NCERT Solutions for Class 10 Economics Chapter 3
NCERT Solutions for Class 10 Economics Chapter 3 Money and Credit in PDf form free to download updated for new academic session 2020-2021 along with important questions, MCQ and one marks extra questions.
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Class: | 10 |
Subject: | Social Science – Economics |
Chapter 3: | Money and Credit |
Class 10 Economics Chapter 3 Money and Credit
NCERT Solutions for Class 10 Economics Chapter 3 Money and Credit in PDF form free to download for new session 2020-21. Ask your questions for NIOS board or UP Board and CBSE Board through Discussion Forum. Download NCERT Books and Solutions Apps updated for new CBSE Syllabus.
NCERT Solutions for Class 10 Economics Chapter 3
Class 10 Economics Important Questions for Exams
- 10th Economics Chapter 1:Important Questions: DevelopmentRead more
- 10th Economics Chapter 2:Important Questions: Sectors of the Indian EconomyRead more
- 10th Economics Chapter 3:Important Questions: Money and CreditRead more
- 10th Economics Chapter 4:Important Questions: Globalisation and the Indian EconomyRead more
What do you mean by Money and Credit?
Money is something that can act as a medium of exchange in transaction. Credits refers to an agreement in which the lender supplies the borrower money, goods and services in return for the promise of future repayment.
Why Credit is considered as an asset?
During the festival season, a shoe manufacturer Salim has received an order of making shoes in bulk, within one month’s time. To complete this production, he hires extra workers and has to purchase the raw materials. He asks the supplier to supply leather now and, promise to pay him later. Then he takes some advance payment from trader. By the end, of the month, he is able to deliver the order, make a good profit and repay the money he had borrowed.
What is Collateral?
Collateral is asset that the borrower owns (Such as land, building vehicle, livestock) and uses this as a guarantee to a lender until the loan is repaid.
Why the formal or informal sector does ask for collateral?
Lenders may demand collateral or an asset that the borrower owns to use it as a guarantee until he repays the loan. It may be sold if the borrower is not able repaid.
How do farmers get into debts trap?
Failure of the crop makes loan repayment impossible. Downfall of crop prices also makes loan repayment impossible. Higher interest makes life difficult. Credit in such a condition pushes the borrowers into a situation from which recovery is painful and they get into the debt trap.
About Class 10 Economics Chapter 3
Money is something that can act as a medium of exchange in transaction. It eliminates the need for double coincidence of wants. When goods are directly exchanged for goods and there is no use of money, it is called Barter System. When both parties have to agree to sell and buy each other’s commodities. This is known as the double coincidence of wants.
Multiple Choice Questions – MCQ
1. Which of the following can be considered as modern form of Money?
(a) Paper note
(b) Gold Coins
(c) Silver Coins
(d) Copper coins
2. In India, which agency is authorized to issue the notes and currency?
(a) NABARD
(b) Reserve Bank of India
(c) World Bank
(d) State Bank of India
3. Where does the large part of deposits spend by the bank?
(a) For opening new Branches
(b) To pay taxes
(c) To pay interest on loan
(d) To provide loan
4. Which of the following is not included in the formal source of loan?
(a) Bank
(b) Co-operative Banks
(c) Employer
(d) None of the above
5. Which of the following is a symptom of debt Trap?
(a) Unable to repay the loan
(b) Able to repay the loan
(c) Both are correct
(d) Both are wrong
6. Which of the following is not an example of Collateral?
(a) Jewelry
(b) House
(c) Agricultural Land
(d) None of the above
7. Who takes the major decision regarding savings and loans in SHG’s?
(a) Bank
(b) Government
(c) Members
(d) NGOs
8. How much cash do the bank have with its total cash amount?
(a) 10%
(b) 20%
(c) 15%
(d) 30%
9. Which Currency is used as medium of exchange mostly at International Level?
(a) American Dollar
(b) Singaporean Dollar
(c) Rupees
(d) Taka
10. Who is responsible for the establishment of Grameen Bank in Bangladesh?
(a) Wasim Akram
(b) Shoaib
(c) Muhammad Yunus
(d) Shahid Afridi
MCQ Answers
1. (a) Paper note
2. (b) Reserve Bank of India
3. (d) To provide loans
4. (c) Employer
5. (a) Unable to repay loan
6. (d) None of the above
7. (c) Members
8. (c) 15%
9. (a) American Dollar
10. (c) Muhammad Yunus
One Mark Questions with Answers
1. What was the primitive methods of exchange in early ages in India?
2. Bharti has a doubt that why one cannot refuse a payment made in rupees in India?
3. Which government agency is authorized to issue notes and currency in India?
4. Why a loan from Informal Sector is costlier than the formal sector?
5. Give one example each of modern currency and older currency?
Answers of 1 Mark Questions
1. Grains and Cattles
2. It is authorized by Government of India
3. Reserve Bank of India
4. Interest Rate is higher.
5. Modern currency- Notes, coins etc. Older currency – Gold coins etc.
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Important Questions on Class 10 Economics Chapter 3
i. Reasonable rate of interest
ii. Collateral security demanded and documentation required by the banker.
iii. Mode and schedule of repayment of principal and loan. The penalty and repercussions applicable in case of default in repayment.
Terms of repayment are different of bank and the money lender. Whichever he finds easier he can consider that. Depending on these factors and of course, easier terms of repayment, Manav has to decide whether he has to borrow from the bank or the moneylender.
Reserve Bank of India
Guaranteed by the Central Government of India
I promise to pay the bearer the sum of Ten Rupee
A 10-rupee note is a legal tender and used as medium of exchange because it is authorized by the government of India. In India, Reserve Bank of India holds the power to issues currency notes on behalf of the central government. The statement indicates that the currency is authorized or guaranteed by the Central Government. The Indian law has legalized the use of rupee to make payment and cannot be refused in setting transaction in India. As a promise written on a promissory note, the RBI promises the bearer to pay the given sum of money.
a). Eliminate informal sources of credit as they usually charge a high rate of interest and act as a debt trap for the borrower.
b). Providing cheap and affordable credit can aid country’s development. Still only half of the total credit needs of the rural people are met by the formal sector.
c). Banks and co-operatives should increase their lending, particularly, in rural areas. Without banks help, rural borrowers are majorly dependent on informal sources like moneylenders and middlemen who charge them a high rate of interests.
d). Easily available credit can fulfil variety of needs of the people and would generate higher incomes. They will be able to grow crops, do business, set up small scale industries etc.
Thus, the main objectives of the SHGs are:
To organize rural poor especially women into small Self Help Groups. A typical SHGs has 15-20 members.
To accumulate savings of their members.
To provide loans at reasonable interest rate without collateral.
To provide timely loans for various needs of the people.
To provide loans at easy terms and flexible payment schedule.
Provide a platform to discuss and act on a variety of social issues such as education, health, nutrition, domestic violence etc.
i. Banks have their own rules and regulation which require proper documents and collateral as security against loans. Upon failure to meet these requirements, loans cannot be granted. Small farmer requiring crop loan usually don’t have adequate documents. Repayment of the loan is dependent on crop production which is highly volatile and depends on external factors like monsoons etc.
ii. The bank will not lend money to borrowers who have not repaid previous loans.
iii. The banks go through the research and development of a business and might not be willing to lend those entrepreneurs who are going to invest in the business with high risks.
iv. One of the principle objectives of a bank is to earn more profits after meeting a number of expenses. For this the bank needs to ensure that the money they lend is returned timely and doesn’t become a debt.