Table of Contents
Money and Credit Notes class 10
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31.The modern currency is accepted as a medium of exchange. Why?
Ans. It is accepted as a medium of exchange because it is authorized by the government of India.
32.Why one cannot refuse a payment made in rupees in India?
Ans. One cannot refuse a payment made in rupees in India because it is authorized by the Indian Government.
33.Define a bank.
Ans. A bank is a financial institution whose demand deposits are widely accepted as money for making payments and has the power to create money.
34.What are demand deposits?
Ans. Deposits in the bank accounts, which can be withdrawn on demand are called demand deposits.35What is cheque?
Ans. A cheque is an instrument instructing the bank to pay a specific amount from the person’s account to the person in whose name the cheque has been issued.
35.What determines the main source of income for the banks?
Ans. It is the difference between what is charged from the borrowers and what is paid to the depositors or savers, which determines the income of the banks.
36.Define credit.
Or
What do you understand by the term ‘credit’?
Ans. Credit or loan refers to an agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future repayment.
37.For what purpose credit is mainly demanded in rural areas?
Ans. Credit is mainly demanded for the purpose of crop production in rural areas.
38.What is a debt-trap?
Ans. A debt-trap is a situation when it becomes impossible to repay the loan and the borrower adds on a new debt to pay the existing debt.
39.What is collateral?
Ans. Collateral is an asset, such as land, vehicle, building, livestock and deposits with banks, that the borrower owns and uses this as a guarantee to a lender until the loan is repaid.
40.What are the main ‘terms of credit’?
Ans. Interest rate, collateral, documentation requirements and the mode of repayment together comprise ‘terms of credit’.
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