Give any three reasons. Answer: Answer: Reserve Bank of India. Why are most of the poor households deprived from the formal sector of loans? There is a great need to expand formal sector of credit in India because: Question 49. The money which he will get can be used to purchase the wheat or any other commodity in the market. What is money? Some part of that money is given out as loan and the other part is kept with the banks for making payments. Answer: The banks also take part in what we call the secondary functions of the bank. How do they work? Explain with an example. Why can one not refuse a payment made in rupees in India? To save the people from the clutches and exploitation by the moneylenders, it is necessary for the banks and co-operatives to extend their lending activies. Answer: Most of the poor households are deprived from the formal sector of loans because they do not have the collateral to keep with the banks. Answer: Answer: Here we present Money and Credit Class 10 Important Questions and Answers Pdf Social Science Economics Chapter 3, We have collected all the important questions which came in the previous year’s exams. It is accepted as a medium of exchange all over the country. 1, neglect it. More lending would lead to higher incomes and encourage people to invest in agriculture, engage in business and set up small industries. Answer: Question 20. Question 50. Cheap and affordable credit is crucial for a country’s development because: Question 45. Self-Help Groups are financial support groups that are formed at the village level Define credit. People can also start a business or set up a small scale industry. Suggest any five measures. These groups provide timely loans for a variety of purposes and at a reasonable rate of interest to its members. How does credit play a vital and positive role? the commercial banks make money through deposits and loans. Explain with an example. Mention four features of each. Each time you swipe your card at a store, the store, or merchant, pays an interchange fee. Page 52: Question 1: In situations with high risks, credit might create further problems for the borrower. Why is rupee widely accepted as a medium of exchange? Answer: It would lead to higher incomes and improve the condition of the rural poor. Answer: Cheap and easy terms of credit would inspire better investment in technology and thus increase competition. Explain with examples, how people are involved with the banks. AH he has to do is to find a buyer for his shoes, who will exchange his money for shoes. Cheap and easy terms of credit would inspire better investment in technology and thus increase competition. Banks and cooperatives should expand their facility of providing loans so as to decrease dependence on informal sector. Commercial banks, which are also called business banks or corporate banks, manage payments for customers, provide lines of credit to manage cash flow, and offer foreign exchange services for companies that do business overseas. of interest on loans than what they offer on deposits. hey provide easy loans on nominal rates that make it possible for the common man to build their own assets. It is not just that most money is in the form of bank accounts. By keeping a collateral with the lender, the borrower is bound to be regular in paying the interest because the borrower does not want to lose the collateral. A cheque is a paper instructing the bank to pay a specific amount from a person’s account to the person in whose name the cheque has been issued. Banks brought in a whopping $10 billion in fees from the government's $350 billion emergency lending small business Paycheck Protection Program (PPP), according to … It doesn't remain locked away in the bank vault – instead, the money you deposit into a savings account is used by the bank to make loans to other people and businesses in your community so that they have the money to pay for big expenses like houses and cars, or even to operate a business. Which government body supervises the functioning of formal sources of loans in India? What is the formula for gross national income? Answer: Question: Name the organisation which issues currency notes in India on behalf of the Central Government. How does the use of money make exchange of things easier? Banks and cooperatives should extend their lending activities in rural areas because: Question 24. Most investment banks, for example, trade shares, foreign currencies and commodities (like oil or gold) in financial markets on behalf of their clients. 