Hot and Important Exercise Question Answer -Chapter 8-Banks and the Magic of Finance-Class 7-Subject Social Science
The Big Questions?
1. What is financial infrastructure, and what does it comprise?
Answer:
Financial infrastructure helps in the smooth flow of money in the economy.
It includes banks, post offices, ATMs, digital payment systems and stock markets.
It also includes institutions like the Reserve Bank of India (RBI).
These systems help people save, borrow and transfer money safely.
Financial infrastructure supports trade and daily economic activities.
2. What are the main functions performed by banks and how do they impact people’s lives?
Answer:
Banks accept deposits and keep money safe.
They give loans to people, farmers and businesses.
Banks provide payment services like ATM, UPI and cheques.
They help people save money and earn interest.
Banks make daily life easier, safer and more organised.
3. How does financial infrastructure contribute to a nation’s progress?
Answer:
It helps in mobilising savings for investment.
It supports businesses, industries and agriculture.
It promotes digital and cashless transactions.
It creates employment opportunities.
Strong financial infrastructure leads to economic growth and development.
Questions and activities:
1. What is financial infrastructure? How does it complement physical infrastructure?
Answer:
Financial infrastructure is the system that helps in the flow of money.
It includes banks, ATMs, UPI, post offices, stock markets, and RBI.
Physical infrastructure helps move goods and people.
Financial infrastructure helps move money and payments.
Both together support economic development.
2. How does having a bank account help people? Should everyone be required to have a bank account?
Answer:
A bank account keeps money safe and secure.
It helps people save money and earn interest.
It allows easy payments through ATM, UPI, and cheques.
Government benefits are sent directly to bank accounts.
Yes, everyone should have a bank account for financial inclusion.
3. What could be the possible advantages and disadvantages of
compound interest for savers and borrowers?
Answer:
Advantages
Savers earn interest on interest.
Money grows faster over time.
Disadvantages
Borrowers have to pay more money.
Long-term loans become costly.
4. How does financial infrastructure enable the flow of money between households and businesses? Can you think of how the government can facilitate this flow?
Answer:
Households save money in banks.
Banks lend this money to businesses and industries.
Businesses produce goods and pay wages.
Government supports this through digital payments, RBI rules, and banking schemes.
This keeps the economy moving smoothly.
5. What could be the reason for the higher interest rate earned on fixed deposits as compared to a savings account?
Answer:
Money in fixed deposits is locked for a fixed time.
Banks can use this money for long-term loans.
Savings accounts allow frequent withdrawals.
Hence, fixed deposits give higher interest.
6. Sahil received ₹10,000 as a prize in a poster-making competition. His father promises to pay him 12 per cent interest per year if he does not spend the amount. After 3 years, how much money would Sahil have?
Answer:
(Compound Interest)
Given:
Principal = ₹10,000
Rate = 12% per year
Time = 3 years
Calculation:
Year 1: 10,000 + 12% = ₹11,200
Year 2: 11,200 + 12% = ₹12,544
Year 3: 12,544 + 12% = ₹14,049 (approx.)
Answer: Sahil will have about ₹14,049 after 3 years.
7. How does the stock market help mobilise the savings of individuals? In what ways do companies benefit by issuing shares to people?
Answer:
People invest savings by buying shares.
Companies get money for expansion and growth.
Investors may earn dividends and profits.
Companies do not need to repay shares like loans.
This helps both people and businesses.
8. How can we balance the convenience of digital payments with the risk of cyber fraud?
Answer:
Use strong passwords and PINs.
Never share OTP or bank details.
Use trusted apps only.
Report fraud immediately on 1930 or cybercrime.gov.in.
Awareness helps enjoy convenience safely.
9. Ask your family members or neighbours about—
Æ how they save money?
Answer:
Most family members save money in bank savings accounts.
Some also invest in fixed deposits and post office savings schemes.
Saving in banks is preferred because it is safe and earns interest
Æ whether they use UPI, ATM or cheques, the kinds of transactions they perform through UPI; do they find UPI better than using cash or not, and why.
Answer:
Family members commonly use UPI and ATM cards.
UPI is mainly used for paying bills, shopping, and sending money.
Cheques are used for school fees and utility payments.
Most people find UPI better than cash because it is fast, easy, and does not require carrying money.
Æ if they or their acquaintance have experienced digital fraud, for instance, through a fake call or message asking for bank details. What did they do when they realised it was a scam, and what did they learn from that experience?
Answer:
One neighbour received a fake call asking for OTP and bank details.
They realised it was a scam and ended the call immediately.
They informed the bank and did not share any information.
They learned never to share OTPs or personal details and to report fraud quickly.
Summarise your findings in a table or short report. Share one surprising insight with your class.
Survey Report (Sample Answer)
Summary Table
| Aspect | Observation |
|---|---|
| Savings method | Bank accounts, fixed deposits |
| Payment modes | UPI, ATM, cheques |
| UPI use | Bill payments, shopping |
| Digital fraud | Fake calls asking for OTP |
| Action taken | Call ended, bank informed |
Surprising insight:
Many people find UPI faster and safer than cash, but only when used carefully.
10. Create a Financial Safety Poster.
Æ Design a poster with dos and don’ts of digital banking safety (for example, not sharing OTPs, reporting frauds).
Answer:
DOs
Keep PINs and passwords secret
Use official apps only
Check messages before clicking
DON’Ts
Do not share OTP
Do not trust unknown calls
Æ Include emergency numbers or websites like https:// cybercrime.gov.in or 1930 helpline.
Answer: 📞 Helpline: 1930
Æ Hang the posters in school corridors or the library.
Answer:
🌐 Website: cybercrime.gov.in
11. Cheques are often used to pay utility bills. Ask your parents to allow you to fill out the cheques for a few monthly payments.
Answer:
Activity: Filling a Cheque (Learning Task)
Write the date clearly.
Write the payee’s name correctly.
Write the amount in numbers and words.
Sign neatly in the signature box.
Cross the cheque for safety.
To Learn more Click Below:
NCERT Solutions:
Chapter 1-The Story of Indian Farming – CLICK HERE
Chapter 2 – India and Her Neighbours – CLICK HERE
Chapter 3 – Empire and Kingdoms: 6th to 10th Centuries – CLICK HERE
Chapter 4 -Turning tides: 11th and 12th Centuries – CLICK HERE
Chapter 5 – India: A Home to Many- CLICK HERE
Chapter 6 – The State, the government and You- CLICK HERE
Chapter 7 – Infrastructure: Engine of India’s Development – CLICK HERE
Chapter 8 – Banks and the Magic of Finance- CLICK HERE
MCQs:
Chapter 1-The Story of Indian Farming – CLICK HERE
Chapter 2 – India and Her Neighbours – CLICK HERE
Chapter 3 – Empire and Kingdoms: 6th to 10th Centuries – CLICK HERE
Chapter 4 -Turning tides: 11th and 12th Centuries – CLICK HERE
Chapter 5 – India: A Home to Many- CLICK HERE
Chapter 6 – The State, the government and You- CLICK HERE
Chapter 7 – Infrastructure: Engine of India’s Development – CLICK HERE
Chapter 8 – Banks and the Magic of Finance- CLICK HERE
Source Based Questions:
The Story of Indian Farming – CLICK HERE