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Money and Credit

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Class 10 Economics Chapter 3
Money and Credit
Important Questions

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In this chapter students have the opportunity to delve into the fascinating history of money and its diverse forms across different historical periods. Furthermore, in Class 10 Economics Money and Credit students will acquire insights into the complex interplay between modern money systems and the banking sector. This holistic approach to the subject is designed to furnish students with a profound understanding of the pivotal roles occupied by money and credit in the current economic landscape.

Introduction

CBSE Class 10 Economics Chapter 3, “Money and Credit,” Within this chapter, students will explore the captivating history of money, delving into how various forms of currency were employed during different historical periods. Additionally, they will gain insights into the intricate relationship between modern forms of money and the banking system. This comprehensive approach to the subject aims to provide students with a deeper understanding of the pivotal role that money and credit play in the contemporary economic landscape.
money and credit class 10 important questions and answers

Class 10 Money and Credit Important Questions and Answers

Q1. Which among the following issues currency notes on behalf of the Central Government ?
Options
(a) State Bank of India
(b) Reserve Bank of India
(c) Commercial Bank of India
(d) Union Bank of India

Ans. (b)

Explanation:
In India, the Reserve Bank of India issues currency notes on behalf of the central government.

Q2. Who among the following takes the decision regarding saving and loan activities in the Self Help Groups (SHGs) ?
Options
(a) Manager of a Bank
(b) Members of Non-Governmental Organisation (NGO)
(c) Local Money Lenders
(d) Members of Self-Help Group (SHG)

Ans. (d)

Explanation:
In an SHG most of the decisions regarding savings and loan activities are taken by its members.

Q3. Why is it necessary to increase a large number of banks mainly in rural areas? Explain.

Explanation:
It is important to open more banks in the rural areas as the formal sector of credit is missing. The practice of borrowing from the informal sector that currently exists in rural areas, for example local moneylenders, has a number of disadvantages.
(i) The informal sector charges a higher rate of interest. Informal sector makes loans very expensive as there are no external organisations controlling the credit activities of lenders.
(ii) Informal sector involves a high degree of risk as there are no proper set of rules for repayment and there is a lot of exploitation of poor farmers.
(iii) Lenders may exploit the borrowers, they may engage in threats and intimidation to ensure repayment of loans. There is no written agreement between the lender and the borrower. There is no legal recourse in case of informal sources of credit.

Q4. The use of money spans a very large part of our everyday life.” Support the statement with example

Explanation:
The use of money spans a very large part of our everyday life and the following examples support it.
(i) Money has become an essential part of our lives. It is used to buy basic items like food, milk products, clothes, etc.
(ii) Money is used to pay for the services we enjoy. For example, the fee of a watchman, teacher, doctor, etc.
(iii) Money is also used for borrowing and lending like loans. Moreover, it is commonly used at places where there might not be any actual transfer of money taking place now but a promise to pay money later.

Q5. Cheap and affordable credit is crucial for the country's development”. Justify the statement.

Explanation:
Importance of cheap and affordable credit for the country’s development:
(i) Cheap and affordable credit would lead to higher income.
(ii) Many people could borrow for a variety of needs
(iii) It encourages people to invest in agriculture, do business and set up small-scale industries etc.
(iv) It enables more investment which will lead to the acceleration of economic activities.
(v) Affordable credit would also end the cycle of the debt trap

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CBSE Class 10 Social Science Chapter wise Important Questions

making of global world class 10 important questions

Conclusion

oswal.io’s diverse range of questions is aimed at enhancing students’ comprehension of the chapter’s concepts and fostering a comprehensive understanding of the subject matter. These thoughtfully designed questions provide students with a valuable resource to deepen their engagement with the content, ultimately aiding in their preparation and mastery of the topic.

Frequently Asked Questions

Ans: Money solves the problem of double coincidence of wants by acting as a medium of exchange. Double coincidence of wants implies a situation where two parties agree to sell and buy each other’s commodities., i.e., what one party desires to sell is exactly what the other party wishes to buy. Money does away with this tedious and complex situation by acting as a medium of exchange that can be used for one and all commodities.
Ans: Banks serve as intermediaries between individuals with surplus money and those in need of loans by offering account services. Typically, banks maintain a cash reserve of around 15% to meet daily withdrawal demands. Individuals with extra funds are encouraged to invest in the bank and receive interest payments. Conversely, individuals seeking loans are charged interest. The discrepancy between interest payments to depositors and interest receipts from borrowers constitutes the bank’s earnings. In this way, banks facilitate both those with surplus money and those in need of funds, acting as a beneficial intermediary for both parties.

Ans: Expanding formal sources of credit in India is crucial for two primary reasons. First, it helps reduce reliance on informal credit sources, which often impose high interest rates and offer limited benefits to borrowers. Second, by enhancing formal credit channels, a larger segment of the population can access loans, as many individuals have greater trust in government-sanctioned credit systems compared to private lending institutions.

Ans: The core concept behind Self-Help Groups (SHGs) for the poor is to empower economically disadvantaged individuals, particularly in rural areas, to become self-reliant in financial matters. These groups consist of members who pool their savings and offer loans to each other at lower interest rates than those charged by informal lenders. When an SHG operates effectively for a certain duration, it becomes eligible for loans from banks. These bank loans are then utilised to create self-employment opportunities for impoverished individuals, elevating their economic status and reducing their dependence on moneylenders.
Ans: The Reserve Bank of India oversees the loan portfolios and cash reserves of banks. It ensures that banks extend loans not only to profit-oriented enterprises but also to small-scale cultivators, small industries, and individual borrowers. Banks are required to periodically report to the RBI about the loans they have disbursed, including details about the recipients and interest rates.This monitoring is essential to uphold fairness and inclusivity in the financial sector, allowing small industries and individuals to access financial support and opportunities for growth.
Chapter Wise  Important Questions for CBSE Board Class 10 Economics
Development
Sectors of the Indian Economy
Money and Credit
Globalization and The Indian Economy
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