52 Question 1: In situations with high risks, credit might create further problems for the borrower. Reserve Bank of India supervises the functioning of formal sources of loans in India. “Whether credit will be useful or not, depends upon the situation.” Give two different examples in support of this statement Deposits in the bank account which are payable on demand are called demand deposits. How can the formal sector loans be made beneficial for poor farmers and It’s a business which earns from the masses, the accountholders and since almost every person has a bank account, these ways turn into a honey pot of profits for the banks. How is money used as a medium of exchange? Question 8. Question 13. Question 58. Answer: A collateral is an asset such as land, building, livestock, vehicle or deposits with the banks that the borrower owns and uses this as a guarantee to the lender until the loan is repaid. The banks keep the money safe and provide interest on it. So, if you earn $50,000 a year, aim to have $50,000 in savings when you hit 30. In urban sector, big businessmen and small manufacturers need loans either to expand their enterprises, bring new technology or diversifying their businesses. Bank loans require proper documentation and collateral which is rarely available with poor households. Question 21. Banks and money are intertwined. They charge a higher rate There is no organisation to supervise credit activities of the informal sector. 2. Question 23. It solves the problem of double coincidence of wants by acting as a medium of exchange. Why is cheap and affordable credit important for the country’s development? hat is meant by double coincidence of wants? By age 35: Have twice your annual salary saved. Here's the income you'd have to earn each year to be considered middle class. money, goods or services in return for the promise of future payments with By serving as a medium of exchange, money removes the situation of double coincidence of wants and the difficulties associated with the barter system. It solves the problem of double coincidence of wants. These questions will act as extra questions. Explain. The most common amount that students had in their bank accounts was highest for Mathematics and Business majors at $2001-$5000 compared to Sciences, Engineering, and Arts and Education majors that had $51-$500, $51-$500, and $0-$50, respectively. Explain with an example. ‘Credit has its own unique role for development.’ Justify the statement with arguments. They have to sell part of the land to repay the loan or a fresh loan may be required to repay the previous loan, and the borrower may find himself caught in a vicious circle and recovery from such a situation is very painful. ,. Explain two points of differences between formal and informal sources of credit. Answer: Answer: Let us take an example of a farmer who wants to sell wheat and wants to buy goat in lieu of that. Calculating interest on a savings bank account: 1. The members can take loans from the groups to meet their daily needs. It is authorised by the government of India. Traditionally, banks made money by borrowing from depositors at low interest rates, lending that money at higher interest rates to borrowers, and pocketing the difference. It is the group that is responsible for the repayment of loan. Question 40. It makes economic activities quite independent from each other. According to a 2018 report from the Pew Research Center, about half of American adults live in "middle class" households. How are they emerging as an important source of by the government of India. Explain any three reasons. For payment through cheque, the payer who has an account in the bank, draws out a cheque for a specific amount. Answer: Banks and Cooperatives, Question 56. Most banks do. It could lead to increasing debt among the borrowers. They therefore actually create money out of nothing, thin air! Answer: Question 55. Higher APY: With a significant savings account balance, you should be eligible to earn more—a higher annual percentage yield (APY)—on your deposits. The higher interest rate of borrowing can mean that the amount to be repaid is greater than the income of the borrower in informal sector. The following points sum up the functioning of Self-Help Groups: Question 28. Describe the vital and positive role of credit with examples. Which are the two major sources of formal loan for rural households? Explain. How is money safe in the banks? Banking used to be heavily regulated, and the joke was that it was a 3-6-3 business; borrow money at 3%, lend it at 6%, and be at the g… 4) Money is sometimes paid as advance with the promise of delivery of goods later. They have freed borrowers from the clutches of the moneylenders. A system where goods are directly exchanged without the use of money is called barter system. How can money be easily exchange for goods or services? Question 9. When a member of the group is in need of money, he/she can get the loan from the group at a low rate of interest. How to Earn and Save Money. He has to look for a person who wants sugar and has wheat to sell. Answer: Question: Mention a major source of income for the banks. Answer: People often avail themselves of credit to purchase luxury items like vehicles, A.Cs, etc., which further raises their standard of living. These groups provide a platform to discuss a variety of social issues of rural people. Question 37. Consistent studies from day 1 and solving as many problems/questions as possible is the only way to score near-perfect marks in the board exams. The informal sector lends at a very high rate of interest and use unfair means to get the money back. They avail the facilities of loans from formal sources like banks at low rate of interest. They earn interest on their deposits. Money is used as a medium of exchange because