UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit

UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit

UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit Textbook Questions and Answers, Additional Important Questions.

UP Board Class 10 Economics Chapter 3 Money and Credit InText Questions and Answers

Let’s Work these out (Page 40)

Question 1.
How does the use of money make it easier to exchange things ?
Answer:
As we know, in a barter system where goods are directly exchanged without the use of money, double coincidence of wants is a necessary condition. By serving as a medium of exchange, money removes the need for double coincidence of wants and the difficulties associated with barter system. In this way, the use of money makes it easier to exchange things.

Question 2.
Can you think of some examples of goods/services being exchanged or wages being paid through barter ?
Answer:
Yes, in the rural areas generally crops and foodgrains are directly exchanged without the use of money. Similarly, agricultural labourers are normally paid not in cash but in kind, i.e., 4-5 kg. wheat or rice per day.

UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit

Let’s Work these out (Page 42)

Question 1.
M. Salim wants to withdraw Rs 20,000 in cash for making payments. How would he write a cheque to withdraw money ?
Answer:
M. Salim would write the concerned date on the space given. He would instruct the bank to Pay ‘Self. He would also write ‘Twenty thousands only’ further to Rupees and fill up the amount and account number, e.g., ‘20,000/-’ and ‘1512000100310360’ respectively in the given boxes. He would also have to sign on the right lower side of the cheque. Further, he would submit it on the withdrawal counter of the bank.

Question 2.
Tick the correct answer :
After the transaction between Salim and Prem,
(i) Salim’s balance in his bank account increases, and Prem’s balance increases.
(ii) Salim’s balance in his bank account decreases and Prem’s balance increases.
(iii) Salim’s balance in his bank account increases and Prem’s balance decreases.
Answer:
(ii) Salim’s balance in his bank account decreases and Prem’s balance increases.

Question 3.
Why are demand deposits considered as money ?
Answer:
Since demand deposits are accepted widely as a means of payment along with currency, they are also considered as money in the modem economy.

In-text Questions (Page 42)

Question 1.
What do you think would happen if all the depositors went to ask for their money at the same time ?
Answer:
Bank would not be able to give money to the depositors if they all went to ask for their money at the same time. This is because, banks would have already used about 85% of their deposits to extend loans.

UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit

Let’s Work these out (Page 44)

Question 1.
Fill the following table :
UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit- 1
Answer:
UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit- 2

Question 2.
Supposing Salim continues to get orders from traders. What would be his position after 6 years ?
Answer:
If Salim continues to get orders from traders, he would earn good profit and become rich after 6 years.

Question 3.
What are the reasons that make Swapna’s situation so risky ? Discuss factors : pesticides; role of moneylenders, climate.
Answer:
Pest attack, exploitation by moneylenders and lack of monsoon are the reasons that make Swapna’s situation so risky.
Pesticides : Pests attack standing Groups. They can be controlled by pesticides.
Role of Moneylenders : Generally moneylenders exploit farmers. They charge high rate of interest and keep them in debt-trap.
Climate : About 60% of our agricultural land area are still unirrigated. Our farmers heavily depend on rainfall. So, climate play a vital role in agriculture.

In-text Question (Page 45)

A House Loan Megha has taken a loan of Rs 5 lakhs from the bank to purchase a house. Tha annual interest rate on the loan is 12 per cent and the loan is to be repaid in 10 years in monthly instalments. Megha had to submit to the bank, documents showing her employment records and salary before the bank agreed to give her the loan. The bank retained as collateral the papers of the new house, which will be returned to Megha only when she repays the entire loan with interest.

Question 1.
Fill the following detail of Megha’s housing loan.
UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit- 3
Answer:
UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit- 4

In-text Questions (Page 45)

Question 1.
Why do lenders ask for collateral while lending ?
Answer:
Lenders ask for collateral as security against loans. If the borrower fails to repay the loan, the lender has the right to sell the asset or collateral to obtain payment.

Question 2.
Given that a large number of people in our country are poor, does it in any way affect their capacity to borrow ?
Answer:
Yes, poverty affects their capacity to borrow. This is because, to borrow people Jhave to give collateral as security which is an asset. Poor people lack in providing collateral which affects their capacity to borrow.

UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit

Question 3.
Fill in the blanks choosing the correct option from the brackets While taking a loan, borrowers look for easy terms of credit. This means ………….. (low/high) interest rate, (easy/tough) …………….. conditions for repayment ………….. (less/more) collateral and documentaion requirements.
Answer:
While taking a loan, borrowers look for easy terms of credit. This means low interest rate, easy conditions for repayment, less collateral and documentaion requirements.

Let’s Work these out (Page 47)

Loans from Cooperatives
Besides banks, the other major source of cheap credit in rural areas are the cooperative societies (or cooperatives). Members of a cooperative pool their resources for cooperation in certain areas. There are several types of cooperatives possible such as farmers cooperatives, weavers cooperatives, industrial workers cooperatives, etc. Krishak Cooperative functions in a village not very far away from Sonpur. It has 2300 farmers as members. It accepts deposits from its members. With these deposits as collateral, the Cooperative has obtained a large loan from the bank. These funds are used to provide loans to members. Once these loans are repaid, another round of lending can take place.
Krishak Cooperative provides loans for the purchase of agricultural implements, loans for cultivation and agricultural trade, fishery loans, loans for construction of houses and for a variety of other expenses.

Question 1.
List the various sources of credit in Sonpur. Ans. The various sources of credit in Sonpur are :
(i) village moneylender ;
(ii) agricultural trader;
(iii) bank;
(iv) Co-operative societies; and
(v) landowner-employers.

Question 2.
Underline the various uses of credit in Sonpur in the above passages.
Answer:
There have been following uses of credit in Sonpur in the*concerned passages:
(i) for cultivation or farm inputs
(ii) for agricultural trade
(iii) fishery loans
(iv) functions in the family; and
(v) for construction of houses.

UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit

Question 3.
Compare the terms of credit for the small farmer, the medium farmer and the landless agricultural worker in Sonpur.
Answer:
Comparison of the terms of credit for the small farmer, the medium farmer and the landless agricultural worker in Sonpur is clear from the following table :

Question 4.
Why will Arun have a higher income from cultivation compared to Shyamal ?
UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit- 5
Answer:
Arun will have a higher income from cultivation compared to Shyamal. This has the following reasons :
(1) Arun has 7 acres of land compared to 1.5 acres land of Shyamal.
(2) Arun received bank loans at an interest rate of 8.5% per annum. On the other hand, Shyamal has received a loan at an interest rate of 36% per annum.
(3) Arun has to repay loan anytime in the next three years while Shyamal will have to repay wihtin 3-4 months.
(4) Shyamal has to promise to sell the crop to the trader at low price but there is no such condition with Arun.

Question 5.
Can everyone in Sonpur get credit at a cheap rate ? Who are the people who can ?
Answer:
(1) No, everyone in Sonpur cannot get credit at a cheap rate. This is because, collateral is required for taking bank loan at cheap rate.
(2) Those people who can fulfil collateral and documentation requirement, get credit from bank at a cheap rate.

Question 6.
Tick the correct answer
(i) Over the years, Rama’s debt

  • will rise.
  • will remain constant.
  • will decline.

Answer:
will rise.

(ii) Arun is one of the few people in Sonpur to take a bank loan because
other people in the village prefer to borrow from the moneylenders.
banks demand collateral which everyone cannot provide.
interest rate on bank loans is same as the interest rate charged by the traders.
Answer:
banks demand collateral which everyone cannot provide.

UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit

Question 7.
Talk to some people to find out the credit arrangements that exist in your area. Record your conversation. Note the differences in the terms of credit across people.
Answer:
Students, do it yourselves.

Let’s Work these out (Page 50)

Question 1.
What are the differences between formal and informal sources of credit ?
Or
Explain any two features each of formal sector loans and informal sector loans.
[Annual Paper (Outside Delhi), 2009, Set 2]
Or
Mention any three points of distinction between formal sector loans and informal sector loans.
[Annual Paper (Outside Delhi), 2010, Set 1, 2, 3]
Answer:
The differences between formal and informal sources of credit may be clear from the following table :

Formal Sources of Credit :
(1) They cover those sources of credit which are registered by the government and have to follow its rules and regulations. These sources are : banks and cooperatives.
(2) The RBI supervises the functioning of formal sources of credit.
(3) They have also social welfare motive apart from profit-making.
(4) They generally charge lower rate of interest than informal sources of credit.
(5) They do not impose any unfair condition.

UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit

Informal Sources of Credit :
(1) They include those small and scattered units which are largely oútside the control of the government. Though there are rules and regulations but these are not followed here. They are : moneylenders, traders, employers, relatives and friends, etc.
(2) There is no organisation which supervises the credit activities of lenders in the informal sector.
(3) Their only motive is profit-making.
(4) They èharge a much higher rate of interest on loans in comparison to formal lenders.
(5) They impose many tough conditions apart from high interest rates.

Question 2.
Why should credit at reasonable rates be available for all ?
Answer:
(1) Of course, credit should be available at reasonable rates for all. This is because, credit plays a vital role in modern business and thus in the development of a country.
(2) A large number of transactions in our day-to-day activities involve credit in some form or the other. The credit helps the farmers to grow crops. It helps the entrepreneurs to establish business units and to meet the on going expenses of production, complete production on time and thereby increase their earnings.

Question 3.
Should there be a supervisor, such as the Reserve Bank of India, that looks into the loan activities of informal lenders ? Why would its task be quite difficult ?
Answer:
(1) Yes, there should be a supervisor, like the Reserve Bank of India, that would look into the loan activities of informal lenders. It is necessary to protect especially the interests of small depositors and the poor borrowers. It would stop them from charging a much high interest on loans and using unfair means to get their money back.

UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit

(2) Its task would be quite difficult because :
(i) Informal lenders are not registered by the government or any other recognised institutions.
(ii) They are small and scattered.
(iii) The small borrowers are generally illiterate and ignorant.
(iv) They require no document and collateral.
(v) They have the personal relation with the borrower.

Question 4.
Why do you think that the share of formal sector credit is higher for the richer households as compared to the poorer households ?
Answer:
(1) Undoubtedly, the share of formal sector credit is higher for the richer households as compared to the poorer households.
(2) This is because, poverty affects poor households’ capacity to borrow. Formal sector credit requires proper documents and collateral as security against loans. Collateral is an asset. So poor people lack in providing such things which affect their capacity to borrow.
(3) Moreover, they do not repay loan on time because of the various day-to-day needs.
That is why, the formal sector is unwilling to lend to poor households and their share of formal sector credit is lower than the rich households.

UP Board Class 10 Economics Chapter 3 Money and Credit Textbook Questions and Answers

Question 1.
In situations with high risks, credit might create further problems for the borrower. Explain.
Answer:
(1) Of course, in one situation credit helps to increase earnings and therefore the person is better off than before. In another situation where there is high risks, credit, might create further problems and push the person into a debt trap. He is much worse off than before.

(2) For example, credit for cultivation. Crop production involves high costs on inputs such as HYV seeds, fertilizers, pesticides, water, etc. Farmers generally take loans at the beginning of the season and repay the loan after harvest. But the failure of the crop makes loan repayment impossible. They have to sell part of the land to repay the loan. So they become much worse off than before. The incidences of farmers’ suicides, especially in Maharashtra, are the burning examples of this situation.
Thus, whether credit would be useful or not, depends on the risks in the situation.

Question 2.
How does money solve the problem of double coincidence of wants ? Explain with an example of your own.
Answer:
(1) In a barter system where goods are directly exchanged without the use of money, double coincidence of wants is an essential feature. In contrast, in an economy where money is in use, money acts as an intermediate in the exchange process and eliminates the need for double coincidence of wants.

(2) For example, it is no longer necessary for the farmer to look for a book publisher who will buy his cereals and at the same time sell him books for his children. All he has to do is find a buyer for his cereals. If he has exchanged his cereals for money, he can purchase any good or service which he needs. This is because, money acts as a medium of exchange.

UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit

Question 3.
How do banks mediate between those who have surplus money and those who .need money T
Answer:
(1) We know that bahks accept the deposits from the people who have surplus money and also pay an interest on the deposits.
(2) But banks keep only a small, proportion (15% in India) of their deposits as cash with themselves. This is kept as provision to pay the depositors who might come to withdraw money from the bank on any give a day. They use the major portion of the deposits to extend loans to those who need money.
In this way, banks mediate between those who have surplus money and those who need money.

