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Social Science (087) — AI-generated practice question

AI-generated practice question — model-generated for extra practice, not a previous-year CBSE board question.

Q1. [1] medium exam-ready
Assertion (A): Informal sector lenders often charge much higher interest rates than formal sector lenders. Reason (R): The Reserve Bank of India supervises and regulates the loan activities of informal lenders.
  1. A Both A and R are true, and R is the correct explanation of A.
  2. B Both A and R are true, but R is NOT the correct explanation of A.
  3. C A is true but R is false.
  4. D A is false but R is true.
Generated by claude-sonnet-4-6 · 2026-06-26 13:22 · grounding rag
Model Answer

Answer: C

Assertion (A) is true — informal lenders charge much higher interest rates than formal lenders. Reason (R) is false — the RBI supervises only formal sector lenders (banks, cooperatives); there is no organisation that supervises informal lenders.

Explanation

The passage clearly states: "The Reserve Bank of India supervises the functioning of formal sources of loans" and "There is no organisation which supervises the credit activities of lenders in the informal sector." So R incorrectly claims RBI regulates informal lenders — making R false. Since R is false, the answer is C.

Previous-year CBSE Grade 10 board exam questions, organised by subject and chapter, each with a model answer — free to read and print.