it serves as a common medium People’s money remains safe with the banks. Modern money has been accepted as a medium of exchange because: Question 44. In formal sector, the rate of interest is low. Interchange is the money banks make from processing credit and debit transactions. Question 5. You can specify conditions of storing and accessing cookies in your browser, वस्तु की 12 इकाईयों को उत्पादित करने पर ओसत लागत40 रू है। ऐसे में 12 इकाईयों की उत्पादित करने की कुल लागत क्या होगी? Use of money makes “Cheap and affordable credit is crucial for the country’s development.” Assess the statement. A bank keeps a certain part of its deposits as a minimum reserve to meet the demands … The rate of interest charged by the informal sector is very high as compared to formal sector. Question 4. There are no minimum balance requirements to open any of these accounts, nor any monthly maintenance fees. Cheap credit would thus lead to increase in production. Answer: They deposit it with the banks by opening a bank account in their name. It ensures that the banks should give loans not only to profit making businesses but also to poor people and small traders. Reserve Bank of India supervises the functioning of formal sources of credit, (id) Urban households are largely depend on formal sources of credit. Sometimes, if the borrowers are unable to return the loan, they can get additional loans from moneylenders. Answer: So, the money is safe with the banks. Aman will write a cheque in the name of Shurti. It is necessary to supervise the functioning of formal sources of loans because the banks have to maintain a minimum cash balance out of the deposits they receive. Periodically, the banks have to submit a report to the RBI on how much they are lending, to whom and at what interest rate. Money is used as a medium of exchange because it serves as a common medium What is the meaning of barter system? How Banks Earn their Money - Risks and Rewards Banks need to make enough money to pay their employees, maintain the buildings and run the business. Question 19. Become a resident advisor. Money solves the problem of double coincidence of wants by acting as a medium of exchange. At the same time, it removes the inconvenience caused by the barter system. Answer: Explain with an example. In this way people's money is safe with the banks and it earns an amount as interest. Why are the deposits in the banks called ‘demand deposits’? They charge higher rate of interest and the mode of repayment is very harsh. What are demand deposits? Give an example to explain. How is money transferred from one bank account to another bank account? Question 3. Answer: Prove with an argument that there is a great need to expand formal sources of credit in rural India. It issues guidelines for fixing rate of interest on deposits and lending by banks. Affordable credit would also end the cycle of debt trap. Explain any four terms of credit with examples. Explain. Question 57. It's also a great industry to lose money in for investors who don't understand it. Answer: The credit activities of the informal sector should be discouraged because: Question 10. When a cardholder fails to repay their entire balance in a given month, interest fees are charged to the account. Answer: Explain. exchange? 5. Secondary Functions Of The Bank. That is why they are called demand deposits. Double coincidence of wants means owner of good X, say shoes, to find someone else with good Y, say wheat, and both being in need of each other’s good. Banks accept the deposits and also pay an amount as interest on the deposits. It is an asset that the borrower owns and uses this as a guarantee to the lender – until the loan is repaid. Answer: A bank is an institution that accepts the surplus deposits and … There is a great need to expand the formal sources of credit in rural India because: Question 6. The people with excess money deposit it in the banks for safety. After two or three days, the money will be transferred from Aman’s account to Shurti’s account. Lending money is the main source of income for banks. The economic value attached to cheap and affordable credit is that it helps the poor in rural and urban households to start self-employment ventures. There is no organisation to supervise the functioning of informal sources of credit. Answer: Answer: Bank credit means bank loans and advances. A large part of the earnings of borrower is used to repay the loans. The law legalises the use of rupee as a medium of payment and settling the transactions. For example, a shoe manufacturer wants to sell shoes in the market and wants to buy rice. The bank has $10 million in deposits. Read on to see how banks really use your deposits to make loans and to what extent they need your money to do so. Explain any three reasons. Make sure you get sleeves and bands for each money denomination. It is used for borrowing and lending like loan. The money which he will get can be used to purchase the wheat or any other commodity in the market. Answer: Loan is sanctioned in the name of the group. It can be easily exchanged with any commodity or service. It is authorised by the government of a India. Banks, being the formal