can we stay safe from digital fraud?
Answer:
Never share OTPs or passwords. Avoid clicking unknown links. Do not install suspicious apps. Report frauds to 1930 immediately.
Question 9.
How do ATMs help people?
Answer:
ATMs allow cash withdrawal anytime. They eliminate the need to visit the bank. People use debit cards and PINs. ATMs act like mini-banks.
Question 10.
Why is compounding powerful?
Answer:
Compounding earns interest on previously earned interest. Moncy grows faster over time. Even small amounts become big in the long term. It encourages long-term saving.
Banks and the Magic of Finance Class 7 Long Question Answer
Question 1.
Explain how banks help people in their daily lives.
Answer:
Banks allow people to save money safely. They provide interest which helps savings grow. People can withdraw money when needed through ATMs or cheques. Banks also provide loans for houses, education, and business. They help facilitate payments and financial transactions. Thus, banks support both personal and economic growth.
Question 2.
Describe the process and advantages of UPI.
Answer:
UPI allows instant payments using mobile phones. A person scans a QR code or enters a phone number. The request is verified and processed within seconds. UPI eliminates the need for cash or cheques. It became extremely useful during Covid-19 for contactless payments. Many countrics now use India’s UPI.
Question 3.
Explain compounding with an example.
Answer:
Compounding means earning interest on previously earned interest. A ₹ 1000 deposit at 6% becomes ₹ 1060 in one year. Next year, interest is earned on ₹ 1060, not just ₹ 1000 . Over time, money grows faster. This is why saving early is beneficial. The king-and-sage story shows compounding’s power.
Question 4.
What is the role of RBI in India’s banking system?
Answer:
RBI is India’s central bank. It prints currency and controls money supply. It regulates banks and ensures safety in financial transactions. It sets benchmark interest rates for banks. RBI also provides loans to banks and the government. It acts like the guardian of India’s financial system.
Question 5.
Explain how digital payments changed India.
Answer:
Earlier people relied mainly on cash. UPI, debit cards, and internet banking made payments faster. It reduced long queues in banks. It brought transparency in money transfers. Digital payments helped direct benefit transfers to citizens. Today India leads the world in digital payments.
Question 6.
How do stock markets function and why are they important?
Answer:
Stock markets allow buying and selling of shares. People become part-owners of companies by purchasing shares. Share prices fluctuate based on performance and economic factors. Companies raise money’ by issuing shares. This supports buisiness growth and expansion. Stock markets mobilize public savings effectively.
Question 7.
Explain advantages of having a bank account.
Answer:
A bank account keeps money safe. It helps receive salaries and scholarships directly. It allows digital and cashless payments. People can save and carn interest. Bank accounts are essential for loans and financial identity. They promote financial inclusion for all.
Question 8.
Describe risks of digital fraud and prevention steps.
Answer:
Fraudsters use fake calls, links, or apps to steal information. They may ask for OTPs or PINs. Once they access a device, they can steal money. To prevent fraud, never share personal details. Avoid unknown links and update passwords regularly. Always report fraud to helpline 1930.
Question 9.
Explain different types of bank accounts.
Answer:
Savings accounts are for individuals who deposit regularly and earn interest. Current accounts support frequent business transactions. Fixed deposits lock money and offer high interest. Each account serves a unique need. People choose based on their financial habits. These accounts help organize financial activity.
Question 10.
How does the financial infrastructure support the economy?
Answer:
Banks, payment systems, and stock markets form financial infrastructure. They help money flow smoothly through society. People can save, borrow, invest, and spend easily. Businesses get loans to operate and grow. Government transfers money directly through accounts. A strong financial system helps national development.
Banks and the Magic of Finance Class 7 Source Based Questions
Question 1.
Banks accept money from people in the form of deposits and keep it safe. They lend this money to individuals and businesses as loans. Banks pay interest on deposits to encourage saving. At the same time, they charge interest on loans. This system helps money flow in the economy.
(i) What do banks pay on deposits to encourage saving?
Answer:
Banks pay interest on deposits.
(ii) To whom do banks lend money?
Answer:
Banks lend money to individuals and businesses.
(iii) Explain how banks help the flow of money in the economy.