Question 4.
Look at a 10 rupee note What is written on top ? Can you explain this statement ?
Answer:
‘Reserve Bank of India’ and ‘Guaranteed by .the Central Government’ is written on top. In India, the Reserve Bank of India issues currency notes on behalf of the central government. The statement means that the currency is authorised or guaranteed by the central government. That is, Indian law legalises the use of rupee as a medium of payment that can not be refused in settling transaction in India.

Question 5.
Why do we need to expand formal sources of credit in India ?
Answer:
We need to expand formal sources of credit in India for many reasons :
(1) Compared to formal lenders, most of the informal lenders charge a much higher interest on loans.
(2) Besides the high interest rate, informal lenders impose various other tough conditions. For example, they make the farmers promise to sell the crop to him at a low price. There is no such condition in formal sector.
(3) Informal lenders do not treat well with the borrowers. On the other hand, there is no such situation in the formal sector.
(4) The Reserve Bank of India supervises the functioning of formal sources of loans. In contrast, there is no organisation which supervises the credit activities of lenders in the informal sector.
(5) People who might wish to start an enterprise by borrowing may not do so because of the high cost of borrowing from informal sources of credit.
(6) The formal sources of*qjedit in India still meets only about half of the total credit needs of the rural people.
So, it is necessary that the formal sources of credit expand their lending especially in rural areas, so that the dependence on informal sources of credit reduces.

UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit

Question 6.
What is the basic idea behind the SHGs for the poor ? Explain in your own words.
Or
What are Self-Help Groups ? Describe in brief their functioning. [Annual Paper (Outside Delhi), 2009, Set 1]
Answer:
The basic idea behind the SHGs for the poor is to organise rural poor especially women, into small Self Help Groups and collect their savings. They also provide timely loans at a reasonable interest rate without collateral.
Thus, the main objectives of the SHGs are:
(1) to organise rural poor especially women into small Self Help Groups.
(2) to collect savings of their members.
(3) to provide loans without collateral.
(4) to provide timely loans for a variety of purposes.
(5) to provide loans at reasonable rate of interest
(6) provide a platform to discuss and act on a variety of social issues such as education, health, nutrition, domestic violence, etc.

Question 7.
What are the reasons why the banks might not be willing to lend to certain borrowers ?
Answer:
The banks might not be willing to lend certain borrowers. This has the following reasons :
(1) Banks do not wish to give loans to the poor which has no collateral. Bank loans require proper documents and collateral as security against loans. This is because, banks do not know the borrower personally. If the borrower fails to repay the loan, the lender has .the right to sell the asset or collateral to obtain payment.
(2) The borrowers who have not repaid previous loans, the banks might not be willing to lend them again.
(3) The banks might not be willing to lend those entrepreneurs who are ^oing to invest in the business with high risks.
(4) One of the principal objectives of a bank is to earn more profit. It has to pay the corporation tax like any other company, dividend to shareholders, salaries to the staff and meet other expenses. For this purpose, it has to adopt judicious loan and investment policies which ensure fair and stable return on the funds.

UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit

Question 8.
In what ways does the Reserve Bank of India supervise the functions of banks ? Why is this necessary ?
Answer:
(1) The Reserve Bank of India supervises the functions of banks in the following ways :
(i) The commercial banks are required to hold part of their cash reserves with the RBI. That is, banks maintain a minimum cash balance out of the deposits they receive.
(ii) RBI observes that the banks give loans not just to profit making businesses and traders but also to small cultivators, small scale industries, small borrowers, etc.
(iii) The commercial banks have to submit information to the RBI on how much they are lending, to whom, at what interest rate, etc.

(2) This is necessary to protect especially small depositors, farmers, small scale industries, small borrowers, etc.

Question 9.
Analyse the role of credit for development.
Answer:
Cheap and affordable credit plays a crucial role for the country’s development. There is a huge demand for loans for various economic activities. The credit helps people to meet the ongoing expenses of production, complete production on time, and thereby increase their earnings. Many people could then borrow for a variety of different needs. They could grow crops, do business, set up small scale industries, etc. They could establish new industries or trade in goods. In this way, credit is very helpful in the development of a country.