source of credit, give loans at a very low rate of interest at flexible terms and conditions. Explain with examples. No other individual is allowed to issue currency. Farmers generally take loans at the beginning of the season and repay the loan after harvest. Credit refers to an agreement in which the lender supplies the borrower with But finding such a person can be difficult and time-consuming. There is no organisation to supervise the credit activities of the lenders in informal sector. How does money solves the problem of double coincidence of wants? Commercial banks make money by providing and earning interest from loans such … You can also find Social Science Class 10 Important Questions With Answers Pdf from the year 2010 to 2020 CBSE board exams. Answer: Some of them are: Question 12. You can also download NCERT Maths Class 10 to help you to revise complete syllabus and score more marks in your examinations. Thus, the problem of double coincidence of wants gets solved with the use of money. It makes it possible for the people to own or construct their own house and get relief from monthly rent. They charge low rate of interest and the mode of repayment is easy. Answer: Credit plays a vital and positive role in the following ways: Question 16. Answer: What is a collateral? For example, it is no longer necessary for a shoe manufacturer to* look for a farmer who will buy his shoes and at the same time sell him wheat. Answer: Banks and cooperatives should extend their lending activities in rural areas because: Question 36. 28 (2. This helps in increasing their income earning capacity and standard of living. Cheap and affordable credit is crucial for a country’s development because: Question 11. They cannot afford to lend to the poor and suffer losses in the bargain. Hence, we can say that it depends on situation whether credit will be useful or not. Deposits with the banks are beneficial to the depositors as well as to the nation in various ways. (1). Under barter system, both parties selling shoes and rice have to agree to buy and sell each other’s commodities and this creates a problem which is referred to as double coincidence of wants. To be sure, banks do collect fees when processing any SBA loan, but rarely, if ever, have banks processed this volume of loans this quickly with fees ranging past $10 billion in a two-week period. Use of money makes The cheque is a statement asking the bank to pay a specific amount from the person’s account to the person in whose name the cheque has been issued. These consist of around 15-20 members who meet and save their money regularly. Answer: They make it possible for the poor to avail timely finance without any collateral. At that time, students can’t sit and solve all the questions of the Class 10 NCERT textbook.In such a situation, they need some questions from important topics of each chapter compiled at one place. It issues currency notes on behalf of the central government. Question 54. Banks do other things too. This leads to acceleration of economic activity. The majority of money from interchange goes to your bank–the consumer’s bank–and a little goes to the merchant’s bank. If you don’t know how many you need, ask for five of each to start with. The law of the country legalises its use as a medium of payment and setting transactions. Answer: Explain its functioning. Why is the supervision of the functioning of formal sources of loans necessary? Goa Board Class 10 Solutions for Economics – Money and Credit (English Medium) Page No. OTP has been sent to your mobile number and is valid for one hour Market demand for a good at rupees 4 per unit is 1,000 units the price rises. Banks make money because they loan out at least 10 times more money than what they have. Why is it necessary for the banks and cooperative societies to increase their lending facilities in rural areas? 2. Answer: Endnote. What are the benifits of deposits with the banks? These groups are collectively responsible for the repayment of loan. Question 2. Explain Solution : While credit may help the borrower in initiating his/her business or work, at times in situation of high risk, it may create further […] Investment banks help businesses raise capital in financial markets. Explain two reasons. In this simplified example, Singleton Bank cannot earn any interest income from these loans and cannot pay its depositors an interest rate either. This problem is overcome by the introduction of money. Collateral with the lender acts as a proof that the borrower will return the money. Find more@learnfatafat Answer: If the interest is less than Rs. Looking after your money, lending money and helping you pay for things are the main ways that people use banks in their daily lives. Credit has a unique role in the economic development of the country. 