| Class | 10th |
| Subject | Economics |
| Category | Important Questions |
Class 10 Economics Chapter 3 Money and Credit Important Question Answer NCERT
Q1. What is the Barter System? Most Important
Ans – In a barter system, goods are directly exchanged without the use of money. In this system, both the parties have to agree to sell and buy each other commodities. If any party deny, then this system will not work.
Q2. What do you mean by Collateral ?
Ans – Collateral is an asset that the borrower owns (such as land, building, vehicle, livestocks, deposits with banks) and uses this as a guarantee to a lender until the loan is repaid.
Q3. Why are the deposits in the banks called ‘demand deposits’?
Ans – The deposits in the bank accounts which can be withdrawn on demand, are called demand deposits.
Q4. Which authority issues the currency notes on behalf of the Central Government of India ?
Ans – In India, the Reserve Bank of India issues currency notes on behalf of the central government.
Q5. What do you mean by Money?
Ans – Money is defined as a medium of exchange for various goods and services in an economy.
Q6. Who issues coins on behalf of the Central Govt. of India?
Ans – The Reserve Bank of India issues coins on behalf of the Central Govt.
Q7. What are formal Sector Loans?
Ans – Formal sector loans are the loans take from formal sector institutions like banks and cooperatives.
Q8. Majority of the credit needs of the…………. household are met from informal sources. (Poor/Rich)
Ans – poor
Q9. How many members a typical self-help group should have ?
Ans – 15 to 20
Q10. What do you mean by self help groups? Most Important
Ans – Self Help Groups is a group of peoples (typical 15-20), usually belonging to one neighbourhood, who meet and save regularly. Members can take small loans from the group itself to meet their needs.
Q11. Describe any three advantage of Self Help Group of the poor.
Ans – Advantages of Self Help Group of the poor are as follow :
(i) Self Help Group provide collateral free loan to the people that generally find it hard to get loans from banks.
(ii) Self Help Group charges interest on loans but this is still less than what the moneylender charges.
(iii) They help the women to be financially independent.
(iv) Self Help Group are the building blocks of organisation of the rural poor.
Q12. Give name of two formal credit institutions.
Ans – (i) Banks
(ii) Cooperatives
Q13. Two main functions of Commercial Banks.
Ans – (i) Provide loan facilities to the business.
(ii) Provide financial services to the general public.
Q14. Write two main functions of Banks.
Ans – (i) Accepting of deposits.
(ii) Granting of loans and advances.
Q15. Why should credit at reasonable rates be available for all ?
Ans – Credit at reasonable rates should be available for all because it would result in more sales and many individuals could also borrow for different things. Therefore, credit at a fair rate would be useful in a country’s development.
Q16. Why is there a great demand of loans or credit?
Ans – There is a great demand of loans or credit for various kinds of economic activities like to set up business, buying cars, houses, able to invest in their farms, factories, marriages etc. which are beyond their current economic capacities. Also, credit save people from debt-trap.
Q17. Compare the formal sources and informal sources of credit of loan in India. Most Important
Ans –
| Formal Sources of Credit | Informal Sources of Credit |
| (i) The formal sources of loans are followed by laws and regulations registered by the government.
(ii) Eg. Banks, Cooperatives etc. (iii) Formal Sources in India charges low rates of interest. |
(i)The informal sources include all those private sources which are beyond the control of government.
(ii) Eg. Moneylenders, Merchants etc. (iii) Informal sources in India charges high rates of interest. |
Q18. Why we need to increase the formal sources of credit in India?
Ans – We need to increase the formal sources of credit to reduce the dependance of poor people on informal sources, which provides loans at higher rates of interest and exploit peoples. With increase in formal sources of credit, people will get access to a better quality of goods and services through increased income.
Q19. How does money solve the problem of double coincidence of wants ? Explain it.
Ans – Money solve the problem of double coincidence of wants by acting as a medium of exchange. In double coincidence of wants, two parties agree to sell and buy each other’s commodities. i.e. one party desires to sell is exactly what the other party wishes to buy.
Q20. Why demand deposits considered as money? Most Important
Ans – Demand deposits are considered as money because they can be withdrawn anytime and they act as supplements for cash and cheque payments. These are a form of money in the bank.
Q21. What is Money? Explain various functions of money. Most Important
Ans – Money is defined as a medium of exchange for various goods and services in an economy.
Functions of Money are as follow :
(i) Medium of exchange
(ii) Measure of value
(iii) Store of value
(iv) Standard of deferred payments
Q22. What are demand deposits ? Describe any two features of demand deposits.
Ans – The deposits in the bank accounts which can be withdrawn on demand, are called demand deposits.
Features of demand deposits are as follow :
(i) Demand deposits can be withdrawn from the bank when required.
(ii) They are considered as money because they can be exchanged as a means of payment.
(iii) They can also be accepted as cheques instead of cash.
Q23. What role do the banks play in the Economy of the country? Explain it.
Ans – Banks play important role in the economy of the country. Without banks we cannot imagine the development of a country. Banks provide loans to generate profits, manage risk and promote economic growth. By providing loans banks help in the development of individuals and businesses which can have a positive impact on the economy.
| Also Read | NCERT Class 10 Social Science Solution (All Books) |
| Also Read | Class 10 Important Questions (Latest) |
| Also Read | Class 10 Old Question Papers |
| Also Read | Class 10 Model Papers [latest] |