The difference between what is charged from borrowers and what is paid to the depositors is the main source of income for the banks. The lenders ask for a collateral before lending because: Question 39. A system where goods are directly exchanged without the use of money is called barter system. They can be encashed by issuing cheques in the name of the person to whom the payment is to be made. More lending would lead to higher incomes and encourage people to invest in agriculture, engage in business and set up small industries. Answer: Answer: How is money transferred from one bank account to another bank account? Answer: In situation of high risks, credit often creates further problems for the borrower. For payment through cheque, the payer who has an account in the bank, draws out a cheque for a specific amount. Therefore, the cost to the borrowing is very high. NCERT Solutions for Class 10 Economics Chapter 3: Money and Credit. Double Coincidence of wants: The double coincidence of wants is the major drawback of the barter system. Money acts as an intermediary in the process of exchange, thus it is called a medium of exchange. The higher interest rate of borrowing can mean that the amount to be repaid is greater than the income of the borrower in informal sector. Let us assume […] For example, a person wants to sell sugar and buy wheat. Free PDF download of NCERT solutions for Class 10 Social Science (Understanding Economic Development) Chapter 3 - Money and Credit. How is money used as a medium of exchange? Prove with an argument that there is a great need to expand formal sources of credit in rural India. Question 41. Answer: 24867. Find more@learnfatafat Especially in India, if formal sources of credit are increased, people will be able to take loans and use them for the development of the country. a person desires to sell exactly what the other person wishes to buy) is an essential feature. Self-Help Groups are a group of 15 to 20 poor villagers, especially women, who regularly pool money at regular intervals. Question 14. For example, a trader wishes to sell 10 sacks full of rice and expects to get it in exchange for five sacks of cereal. Money solves the problem of double coincidence of wants by acting as a medium of exchange. Complete CBSE Guide, chapter wise NCERT Solutions, CBSE Notes, Guess and Sample Questions from NCERT Textbooks with their answers for Class 7 - 12. Explain. Now, he can purchase wheat or any other good in the market with the help of the money earned. Important questions guess papers, most expected questions and best questions from 10th Social Science ECO chapter 03 Money and Credit have CBSE chapter wise important questions with the solution for free download in PDF format. NCERT solutions for class 10 Economics Chapter 3 - Money and Credit are available here in PDF for free download. Answer: These informal sources of credit include moneylenders, agricultural traders, etc. People can open accounts in banks and banks make use of that money to fulfil the loan requirements of the people. It ensures that banks should maintain a minimum cash balance out of the deposits they receive. MCQ Questions for Class 10 Social Science with Answers was Prepared Based on Latest Exam Pattern. ___________________costs of borrowing increase the debt-burden. Explain with examples. Value based questions are now being given in Class 10 Economics exams to promote morals and values in students, Students should read and understand the following VBQs to get better understanding and score good marks in exams. Affordable credit plays a very important role in the country’s development. Quick revision online notes covering each and every topic of the chapter. In case there is a failure, and the borrower faces loss, then he further falls in the trap of credit. Answer: Answer: The Self Help Groups (SHGs) have been set in India with an aim to help the rural poor, especially women. Why do lenders ask for a collateral while lending? The credit activities of the informal sector should be discouraged because: Question 10. When it comes to financial literacy, we’re not all reading on the level we should. In situations with high risks, credit might create further problems for the borrower. They keep a collateral from the borrowers for granting loans. Modern money has been accepted as a medium of exchange because: Question 44. Answer: Manav wants to set up a small business. Answer: To understand this, let us take an example of a marginal farmer who holds a small plot of land. Answer: It also keeps a regular check on the interest rates set for loans in public sector banks. ,. Self-Help Groups are emerging as an important source of credit because: Question 43. August 15, 2020 at 12:08 am Reply . Double coincidence of wants means owner of good X, say shoes, to find someone else with good Y, say wheat, and both being in need of each other’s good. It could lead to increasing debt among the borrowers. The lenders ask for a collateral before lending because: Question 35. Why is the supervision of the functioning of formal sources of loans necessary? Any case of non-payment of loan by any member is followed up seriously by other members. The process of providing loans should be made easier and accessible to them. Bank loans require proper documentation and collateral which is rarely available with poor households. 3. They avail the facilities of loans from formal sources like banks at low rate of interest. Analyse the role of credit for development. Apart from this, there are small scale industries, business and various other sectors where credit can help people and ultimately result in the development of the country. The rate of interest is very high in informal sector. Money is anything which has common acceptability as a means of exchange, a measure and a store of value. It is authorised by the government of a India. He has to look for a person who wants sugar and has wheat to sell. In our culture, discussing money is a social taboo and the lack of formal education about finance doesn’t help. In a barter system where goods are directly exchanged without the use of money, double coincidence of wants is an essential feature. Why is it necessary for banks and cooperatives to extend their lending activities in rural areas? How does money solve the problem of double coincidence of wants? Answer: Collateral is an asset that the borrower owns such as land, building, vehicle, livestock, deposits with the banks and 2. Multiple choice questions help to develop understanding of all key points of chapter. At the same time, it removes the