Short Questions
1. What is financial infrastructure?
Answer: Financial infrastructure is a network of banks, payment systems, stock markets and financial institutions that help manage money and financial transactions.
2. What is a bank?
Answer: A bank is a financial institution that accepts deposits and gives loans.
3. What is a savings account?
Answer: A savings account is an account where individuals deposit money and earn interest on it.
4. What is a fixed deposit account?
Answer: A fixed deposit account is a one-time deposit kept for a fixed period that earns higher interest.
5. What is interest?
Answer: Interest is the extra money paid for borrowing or earned for saving money.
6. What is compounding?
Answer: Compounding is earning interest on the original amount as well as on previous interest.
7. What is a loan?
Answer: A loan is an amount of money borrowed from a bank that must be repaid with interest.
8. What is UPI?
Answer: UPI is a digital payment system that allows instant money transfer using mobile phones.
9. What is a share?
Answer: A share is a unit of ownership in a company.
10. What is a stock exchange?
Answer: A stock exchange is a marketplace where shares of companies are bought and sold.
Long Questions
1. What are the main functions of banks?
Answer: Banks accept deposits from people and keep their money safe. They give loans to individuals and businesses for various purposes. Banks also provide interest on savings and charge interest on loans to earn income.
2. How does compounding help money grow?
Answer: Compounding helps money grow because interest is earned on both the original amount and previous interest. Over time, this increases the total amount significantly. It shows how small savings can grow into large sums.
3. How does UPI make digital payments easy?
Answer: UPI allows instant transfer of money using a mobile phone. It works through QR codes or phone numbers and requires a UPI PIN for security. It reduces the need for cash and makes payments quick and convenient.
4. What role does the Reserve Bank of India play?
Answer: The Reserve Bank of India supervises and regulates the banking system in India. It prints and distributes currency and fixes benchmark interest rates. It is also called the banker of banks.
5. How does the stock market help companies and investors?
Answer: The stock market allows companies to raise money by issuing shares. People who buy shares become part-owners of the company. Investors can earn profits if the share prices increase.
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