Table of Contents
Money and Credit Notes class 10
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41.Which are the two major sources of formal loan for rural households?
Ans. Banks and Cooperatives.
42.Who supervises the functioning of formal sources of loans?
Ans. Reserve Bank of India
43.Why are banks unwilling to lend loans to small farmers?
Or
Why are most of the poor households deprived from formal sector of loans?
Ans. Banks provide loans after collateral and documentation securities, which generally the small framers fail to comply with. Therefore, banks are unwilling to give loans to small farmers.
44.What kind of credit is crucial for a country’s development?
Ans. Cheap and affordable credit plays a crucial role in a country’s development.
45.Besides banks, what are the other sources of credit from which the small farmers borrow?
Ans. Besides banks, the small farmers borrow from landlords, moneylenders, traders, relatives and friends etc.
46.What are SHGs?
Ans. They are Self-Help Groups formed by the poor rural women.
47.What does the stock of money consist of?
Ans. The stock of money consists of currency held by the public and the demand deposits that they hold with the banks.
48.What is money? Why is modern money currency accepted as a medium of exchange?
Ans. Money is anything which has common acceptability, as means of exchange, a measure and a store of value
It has been accepted as a medium of exchange because:
- Goods and services are being bought and sold with the use of money easily.
- Money solves the problem of double coincidence of wants.
- Money is sometimes paid as advance with the promise of delivery of goods later.
- It is a perfect store of value.
- It makes economic activities quite independent from each other.
49.How can money be easily exchanged for goods and services? Give an example to explain.
Or
Why are transactions made in money? Explain with suitable examples.
Or
How is money used as medium of exchange? Explain with examples.
Ans. Money is used as a medium of exchange because it serves as a common medium through which people can carry out buying and selling. Use of money makes economic activities independent of each other. At the same time, it removes the inconvenience caused by the barter system.
For example, a person wants to sell sugar and buy wheat, he has to look for a person who wants sugar and has wheat to sell. In contrast, if in an economy, where money is used, the person who wants to sell sugar only has to look for a buyer for his sugar. The money which he will get can be used to purchase the wheat or any other commodity in the market. Since, money is used in the exchange process it is called a medium of exchange.
50.What are demand deposits? How is money safe with the banks? Explain.
Ans. The deposits in the bank accounts which can be withdrawn on demand are called demand deposits.
People deposit their surplus cash at the beginning of the month with the banks, where they have an account in their names. Banks accept these deposits and also pay an amount (as an interest) on these deposits. In this way, people’s money is safe with the banks and also earns an amount in the form of interest.
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