NCERT Solutions for Class 10 Social Science Understanding Economic Development Unit 3

Money and Credit Class 10

Unit 3 Money and Credit Exercise Solutions

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Exercise : Solutions of Questions on Page Number : 52

Q1 :  

In situations with high risks, credit might create further problems for the borrower. Explain.


Answer :

In situations with high risks, credit might create further problems for the borrower. This is also known as a debt-trap. Taking credit involves an interest rate on the loan and if this is not paid back, then the borrower is forced to give up his collateral or asset used as the guarantee, to the lender. Thus, in situations with high risks, if the risks affect a borrower badly, then he ends up losing more than he would have without the loan.

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Q2 :  

How does money solve the problem of double coincidence of wants? Explain with an example of your own.


Answer :

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. For example, if an ice-cream vendor wants a bicycle but the bicycle manufacturer wants clothes, and not ice-creams, then the vendor can use money to obtain a bicycle. He does need to adhere to the bicycle man's needs because money acts as the common medium of exchange. Similarly, the bicycle manufacturer can then use the money to buy clothes.

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Q3 :  

How does money solve the problem of double coincidence of wants? Explain with an example of your own.


Answer :

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Q4 :  

Look at a 10 rupee note. What is written on top? Can you explain this statement?


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Q5 :  

Why do we need to expand formal sources of credit in India?


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Q6 :  

What is the basic idea behind the SHGs for the poor? Explain in your own words.


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Q7 :  

What are the reasons why the banks might not be willing to lend to certain borrowers?


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<< Previous Chapter 2 : Sectors of the Indian Economy Next Chapter 4 : Globalisation and the Indian Economy >>

Additional project/activity : Solutions of Questions on Page Number : 53

Q1 :  

 The following table shows people in a variety of occupations in urban areas. What are the purposes for which the following people might need loans? Fill in the column.

Occupations

Reason for needing a Loan

Construction worker

-

Graduate student who is computer literate

-

A person employed in government service

-

Migrant labourer in Delhi

-

Household maid

-

Small trader

-

Autorickshaw driver

-

A worker whose


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Q2 :  

Analyse the role of credit for development.


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Q3 :  

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.


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Q4 :  

In India, about 80 per cent of farmers are small farmers, who need credit for cultivation.

(a) Why might banks be unwilling to lend to small farmers?

(b) What are the other sources from which the small farmers can borrow?

(c) Explain with an example how the terms of credit can be unfavourable for the small farmer.

(d) Suggest some ways by which small farmers can get cheap credit.


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Q5 :  

Fill in the blanks:

(i) Majority of the credit needs of the __________households are met from informal sources.

(ii) __________costs of borrowing increase the debt-burden.

(iii) __________issues currency notes on behalf of the Central Government.

(iv) Banks charge a higher interest rate on loans than what they offer on __________.

(v) __________is an asset that the borrower owns and uses as a guarantee until the loan is repaid to the lender.


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Q6 :  

Choose the most appropriate answer.

(i) In a SHG most of the decisions regarding savings and loan activities are taken by

(a) Bank.

(b) Members.

(c) Non-government organisation.

(ii) Formal sources of credit does not include

(a) Banks.

(b) Cooperatives.

(c) Employers.


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<< Previous Chapter 2 : Sectors of the Indian Economy Next Chapter 4 : Globalisation and the Indian Economy >>

Understanding Economic Development - Social Science : CBSE NCERT Exercise Solutions for Class 10th for Money and Credit will be available online in PDF book form soon. The solutions are absolutely Free. Soon you will be able to download the solutions.

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