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![NCERT solutions for सोशल सायन्स अंडरस्टॅंडिंग इकॉनॉमिक्स डेवलपमेंट [इंग्रजी] इयत्ता १० chapter 3 - Money and Credit - Shaalaa.com](/images/social-science-understanding-economic-development-english-class-10_6:85bdf698b6c240edbabfd600621e35fb.jpg "NCERT solutions for सोशल सायन्स अंडरस्टॅंडिंग इकॉनॉमिक्स डेवलपमेंट [इंग्रजी] इयत्ता १० chapter 3 - Money and Credit")
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Solutions for Chapter 3: Money and Credit
Below listed, you can find solutions for Chapter 3 of CBSE NCERT for सोशल सायन्स अंडरस्टॅंडिंग इकॉनॉमिक्स डेवलपमेंट [इंग्रजी] इयत्ता १०.
NCERT solutions for सोशल सायन्स अंडरस्टॅंडिंग इकॉनॉमिक्स डेवलपमेंट [इंग्रजी] इयत्ता १० 3 Money and Credit Intext Questions [Pages 40 - 50]
LET’S WORK THESE OUT
How does the use of money make it easier to exchange things? Give an example.
Can you think of some examples of goods/services being exchanged through barter?
Can you think of some examples of wages being paid through barter?
LET’S WORK THESE OUT
M. Salim wants to withdraw Rs 20,000 in cash for making payments. How would he write a cheque to withdraw money?
Tick the correct answer.
| A shoe manufacturer, M. Salim has to make a payment to the leather supplier and writes a cheque for a specific amount. This means that the shoe manufacturer instructs his bank to pay this amount to the leather supplier. The leather supplier takes this cheque and deposits it in his own account in the bank. The money is transferred from one bank account to another bank account in a couple of days. The transaction is complete without any payment of cash. |
After the transaction between Salim and Prem, ______.
Salim’s balance in his bank account increases, and Prem’s balance increases.
Salim’s balance in his bank account decreases and Prem’s balance increases
Salim’s balance in his bank account increases and Prem’s balance decreases
Why are demand deposits considered as money?
What do you think would happen if all the depositors went to ask for their money at the same time?
LET’S WORK THESE OUT
(1) Festival Season
|
It is festival season two months from now and the shoe manufacturer, Salim, has received an order from a large trader in town for 3,000 pairs of shoes to be delivered in a month time. To complete production on time, Salim has to hire a few more workers for stitching and pasting work. He has to purchase the raw materials. To meet these expenses, Salim obtains loans from two sources. First, he asks the leather supplier to supply leather now and promises to pay him later. Second, he obtains loan in cash from the large trader as advance payment for 1000 pairs of shoes with a promise to deliver the whole order by the end of the month. At the end of the month, Salim is able to deliver the order, make a good profit, and repay the money that he had borrowed. |
(2) Swapna’s Problem
| Swapna, a small farmer, grows groundnut on her three acres of land. She takes a loan from the moneylender to meet the expenses of cultivation, hoping that her harvest would help repay the loan. Midway through the season the crop is hit by pests and the crop fails. Though Swapna sprays her crops with expensive pesticides, it makes little difference. She is unable to repay the moneylender and the debt grows over the year into a large amount. Next year, Swapna takes a fresh loan for cultivation. It is a normal crop this year. But the earnings are not enough to cover the old loan. She is caught in debt. She has to sell a part of the land to pay off the debt. |
- Fill the following table.
Salim Swapna Why did they need credit? What was the risk? What was the outcome? - Supposing Salim continues to get orders from traders. What would be his position after 6 years?
- What are the reasons that make Swapna’s situation so risky? Discuss factors - pesticides, role of moneylenders, and climate.
|
A House Loan Megha has taken a loan of Rs 5 lakhs from the bank to purchase a house. The 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. |
Fill the following details of Megha’s housing loan.
| Loan amount (in Rupees) | |
| Duration of loan | |
| Documents required | |
| Interest rate | |
| Mode of repayment | |
| Collateral |
LET’S WORK THESE OUT
Why do banks or lenders demand collateral against loans?
Given that a large number of people in our country are poor, does it in any way affect their capacity to borrow?
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 documentation requirements.
