NCERT Solution For Class 10 Economics Chapter 3 – Money and Credit
NCERT Solution For Class 10 Economics Chapter 3
- In situations with high risks, credit might create further problems for the borrower. Explain.
Answer: Credit may put the borrower in further trouble in high-risk situations. A certain amount of high-interest loans taken out by borrowers from lenders constitute credit. If there is a failure and the borrower loses money, they are enticed to take on more debt. We refer to this as a debt trap. The borrower’s problems only get worse when they fall deeper into the credit trap and are forced to repay the credit plus interest charged by the lender. To pay back the loan, the borrower must additionally sell a portion of their property.
NCERT Solution For Class 10 Economics Chapter 3
- How does money solve the problem of double coincidence of wants? Explain with an example of your own.
Answer: When two people have identical desires, it is said that there is a “double coincidence of wants.”Double coincidence of wants is a necessary component of a barter system, in which goods are directly exchanged without the use of money.The introduction of money allowed people to use it as a middleman to buy and sell goods without the need for a specific buyer or seller, which solved the problem of the double coincidence of wants. A trader might want to sell ten sacks of rice, for instance, and hope to receive five sacks of cereal in return.
Getting the rice sacks sold to a suitable buyer in return for cereals would be extremely difficult. But, the trader can use the money to purchase cereal with the proceeds from the sale of the rice buyer and sell the sacks of rice to someone in need, thus solving this problem.
NCERT Solution For Class 10 Economics Chapter 3
- How do banks mediate between those who have surplus money and those who need money?
Answer: Banks act as intermediaries, providing loans to those in need, between those who have excess funds (depositors) and those who don’t (borrowers). Individuals can open bank accounts, and banks use the funds from those accounts to meet customers’ loan needs. The borrower is charged a higher interest rate, and the depositor receives interest for making deposits.
NCERT Solution For Class 10 Economics Chapter 3
- Look at a 10 rupee note. What is written on top? Can you explain this statement?
Answer: On the top of a 10 rupee note are the words “Reserve Bank of India” and “Guaranteed by the Central Government.” The Reserve Bank of India is the central bank of India, and it is responsible for issuing currency to citizens of that nation. These are the only authorities in India who have the authority to issue currency; the Central Government issues the currency on its behalf.
NCERT Solution For Class 10 Economics Chapter 3
- Why do we need to expand formal sources of credit in India?
Answer: The government-approved businesses that are qualified to lend money to individuals are known as formal sources of credit. In India, formal credit sources must be increased since unregistered informal sources lend money to individuals at exorbitant interest rates, which is unfair and should not be done. Increased formal credit availability will allow people to borrow money at lower interest rates and without having to perform any additional work for the borrower. People will be able to take out loans and use them for the development of their country, especially in India, if official credit sources are expanded.
NCERT Solution For Class 10 Economics Chapter 3
- What is the basic idea behind the SHGs for the poor? Explain in your own words.
Answer: In India, the Self Help Groups (SHGs) were established to assist the impoverished in rural areas, particularly women. A typical Self Help Group is made up of fifteen to twenty-five neighbours who pool their daily earnings to save money for the group. These organisations allow people to borrow money when they’re in need or in an emergency. They impose a minimum interest rate on the borrowers. The SHG is also qualified to apply for bank loans once they have reached a certain savings target. Increasing small-scale employment opportunities for rural residents was the primary goal of establishing these self-help groups, enabling them to launch small businesses and support themselves.
NCERT Solution For Class 10 Economics Chapter 3
- What are the reasons why banks might not be willing to lend to certain borrowers?
Answer: The following are some of the reasons why banks might refuse to lend money to particular borrowers:
1. Some people do not submit the necessary paperwork in order to be approved for a loan.
2. Because they raise the likelihood of loan non-repayment, irregular pay and no permanent employment are additional contributing factors.
3. A few borrowers are added to the non-performing assets list.
4. Lending money to business owners carries a significant risk.
NCERT Solution For Class 10 Economics Chapter 3
- In what ways does the Reserve Bank of India supervise the functioning of banks? Why is this necessary?