2010. By age 40: Have three times your annual salary saved. Answer: They can be encashed by issuing cheques in the name of the person to whom the payment is to be made. What are the modern forms of money? They provide easy loans on nominal rates that make it possible for the common man to build their own assets. Be aware of the career path for bank managers. For example, Salim availed credit facility to meet the working capital needs of production. They provide interests on the deposited money to the depositors. In informal sector, the rate of interest is very high as there is no organisation to supervise the functioning of informal sources of loan. 3) Goods are also bought with a promise to pay money later. which allows enrichment of human resource. Modern money has been accepted as a medium of exchange because: Question 25. If the group is regular in its savings, they can also take loan from the bank. “The credit activities of the informal sector should be discouraged.” Support the statement with arguments. Money is anything which has common acceptability as a means of exchange, a measure and a store of value. …, Four ways in which specialisation has improved economic development of Nigeria, What was the contribution of the primary sector to net domestic product in india, Do you think every country has same poverty line? How does credit plays a vital and positive role? However, if the same balance continues for n months then multiply this balance by n, rather than writing it n times and then adding. long Answer Type Questions [4/5 Marks]. It can be difficult to earn and save money, especially if you are not great at money-management and are struggling to pay off your debts. Explain These groups help in pooling the savings of the members, especially who are poor women. Question 18. Answer: Evaluate how much banks pay at different levels, and shop around. The formal sector is willing to lend to the members of SHGs because of their good track record of managing the credit. The group is responsible for the repayment of loan. They help the poor to become self-reliant in terms of savings and generating income as the decisions regarding savings are taken by the group members. The deposits can be drawn at any time on demand by the depositors. Credit plays a vital and positive role in the following ways: Question 34. Answer: CBSE Maths notes, CBSE physics notes, CBSE chemistry notes. These groups help the borrowers to overcome the problem of lack of collateral. Answer: Why do lenders ask for collateral while lending? Who supervises the functioning of formal sources of loans? They make it possible to directly settle payments without the use of cash. Collateral is an asset that the borrower owns such as land, building, vehicle, Money has made transactions easy because: Question 26. So I'm getting 10%. Methodology: In order to find out how much you need to earn to be ‘rich’ in each state, GOBankingRates looked at the 2018 American Community Survey conducted by the U.S. Census Bureau to source the (1) average household income of the top 5% in every state and (2) lower limit household income for the top 5% in every state. Answer: Figure 1. Answer: Deposits with the banks are beneficial to the depositors as well as to the nation in various ways. Why do lenders ask for a collateral while lending? The difference between what is charged from borrowers and what is paid to the depositors is the main source of income for the banks. interest. statement with examples. What else do banks do? The two categories of sources of credit are: The features of formal sources of credit are: The features of informal sources of credit are: Question 42. For example, Aman has to pay a specific amount of money to Shruti, say ? The process of providing loans should be made easier and accessible to them. Commercial banking isn’t free. These questions […] 3. through which people can carry out buying and selling. How do banks play an important role in the economy of India? Answer: Explain? 2) Services are being exchanged with money. Enter OTP. How Banks Earn their Money - Risks and Rewards Banks need to make enough money to pay their employees, maintain the buildings and run the business. The lenders ask for a collateral before lending because: Question 35. Higher cost of borrowing means a large part of the earnings of the borrowers is used to repay the loan. Back to Lesson Money Money can be defined as anything that act as medium of exchange, store of value and unit of accounting to facilitate the economic LearnFatafat Money and credit Class 10 notes for CBSE board. No interest is paid fo… The classifications are updated each year on July 1 and are based on GNI per capita in current USD (using the Atlas method exchange rates) of … How do SHGs help borrowers to overcome the problem of lack of collateral? Poor households are largely depend on informal sources of credit. What are the two forms of modern currency? Find simple interest on this sum for one month. They provide safe and secure deposits to a person’s money. Since, money is used in the exchange process it is called a medium of exchange. Answer: In short, How do banks make money? But the failure of the crop makes loan repayment impossible. The formal sector loans can be made beneficial to poor farmers and workers in following ways: Question 17. Answer: The social value attached to cheap and affordable credit is that it helps in reducing the dependence of poor on informal sources of credit. Modern forms of money include paper notes and coins. There is no organisation to supervise the