LET’S WORK THESE OUT
|
Shyamal tells us that every season he needs loans for cultivation on his 1.5 acres of land. Till a few years back, he would borrow money from the village moneylender at an interest rate of five per cent per month (60% per annum). For the last few years, Shyamal has been borrowing from an agricultural trader in the village at an interest rate of three per cent per month. At the beginning of the cropping season, the trader supplies the farm inputs on credit, which is to be repaid when the crops are ready for harvest. Besides the interest charge on the loan, the trader also makes the farmers promise to sell the crop to him. This way the trader can ensure that the money is repaid promptly. Also, since the crop prices are low after the harvest, the trader is able to make a profit from buying the crop at a low price from the farmers and then selling it later when the price has risen. |
| We next meet Arun who is supervising the work of one farm labourer. Arun has seven acres of land. He is one of the few persons in Sonpur to receive bank loan for cultivation. The interest rate on the loan is 8.5 per cent per annum, and can be repaid anytime in the next three years. Arun plans to repay the loan after harvest by selling a part of the crop. He then intends to store the rest of the potatoes in a cold storage and apply for a fresh loan from the bank against the cold storage receipt. The bank offers this facility to farmers who have taken crop loan from them. |
| Rama is working in a neighbouring field. She works as an agricultural labourer. There are several months in the year when Rama has no work, and needs credit to meet the daily expenses. Expenses on sudden illnesses or functions in the family are also met through loans. Rama has to depend on her employer, a medium landowner in Sonpur, for credit. The landowner charges an interest rate of 5 per cent per month. Rama repays the money by working for the landowner. Most of the time, Rama has to take a fresh loan, before the previous loan has been repaid. At present, she owes the landowner Rs 5,000. Though the landowner doesn’t treat her well, she continues to work for him since she can get loans from him when in need. Rama tells us that the only source of credit for the landless people in Sonpur are the landowner-employers. |
- List the various sources of credit in Sonpur.
- Underline the various uses of credit in Sonpur in the above passages.
- Compare the terms of credit for the small farmer, the medium farmer and the landless agricultural worker in Sonpur.
- Why will Arun have a higher income from cultivation compared to Shyamal?
- Can everyone in Sonpur get credit at a cheap rate? Who are the people who can?
- Choose the correct answer.
- Over the years, Rama’s debt ______.
- will rise
- will remain constant
- will decline
- 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
- Over the years, Rama’s debt ______.
- 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.
LET’S WORK THESE OUT
Distinguish between formal and informal sources of credit.
Why should credit at reasonable rates be available for all?
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?
Why do you think that the share of formal sector credit is higher for the richer households compared to the poorer households?
NCERT solutions for सोशल सायन्स अंडरस्टॅंडिंग इकॉनॉमिक्स डेवलपमेंट [इंग्रजी] इयत्ता १० 3 Money and Credit Exercises [Pages 52 - 53]
In situations with high risks, credit might create further problems for the borrower. Explain.
How does money solve the problem of double coincidence of wants? Explain with an example of your own.
How do banks mediate between those who have surplus money and those who need money?
Look at a 10 rupee note. What is written on top? Can you explain this statement?
Why do we need to expand formal sources of credit in India?
What is the basic idea behind the SHGs for the poor? Explain in your own words.
What are the reasons why the banks might not be willing to lend to certain borrowers?
In what ways does the Reserve Bank of India supervise the functioning of banks? Why is this necessary?
Analyse the role of credit for 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.
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?
In India, about 80 per cent of farmers are small farmers, who need credit for cultivation.
What are the other sources from which the small farmers can borrow?
In India, about 80 per cent of farmers are small farmers, who need credit for cultivation.
Explain with an example of how the terms of credit can be unfavourable for the small farmer.
In India, about 80 per cent of farmers are small farmers, who need credit for cultivation.
Suggest some ways by which small farmers can get cheap credit.
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.
Choose the most appropriate answer.
In a SHG most of the decisions regarding savings and loan activities are taken by ______.
Bank
Members
Non-government organisation
Formal sources of credit does not include ______.
Banks
Cooperatives
Employers
ADDITIONAL PROJECT/ACTIVITY
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 factory has closed down |
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?
Solutions for 3: Money and Credit
NCERT solutions for सोशल सायन्स अंडरस्टॅंडिंग इकॉनॉमिक्स डेवलपमेंट [इंग्रजी] इयत्ता १० chapter 3 - Money and Credit
Shaalaa.com has the CBSE Mathematics सोशल सायन्स अंडरस्टॅंडिंग इकॉनॉमिक्स डेवलपमेंट [इंग्रजी] इयत्ता १० CBSE solutions in a manner that help students grasp basic concepts better and faster. The detailed, step-by-step solutions will help you understand the concepts better and clarify any confusion. NCERT solutions for Mathematics सोशल सायन्स अंडरस्टॅंडिंग इकॉनॉमिक्स डेवलपमेंट [इंग्रजी] इयत्ता १० CBSE 3 (Money and Credit) include all questions with answers and detailed explanations. This will clear students' doubts about questions and improve their application skills while preparing for board exams.
Further, we at Shaalaa.com provide such solutions so students can prepare for written exams. NCERT textbook solutions can be a core help for self-study and provide excellent self-help guidance for students.
Concepts covered in सोशल सायन्स अंडरस्टॅंडिंग इकॉनॉमिक्स डेवलपमेंट [इंग्रजी] इयत्ता १० chapter 3 Money and Credit are Role of Money in an Economy, Formal and Informal Financial Institutions for Savings and Credit, Formal Institution - Nationalized Commercial Bank, Informal Institutions - Local Money Lenders, Landlords, Self Help Groups, Chit Funds and Private Finance Companies, Overview of Money and Credit, Self-Help Groups for the Poor, Money as a Medium of Exchange, Loan Activities of Banks, Two Different Credit Situations, Terms of Credit, Formal Sector Credit in India, Modern Forms of Money.
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