inconvenience caused by the barter system. Explain two reasons. What are the two categories of sources of credit? Paper notes and Coins. Answer: economic activities independent of each other. Currency in India is issued by the central bank of the country, in the case of India, the Reserve Bank of India is the central bank of the country. particularly by women. Money has made transactions easy because: Question 26. (c) 9. If the group is regular in its savings, they can also take loan from the bank. Which government body supervises the functioning of formal sources of loans in India? There is no organisation to supervise credit activities of the informal sector. Answer: Banks mediate between those who have surplus funds (the depositors) and those who are in need of funds (the borrowers) by lending money to people who are in need. of interest on loans than what they offer on deposits. The two examples showing whether credit will be useful or not, depends upon the situation are: Question 46. Two different credit situations • Credit is an agreement in which is created when a person gives money and goods to the needy person with the promise of to repay that with some rate of interest. CBSE Maths notes, CBSE physics notes, CBSE chemistry notes. A typical Self Help Group comprises 15-20 people from the same neighbourhood who save some money from their daily wages and collect them together. Next page. What are the benifits of deposits with the banks? Required fields are marked *, NCERT Solutions for Class 10 Social Science. A higher interest rate is charged for the borrower and that profit is given to the depositor as interest for offering deposits. Which are the two major sources of formal loan for rural households? You will learn about credit such as types of credit, credit terms etc. Answer: Why do banks ask for collateral while giving credit to a borrower? The solutions for Chapter 3 of Understanding Economic Money and Credit are given below. Why is cheap and affordable credit important for the country’s development? workers? What are demand deposits? For example, a person wants to sell sugar and buy wheat. Do check out the sample questions of Introduction to Money Class 10 Video | EduRev for Class 10, the answers and examples explain the meaning of chapter in the best manner. A collateral is an asset such as land, building, livestock, vehicle or deposits with the banks that the borrower owns and uses this as a guarantee to the lender until the loan is repaid. Answer: statement with examples. They have freed borrowers from the clutches of the moneylenders. MONEY AND CREDIT 2. Now, the shoe manufacturer will sell the shoes for money and with that money he can buy rice. Explain any three reasons. Which is the main source of credit for urban househ olds? How do banks play an important role in the economy of India? How does the use of money make exchange of things easier? Answer: Bank would not be able to give money to the depositors if they all went to ask for their money all at the same time. The economic value attached to cheap and affordable credit is that it helps the poor in rural and urban households to start self-employment ventures. Question 53. Under barter system, both parties selling shoes and rice have to agree to buy and sell each other’s commodities and this creates a problem which is referred to as double coincidence of wants. Social Science Class 10 Important Questions Economics Chapter 3 Money and Credit Class 10 Important Questions. If you are a student of class 10 who is using NCERT Textbook Credit plays a vital and positive role in the following ways: Question 34. That is why they are called demand deposits. The group is responsible for the repayment of loan. Class 10 Social Science MCQs Multiple Choice Questions with Answers Practicing CBSE NCERT MCQ Questions of Class 10 Social Science SST is one of the best ways to prepare for the Class 10 board exam. The credit situation in the country and terms of credit have been discussed in detail in this chapter. The members can take loans from the groups to meet their daily needs. hat is meant by double coincidence of wants? Answer: People can borrow money from these groups during an emergency or when they are in need. The best app for CBSE students now provides Economics-Money and Credit class 10 Notes latest chapter wise notes for quick preparation of CBSE board exams and school based annual examinations. (iv) Credit control (g) Which of the following is not near money? Read our model answers to understand Q.1 In situations with high risks, credit might create further problems for the borrower. Periodically, the banks have to submit a report to the RBI on how much they are lending, to whom and at what interest rate. Question 23. They provide interests on the deposited money to the depositors. Special focus should be paid on poor and small farmers along with small scale industries. People used to exchange one thing for another in this system. through which people can carry out buying and selling. Credit plays a vital and positive role in the following ways: Question 60. People are involved with the banks in the following ways: Question 33. Banks, being the formal source of credit, give loans at a very low rate of interest at flexible terms and conditions. (c) 6. How does credit plays a vital and positive role? Multiple Choice Questions and Answers on Money and Credit 1. Answer: Explain Banks and cooperatives should extend their lending activities in rural areas because: Question 36. Answer: But it, indeed, is a very cumbersome process. It helped him to meet the ongoing expenses of production, complete production on time, thereby, increasing his income. What is collateral? Here we present Money and Credit Class 10 Important Questions and Answers Pdf Social Science Economics Chapter 3, We have collected all the important questions which came in the previous year’s exams. Explain. 12th Class 11th Class 10th Class 9th Class 8th Class 7th Class 6th Class 5th Class 4th Class 3rd Class 2nd Class 1st Class Other Exam Pre-Primary MP State Exams UP State Exams Rajasthan State Exams Jharkhand State Answer: Money is used as a medium of exchange because it serves as a common medium They help borrowers to overcome the problem of collateral. Why is this necessary? How do the deposits with the banks become their source of income? RBI maintains a periodic report of other banks regarding the amount loaned to people. (a) Grameen Bank (b) Reserve Bank (c) Cooperative Bank (d) None of these. Explain with suitable example. 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