credit activities of lenders in informal sector. It is fixed by the Reserve Bank of India, who supervises the functioning of formal sources of loan. Special focus should be paid on poor and small farmers along with small scale industries. economic activities independent of each other. What are Self-Help Groups? It is issued by the apex bank on behalf of the government. It means Aman instructs his bank to pay the money to Shurti. Hence, the borrowers have less income left for themselves. They create self-employment opportunities by discussion within their group. No one in a country can refuse payment made in the currency of that country. Answer: Explain with examples. He has to look for a person who wants sugar and has wheat to sell. Credit plays a vital and positive role in the following ways: Question 60. They include moneylenders, relatives, friends etc. In situation with high risks, credit might create problems and pushes the borrower into a debt-trap. Why is there a great need to expand formal sector of credit in India? Singleton Bank is required by the Federal Reserve to keep $1 million on reserve (10… 4. 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The entire structure of banking is based on credit. Ally is a popular online bank with just about every account you could possibly want: checking and savings, CDs, money market accounts, IRAs, as well as many different kinds of loans. Cheap credit will enable more investment. In everyday life, money is used in following ways: Question 32. Question 7. There are three main ways banks make money: by charging interest on money that they lend, by charging fees for services they provide and by trading financial instruments in the financial markets. They keep a collateral from the borrowers for granting loans. Shurti will deposit the cheque in her bank. Transactions are made in money because a person holding money can easily exchange it for any commodity or a service. Quick revision online notes covering each and every topic of the chapter. Question 1. Ans.Banks are present everywhere, but it is very d ifficult for poor households to get loan from the bank than taking a loan from informal sour ce. “Poor households still depend on informal sources of credit.” Support the Answer: 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. Mention any three points of distinction between formal sector loans and informal sector loans. What is a cheque? For example, crop production involves high costs on inputs such as fertilizers, pesticides, water etc. Sometimes, a higher rate of lending means that the amount to be repaid is more than the earnings of the borrower. Answer: They help borrowers to overcome the problem of collateral. Free Question Bank for 10th Class Mathematics. admin October 30, 2018 10th Class, Social Science Leave a comment 2,599 Views Question: What is a bank? “Most of the poor households still depend on the informal sector for loans, Banks mediate between people who have surplus and those who need money. Getting the purchasing power now and promising to pay the money deposited banks are beneficial to poor and. Question 6 for Economics – money and credit ( English medium ) Page no construct their assets... Number of banks and cooperative societies to increase their income earning capacity and standard living... Coins to the nation been accepted as a result, the store, merchant... Fund products etc of non-payment of how do banks earn class 10 by any member is followed up seriously other! 10 Solutions for Economics – money and with that money he can buy how do banks earn class 10 the name Shurti. 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Credit for education, training, etc loans should be simple, faster timely! 2020.. as compared to the members of the chapter as loan and the mode repayment! Electricity, repair of equipments can withdraw their money whenever they want Views Question what. How 97 % of money women, who will exchange his money for shoes of them all is no to! How do SHGs help borrowers to overcome the problem of double coincidence of wants by acting as a result the... Construct their own house and get rid of from informal moneylenders since demand drafts/cheques are widely accepted as medium. Flexible terms and conditions avail timely finance without any collateral ( in the board.. Loans on nominal rates that make it possible for the common man to their. Beneficial to the public or selling insurance products and selling mutual fund products etc their banking one not a... On a savings bank account to another bank account in their name followed up seriously by other members, people... People can also download NCERT Maths Class 10 Solutions for Economics – money and (. That banks make money removes the inconvenience caused by the government of a country purchase the or. Keep a collateral borrowers have less income left for themselves: credit plays a vital and positive role debt-trap! Credit. ” Support the statement with arguments drafts/cheques are widely accepted as a result, the money, the manufacturer. That banks should maintain a minimum cash balance out of nothing, thin air credit might further!
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