Question 10.
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 will decide whether to borrow from the bank or the moneylender on the basis of following terms of credit:
(i) Lower rate of interest.
(ii) Lower requirements of collateral and documentation.
(iii) Easier mode of repayment.
Manav will prefer to that organisation which will provide him loan on the above easier terms.

Question 11.
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.
Answer:
(a) Bank loans require proper documents and collateral as security against loans. But small farmers lack in documents and collateral. Besides, they do not repay loan on time because of the uncertainty of the crop. So, banks might be unwilling to lend small farmers.

(b) Apart from the bank, the small farmers can borrow from local moneylenders, agricultural traders, big landlords, cooperatives, etc.
(c) The terms of credit can be unfavourable for the small farmer as follows:
Ramu, a small farmer borrows from a local moneylender at a high rate of interest i.e., 3% per month to grow rice. But the crop is hit by drought and the crop fails. As a result, he has to sell a part of the land to repay the loan. Now he is much worse-off than before.

(d) The small farmers can get cheap credit from the following sources:
(i) Banks
(ii) Agricultural Cooperatives
(iii) Self Help Groups (SHGs)

UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit

Question 12.
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.
Answer:
(i) rural
(ii) High
(iii) Reserve Bank of India
(iv) deposits
(v) Collateral.

Question 13.
Choose the most appropriate answer :
(i) In a SHG most of the decisions regarding savings and loan activities are taken by
(а) Bank.
(b) Members.
(c) Non-government organisation.

(ii) Formal sources of credit does not include
(a) Banks.
(b) Cooperatives.
(c) Employers.
Answer:
(i) (b) Members
(ii) (c) Employers.

Additional Project/Activity

Question 1.
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.
UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit- 6
Next, classify the people into two groups based on whom you think might get a bank loan and those who might not. What is the criterion that you have used for classification ?
Answer:
Occupations :
Construction worker
Graduate student who is computer literate
A perse employed in government service
Migrant labourer in Delhi
Household maid
Small trader
Autorickshaw driver for
A worker whose factory has closed down

UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit

Reason for needing a loan :
for day to day needs
to establish computer learning centre
for heavy expenses like marriages, death, etc.
for day-to-day expenses
for daily expenses
for working capital
heavy family expenses
for day-to-day needs.

I have classified the people into two groups who might get bank loan and who can not get a bank loan in the form of following table :
The people who might get bank loan :
(1) Graduate student who is computer literate.
(2) A person employed in government service.
(3) Small trader
(4) Autorickshaw driver

Those people who cannot get a bank loan :
(1) Construction worker.
(2) Migrant labourer in Delhi.,
(3) Household maid.
(4) A worker whose factory has closed down.

The criterion is availability of proper documents and collateral which I have used for classification.

UP Board Class 10 Economics Chapter 3 Money and Credit Additional Important Questions and Answers

Objective Type Questions

Multiple Choice Questions (MCQs)

Question 1.
Which of the following is the reason for accepting paper notes as a medium of exchange ?
(a) It is easy to keep
(b) It is useful
(c) It is authorised by the government of the country id) It is authorised by an agency.
Answer:
(c) It is authorised by the government of the country

Question 2.
Which one of the following authorises money as a medium of exchange ?
(a) Reserve Bank of India
(b) Self-Help Groups
(c) The Central Government
(d) The President of India
Answer:
(c) The Central Government

Question 3.
Which is not the main source of credit for rural households in India ?
(a) Traders
(b) Friends
(c) Commercial Banks
(d) Money lenders
Answer:
(c) Commercial Banks

Question 4.
Which one of the following is not a formal source of credit?
(a) Commercial banks
(b) State Bank of India
(c) Employers
(d) Co-operatives
Answer:
(c) Employers

UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit

Question 5.
Which of the following is not an advantage of self-help group ?
(a) Grant of timely loans
(b) Reasonable interests
(c) A platform to discuss various issues
(d) Does not help women to become self-reliant
Answer:
(d) Does not help women to become self-reliant

Fill in the blanks :

Question 6.
Anything which is generally accepted by the people in exchange of goods and services is called.
Answer:
money

Question 7.
Modern forms of money includes.
Answer:
paper notes and coins

Question 8.
Banks use the major portion of the deposit to.
Answer:
extend loans

Question 9.
A major reason that prevents the poor from getting loans from the banks is.
Answer:
lack of collateral

