NCERT Class 10 Economics Chapter 3 Money And Credit Very Short Answer Questions
Question 1. What is collateral?
Answer:
Collateral is an asset that the borrower owns (such as land, building vehicles, livestock, etc.) and is used as a guarantee to the lender until the loan is repaid.
Question 2. From where is the formal source of credit available?
Answer:
A formal source of credit is available through banks and cooperatives.
Question 3. What is the idea behind the Self-Help Groups?
Answer:
The basic idea behind the Self Help Groups is to organize the rural poor into self-help groups and collect their savings.
Question 4. What is the system of exchanging goods from goods called?
Answer:
The system of exchanging goods for goods is called the Barter System.
Question 5. Mention one main function of RBI.
Answer:
Reserve Bank of India supervises the functioning of formal sources of loans.
Question 6. Why do the banks keep a major portion of deposits?
Answer:
Banks keep a major portion of deposits to extend loans.
Question 7. Define double confidence of wants.
Or
What is a double coincidence of wants?
Answer:
When both parties agree to sell and buy each other’s commodities, it is known as a double coincidence of wants.
Question 8. What do you mean by terms of credit?
Answer:
Terms of credit mean interest rate, collateral and documentation requirement, and the mode of repayment.
Question 9. What does credit refer to?
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 payments with interest.
Question 10. What are the benefits of money?
Answer:
Money eliminates the double coincidence of wants. It acts as a common measure of value and acts as a standard of deferred payments.
Question 11. Why are demand deposits considered money?
Answer:
Demand deposits are considered as money because they can be withdrawn when required and the withdrawn money can be used for making payments. These can also be used as collateral for loans.
Question 12. Why do lenders ask for collateral while lending?
Answer:
The collateral is a kind of surety, which the lender can hold on to. In case of the debtor fails to repay the loan, the lender can recover the same money by selling the collateral.
Question 13. Given that a large number of people in our country are poor, does it in any way affect their capacity to borrow?
Answer:
Credit is always given after properly assessing the repayment capacity of the borrower. Since poor people do not have repayment capacity, they are usually unable to get a loan; especially from the formal sector.
They get some loans from the informal sector but in that case, they often fall into a debt trap because of the very high rates of interest.
Question 14. List the various sources of credit in Son-pur.
Answer:
The Various Sources Of Credit In Sonpiir Are:
- Village money lenders
- Agricultural Traders
- Landowners acting as moneylenders
- Commercial Banks
- Krishak Cooperative Society