Answer: India’s central bank is called the Reserve Bank of India, and it oversees the operations of all other public sector banks. It oversees the following methods by which the banks operate:
1. It keeps an eye on how the bank is keeping the cash balance.
2. Small farmers and small-scale businesses are also granted loans, in addition to profit-making corporations.
3. The RBI keeps track of other banks’ loan amounts on a regular basis.
4. It additionally routinely monitors the interest rates established for loans in public sector banks.
NCERT Solution For Class 10 Economics Chapter 3
- Analyse the role of credit for development.
Answer: One of the key components of a nation’s development is credit. The development of the nation is greatly aided by accessible credit. For a variety of reasons, people require loans, and credit is a prerequisite that must be satisfied. Credit is essential to agricultural activities in India, where a large portion of the population is employed in the sector. Modern farming techniques are more dependable than traditional farming methods for producing crops, and people can borrow money to use them. In addition, credit can assist individuals in a number of other sectors, including small-scale enterprises and industries, which will ultimately lead to national development.
- Manav needs a loan to set up a small business. On what basis will Manav decide whether to borrow from the bank or the moneylender? Discuss.
Answer: Manav is interested in starting a small company. He should consider the following factors before choosing whether to borrow money from a bank or money lender:
1. The interest rates that the bank and the moneylender charge should be compared. He should have the choice of whichever charges less.
2. In order for the banks to approve his loan, he must determine whether he has all the necessary qualifying documentation.
3. His desired method of loan repayment.
NCERT Solution For Class 10 Economics Chapter 3
- In India, about 80 per cent of farmers are small farmers who need credit for cultivation.
- Why might banks be unwilling to lend to small farmers?
Answer: Due to the significant risks involved, banks may be reluctant to lend money to small farmers. They might not be able to receive the installments on time if the harvest is destroyed. Additionally, small-scale farmers may not be able to obtain the necessary paperwork in order to apply for a bank loan.
NCERT Solution For Class 10 Economics Chapter 3
- What are the other sources from which the small farmers can borrow?
Answer: If they aren’t taking out bank loans, small farmers can switch to unofficial sources of credit. Moneylenders and agricultural traders are a few examples of these unofficial lenders.
- Explain with an example of how the terms of credit can be unfavourable for the small farmer.
Answer: A small-scale farmer who takes out a bank loan must pay back the money with a predetermined interest rate. For instance, if a farmer borrows money from the bank and, during harvest season, their crops are destroyed, they will be further ensnared in debt and unable to repay the bank’s loan.
- Suggest some ways by which small farmers can get cheap credit.
Answer: Small farmers can get cheap credit from formal sources of credit like banks.
NCERT Solution For Class 10 Economics Chapter 3
- Fill in the blanks:
- Majority of the credit needs of the _________________households are met from informal sources.
- ___________________costs of borrowing increase the debt-burden.
- __________________ issues currency notes on behalf of the Central Government.
- Banks charge a higher interest rate on loans than what they offer on __________.
- _______________ is an asset that the borrower owns and uses as a guarantee until the loan is repaid to the lender.
Answer a: Poor
Answer b: High
Answer c: Reserve Bank of India
Answer d: Deposits
Answer e: Collateral
NCERT Solution For Class 10 Economics Chapter 3
- Choose the most appropriate answer.
-
- In an SHG, most of the decisions regarding savings and loan activities are taken by
- Bank
- Members
- Non-government organisation
- In an SHG, most of the decisions regarding savings and loan activities are taken by
Answer: b. Members
-
- Formal sources of credit do not include
- Banks
- Cooperatives
- Employers
- Formal sources of credit do not include
Answer: c. Employers
NCERT Solution For Class 10 Economics Chapter 3
For the Next Chapter Solution Click Below
CHAPTER 2 – Sectors of the Indian Economy
CHAPTER 4 – Globalisation and the Indian Economy
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