Question 10.
The functioning of the formal sources of credit is supervised by.
Answer:
Reserve Bank of India

State whether the following statements are True or False:

Question 11.
Money acts as an intermediate in the exchange process.
Answer:
True

Question 12.
Cattle is also included in the modem form of money.
Answer:
False

Question 13.
The difference between the interest charged on borrowers and paid to depositors is the main source of income for banks.
Answer:
True

Question 14.
Formal Sector is the main source of credit foi the rich household.
Answer:
True

UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit

Very Short Answer Type Questions (VSAQs)

Question 15.
Why is money used for exchange?
Answer:
Since money acts as an intermediate in the exchange process, it is called a medium of exchange.

Question 16.
Who issues currency notes in India?
Answer:
Reserve Bank of India

Question 17.
What is credit ?
Answer:
Credit refers to an agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future payment.

Question 18.
What is required to get loan from a bank ?
Answer:
Interest rate, collateral and documentation requirement and the mode of repayment together comprise what is called the ‘terms of credit’.

Question 19.
Mention any two main sources of credit operating in Indian Villages.
Answer:
Moneylenders and traders are the main sources of credit operating in Indian villages.

Question 20.
Why are banks and co-operative societies more popular lending agencies ?
Answer:
They provide loans at cheep rate of interest.

UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit

Match the following:

Question 21.
Match the following and choose the correct answer from the options given below:
(l)’Self-Help Groups – (A) Poor people
(2) Absence of collateral – (B) Rich Households
(3) Formal Source of credit – (C) Saving from ₹ 25 to ₹ 100 or more.
(4) SHG Members – (D) Women Empowerment
Choose the correct option :
(a) (1-C), (2-B), (3-D), (4-A)
(b) (1-D), (2-A), (3-B), (4-C)
(c) (1-D), (2-A), (3-C), (4-B)
(d) (1-B), (2-C), (3-A), (4-D)
Answer:
(c) (1-D), (2-A), (3-C), (4-B).

Question 22.
Study the picture and answer the question that follow:
UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit- 7
Do you think a bank will give the worker stitching a quilt, a loan? Why should credit at reasonable rates be available to all?
Answer:
(1) No. This is because, they are not capable of providing collateral or complicated paper work.
(2) It promotes the development of the country as a whole.

Complete the Table:
Question 23.
UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit- 8

Answer:
UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit- 9

Picture Based Question:

Do you think a bank will give the worker stitching a quilt, a loan? Why should credit at reasonable rates be available to all?
Answer:
(1) No. This is because, they are not capable of providing collateral or complicated paper work.
(2) It promotes the development of the country as a whole. Complete the Table:

Assertion and Reason

Question 24.
In the question given below, there are two statements marked as Assertion (A) and Reason (R). Read the statements and choose the correct option:
Assertion (A) : The modern forms of money currency in India is accepted as medium of exchange,
Reason (R) : The modern form of currency is authorised by the government of the country.
Options :
(a) Both A and R are true and R is the correct explanation of A.
(b) Both A and R are true but R is not the correct explanation of A.
(c) A is correct but R is wrong.
(d) A is wrong but R is correct.
Answer:
(a) Both A and R are true and R is the correct explanation of A.

Case/Source-Based Integrated Questions

Question 25.
Rakesh has taken a loan of f 20 lakhs from the bank to purchase a house. The loan is to be repaid in 5 years in monthly instalments. The bank retained the papers of the new’ house as collateral, which will be returned to Rakesh only when he repays the entire loan.
Analyse the loan information given above : considering one of the terms of credit is missing. Choose the correct option.
(a) Mode of re-payment
(b) Time
(c) Interest on loan
(d) Collateral Type
Answer:
(c) Interest on loan

Question 26.
Arnrita is a government employee and belongs to a rich urban household whereas Rani works as a helper on a construction site and comes from a poor rural household. Both have a crisis at home and wish to take loan. Create a list of arguments explaining who between the two would successfully be able to get the loan from a formal source. Why ?
Answer:
(1) Amrita would successfully be able to get the loan from a formal source.
(2) This has the following reasons :

(1) Since Amrita is a government employee and belongs to a rich urban’household, she would be able to provide cpllateral such as desposits with banks, building, vehicle, etc.
(ii) She would also be capable of providing complicated paper work.
(iii) Being a government employee, she has regular income, she would be able to repay the loan in time.

