What Do You Know About Microfinance?

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What Do You Know About Microfinance? - Quiz

Microfinance is the provision of small loans for the poor firms or organizations which are having problems with bank operations. This is a broad category of service that is meant for the provision of credit services to poor customers. A lot of studies have made possible effort in assessing its impact.

Questions and Answers

1.

Which area is the microfinance system mostly practiced?
- A.
  
  Under-populated
- B.
  
  Over-populated
- C.
  
  Rural
- D.
  
  Urban
Correct Answer
C. Rural

Explanation
The microfinance system is mostly practiced in rural areas. This is because rural areas often have limited access to traditional financial services, such as banks, making it difficult for people to access credit and other financial services. Microfinance institutions provide small loans and other financial services to individuals and small businesses in rural areas, helping to promote economic development and alleviate poverty in these communities.

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2.

Which of these is about provision of credit services to poor clients?
- A.
  
  Macrocredit
- B.
  
  Microcredit
- C.
  
  Minecraft
- D.
  
  Modecraft
Correct Answer
B. Microcredit

Explanation
Microcredit refers to the provision of small loans and financial services to poor individuals who typically lack access to traditional banking services. These loans are often given without collateral and aim to empower individuals to start or expand their own small businesses, ultimately helping them escape poverty. Microcredit programs have been successful in promoting entrepreneurship and economic development in many developing countries.

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3.

Which of these is done before the revolution of microfinance?
- A.
  
  Trading
- B.
  
  Trade by barter
- C.
  
  Labor
- D.
  
  Work
Correct Answer
B. Trade by barter

Explanation
Trade by barter is the correct answer because it refers to a system of exchanging goods and services without the use of money. This practice predates the concept of microfinance, which is a modern approach to providing financial services to low-income individuals. Before the revolution of microfinance, people relied on trade by barter as a means of obtaining the goods and services they needed. This involved exchanging one type of good or service for another, based on mutual agreement and need.

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4.

What is the main aim of microfinance?
- A.
  
  Economic Stability
- B.
  
  Economic Development
- C.
  
  Poverty Reduction
- D.
  
  Economic Growth
Correct Answer
C. Poverty Reduction

Explanation
The main aim of microfinance is poverty reduction. Microfinance provides financial services, such as small loans and savings accounts, to low-income individuals who do not have access to traditional banking services. By providing these financial resources, microfinance aims to empower individuals and communities to lift themselves out of poverty, start their own businesses, and improve their economic conditions. This helps to reduce poverty by providing opportunities for income generation and economic self-sufficiency.

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5.

What is the process of allowing citizens from lower socio-economical classes to participate in the economy?
- A.
  
  Income Inequality
- B.
  
  Income Equality
- C.
  
  Economic Equality
- D.
  
  Economic Inequality
Correct Answer
B. Income Equality

Explanation
Income equality refers to the process of allowing citizens from lower socio-economic classes to participate in the economy. It means ensuring that everyone has equal access to income and resources, regardless of their social or economic background. This can be achieved through policies and measures that promote fair distribution of wealth, equal opportunities for education and employment, and social welfare programs. By reducing income disparities and providing equal economic opportunities, income equality aims to create a more inclusive and equitable society.

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6.

Which of these is awarded by microfinance?
- A.
  
  Car loan
- B.
  
  House loan
- C.
  
  Business loan
- D.
  
  Travel loan
Correct Answer
C. Business loan

Explanation
Microfinance institutions provide small loans to individuals who do not have access to traditional banking services. These loans are typically used to start or expand small businesses, hence the term "business loan". Microfinance aims to empower individuals and promote economic growth by providing financial services to those who are financially excluded. Car loans, house loans, and travel loans are not typically associated with microfinance, as they are more commonly provided by traditional banks or lending institutions.

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7.

Which of these does not favor microfinance growth?
- A.
  
  Change in social welfare policies
- B.
  
  Encouragement of Employment
- C.
  
  Increase in proportion of immigrants
- D.
  
  Theft
Correct Answer
D. Theft

Explanation
Theft does not favor microfinance growth because it results in financial losses for both the microfinance institutions and the borrowers. When theft occurs, it reduces the available funds for lending, making it difficult for microfinance institutions to provide loans to individuals in need. Additionally, theft undermines trust and confidence in the microfinance sector, discouraging potential borrowers from seeking financial assistance. Therefore, theft hinders the growth and sustainability of microfinance initiatives.

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8.

Which of these help in supporting microfinance?
- A.
  
  Robbery
- B.
  
  Subsidies donor
- C.
  
  Theft
- D.
  
  Cyber fraud
Correct Answer
B. Subsidies donor

Explanation
Subsidies donors provide financial support to microfinance institutions, which in turn help them provide small loans and other financial services to low-income individuals or small businesses. This support helps in promoting financial inclusion, poverty reduction, and economic development in underserved communities.

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9.

Which of these means building permanent local institution?
- A.
  
  Economy
- B.
  
  Microfinance
- C.
  
  Development
- D.
  
  Finance
Correct Answer
B. Microfinance

Explanation
Microfinance refers to the provision of financial services, such as loans, savings, and insurance, to low-income individuals or communities who lack access to traditional banking services. By providing these financial services, microfinance aims to empower individuals and communities, enabling them to build permanent local institutions and improve their economic situation. Therefore, microfinance is the correct answer as it directly relates to building permanent local institutions through financial inclusion and support.

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10.

Which category of people is not microfinance set up for?
- A.
  
  Government
- B.
  
  Poor
- C.
  
  Low-income earners
- D.
  
  Self-employed
Correct Answer
A. Government

Explanation
Microfinance is a financial service that aims to provide access to small loans and other financial services to individuals who are unable to access traditional banking services. It is primarily targeted towards the poor, low-income earners, and self-employed individuals who lack collateral or credit history. Government entities, on the other hand, typically have access to other financial resources and are not the intended beneficiaries of microfinance programs. Therefore, microfinance is not set up for the government.

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