Answer:
Banks collect savings from people as deposits and lend this money as loans to borrowers. This supports business activities, spending, and overall economic growth.
Question 2.
Unified Payments Interface (UPI) is a digital payment system developed in India. It allows instant transfer of money between bank accounts. Payments can be made using a QR code or mobile number. UPI is fast, secure, and easy to use. It reduces the need for cash and cheques.
(i) Name the digital payment system mentioned in the source.
Answer:
Unified Payments Interface (UPI).
(ii) Mention one way through which payments can be made using UPI.
Answer:
Payments can be made using a QR code or a mobile number.
(iii) State any two advantages of using UPI.
Answer:
- It allows instant transfer of money between bank accounts.
- It reduces the need for cash and cheques, making payments convenient.
Question 3.
The Reserve Bank of India (RBI) is the central bank of India. It supervises and regulates all commercial banks in the country. RBI has the sole authority to issue Indian currency notes. It fixes benchmark interest rates for banks. RBI also acts as the banker to banks and the government.
(i) Name the central bank of India mentioned in the source.
Answer:
The central bank of India is the Reserve Bank of India (RBI).
(ii) Mention one function of the RBI stated in the source.
Answer:
RBI issues Indian currency notes / supervises banks / fixes benchmark interest rates.
(iii) Explain why RBI is called the banker to banks.
Answer:
RBI maintains accounts of other banks and provides them loans when needed. It also helps in transferring funds between banks and ensures the smooth functioning of the banking system.
Banks and the Magic of Finance Class 7 Picture Based Questions
Question 1.
(i) Identify the institution shown in the picture.
Answer:
The picture shows the Reserve Bank of India (RBI).
(ii) What is meant by the benchmark interest rate?
Answer:
The benchmark interest rate is the base interest rate fixed by the RBI for lending money to commercial banks.
(iii) Explain why this institution is compared to Kubera, the God of Wealth.
Answer:
RBI is compared to Kubera because it protects and manages the country’s money. It has the sole authority to issue currency and acts as the banker to all banks, similar to how Kubera guards wealth.
Question 2.
(i) What is shown in the picture above?
Answer:
The picture shows copper plates with inscriptions from the Pandya Kingdom.
(ii) Who were the main borrowers from temples in ancient India?
Answer:
Artisans, traders, and local rulers were the main borrowers.
(iii) What do the copper plate inscriptions tell us about banking in ancient India?
Answer:
The copper plate inscriptions show that temples lent money and charged interest. They prove that organised lending and record-keeping existed in India long before modern banks.
Class 7 Banks and the Magic of Finance Extra Questions for Practice
Multiple Choice Questions
Question 1.
A share represents a small unit of ………… in a company,
(a) sale
(b) expense
(c) ownership
(d) loss
Question 2.
An ATM allows people to withdraw cash using a ………… card.
(a) Identity
(b) Debit
(c) Ration
(d) Punch
Question 3.
Digital frauds often involve asking for personal details such as ………….
(a) OTP
(b) PIN
(c) Bank password
(d) All of these
Question 4.
Assertion (A): The Reserve Bank of India regulates all banks in the country.
Reason (R): RBI is the central bank of India.
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A).
(c) (A) is true but (R) is false.(d) (A) is false but (R) is true.
Very Short Answer Type Questions
Question 1.
What is a loan and why do people take loans?
Question 2.
What is the role of the Reserve Bank of India (RBI)?
Question 3.
What are shares?
Question 4.
Why do share prices rise and fall?
Question 5.
How does an ATM help bank customers?
Short Answer Type Questions
Question 1.
Explain the concept of compounding with an example.
Question 2.
Describe how UPI has changed digital payments in India.
Question 3.
How does the Jan Dhan Yojana help people?
Question 4.
Explain the role of NABARD in rural development.
Question 5.
What is a stock market and how does it function?
Long Answer Type Questions
Question 1.
How do financial records like passbooks and transaction statements help individuals?
Question 2.
Describe the major functions of post offices and why they are important in rural areas.
Question 3.
Explain the different types of digital frauds and steps to stay safe from them.
Question 4.
Explain how UPI and digital payments have transformed the way people transfer money.
Question 5.
Discuss the importance of financial infrastructure in our country.