Subjective Type Questions

Question 27.
How is money used in everyday life ? Explain with examples.
Answer:
(1) The use of money spans a very large part of our everyday life. There are several transac-tions involving money in any single day.
(2) In many of these transactions, goods are bought and sold with the use of money. In Some other transactions, services are exchanged with money. For some, there might not be any actual transfer of money taking place now but, a promise to pay money later.
(3) For example, we purchase books, pencils, chocolates from money. We give doctor’s fee and school fee in money. My father receives monthly salary in money. Hence, money is used in everyday life.

UP Board Solutions for Class 10 Social Science Economics Chapter 3 Money and Credit

Question 28.
What is a demand deposit ? List two advantages of demand deposits.
Answer:
(1) A demand deposit is the deposit with the bank that people have the provision to withdraw the money as and when they require. Since, the deposits in the bank accounts can be withdrawn on demand, these deposits are called demand deposits.
(2) (i) Demand deposits earn an amount as interest.
(ii) They act as a medium of exchange like money. They constitute money in the modem economy. They are accepted widely as a means of payment by way of a cheque instead of cash.

Question 29.
“In rural India, credit often pushes the person into a debt trap.” Explain with an example.
Credit can push the borrower into a situation from which recovery is very painful. Explain With the help of an example.
Answer:
(1) In rural areas, the main demand for credit is for crop production. Farmers usually take crop loans at the beginning of the season to purchase seeds, fertilizers, pesticides, water, electricity, etc. and repay the loan after harvest.
(2) Repayment of the loan is crucially dependent on the income from farming.
(3) For example, as we have studied the case of Swapna in the textbook, the failure of the crop made loan repayment impossible. She had to sell part of the land to repay the loan. Credit, instead of helping Swapna improve her earnings, left her worse off. This is an example of what is commonly called debt trap.

Question 30.
Why is credit a crucial element in the economic development ?
Answer:
(1) Cheap and affordable credit is crucial for the country’s development. It is true that to achieve the over all development of the country, cheap and affordable credit is necessary for all.
(2) This is because, about one-fourth of our population is still poor that have little access to formal sources of credit due to absence of collateral. They have to depend upon the informal sources of credit at high rate of interest.
(3) The elderly and women are the poorest of the poor in our society. So, for the women empowerment, cheap and affordable credit is essential.
(4) Cheap and affordable credit would increase incomes of the poor. They would have to give a little portion of their earnings as interest amount. And the rest is left with themselves. This would make them economically self-dependent.
(5) Economic self-dependency would boost up social status of the people. With their increased earnings, they could grow crops, do business, set up small-scale industries, etc.

Question 31.
How do banks play an important role in the economy of India ? Explain.
Answer:
Banks play an important role in the economy of India as is given below :
(1) Banks mediate between those who have surplus money and those who need money. They take deposits from those who have surplus money and use the major portion of the deposits to extend loans.
(2) They account for 25% of rural credit in India. In this way, they help in increasing economic activities of the borrowers.
(3) In India, banks give loans not just to profit-making business and traders but also to small cultivators, small-scale industries, small borrowers, etc.
(4) Undoubtedly, cheap and affordable credit is crucial for the country’s development. It helps to grow crops, to meet working capital needs of produc-tion and in setting up new industries or trade in goods.
(5) In this way, they help poor people to increase their standard of living. If credit is available to the poor people at low rate of interest and on reasonable terms and conditions, they can improve their economic conditions.

Question 32.
Describe the organisation, working and importance of Self-Help Groups.
Answer:
(1) SHGs are the groups created by the needy persons themselves, especially women to fulfil their credit and loan needs. A typical SHG has 15-20 members, who meet and save regularly.
(2) Saving of per member varies from ? 25 to ^ 100 or more depending on the ability of the people to save.
(3) Members can take small loans from the group itself to meet their needs.
(4) The group charges interest on these loans but this is still less than what the money-lenders charge.
(5) If the group is regular in savings, it becomes eligible for availing loan from the bank. The loan is sanctioned in the name of the group and is meant to create self-employment opportunities for the members.

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