NCERT Solutions For Class 10 Economics Chapter 3
The study of the creation, consumption, and transfer of wealth is called economics. It explores how people, corporations, governments, and nations make resource allocation decisions, especially for scarce resources.
Money and Credit is the 3rd Chapter of Class 10th Economics. This chapter covers modern forms of Money and their connection to the banking system. The second half of the chapter teaches students about Credit and how it affects borrowers in various situations.
NCERT solutions provide detailed and authentic answers to the questions given in the NCERT text book. For example, Extramarks presents CBSE Class 10 Economics Chapter 3 Solutions. These help students understand the chapter’s concepts as the Extramarks NCERT Solutions Class 10 Economics Chapter 3 is made systematically, using an elementary language. Money and Credit Class 10 NCERT Solutions are prepared by Economics experts having years of experience.
Apart from Class 10 Economics Chapter 3 Solutions by Extramarks, students can access various other comprehensive study materials on the Extramarks’ website. For example, study material such as NCERT books, CBSE revision notes, CBSE sample papers, and CBSE past years’ question papers, all curated by experts after a lot of research, is available for all Classes.
Key Topics Covered in NCERT Solutions for Class 10 Economics Chapter 3
The key topics covered for NCERT Solutions for Class 10 Economics Chapter 3– Money and Credit, are listed below:
| Money as a Medium of Exchange |
| The Modern form of Money |
| Loan activities of Bank |
| Two different Credit situations |
| Terms of Credit |
| Formal Sector Credit in India |
| Self Help groups for the Poor |
Let us dig into Extramarks’ detailed information on each subtopic in NCERT Solutions for Class 10 Economics Chapter 3- Money and Credit.
Money as a Medium of Exchange
Extramarks NCERT Solutions for Class 10 Economics Chapter 3 defines Money as a medium of exchange as it serves as an intermediary in the exchange process. Therefore, a person with Money may readily exchange it for whatever item or service they desire.
Double Coincidence of Wants: It happened when both sides in a deal agreed to sell and buy each other’s goods at the same time. The barter system relies on a double coincidence of wants.
The Modern form of Money
In the early years, Indians used wheat and livestock as currency. subsequent to that, till the twentieth century, the usage of metallic coins, such as gold, silver, and copper was prevalent. Among the contemporary forms of currency — paper notes and coins are the most famous. Currency and deposits, the modern forms of Money – are intimately related to the current banking system’s operations.
Currency
The Reserve Bank of India is the only organization that issues currency notes on behalf of the Indian government. No individual or any organisation is allowed to print money. The rupee is widely accepted as a means of currency in India.
Deposits in the Banks
People may also save money in the form of bank deposits. People deposit their excess funds in the Bank by creating a personal account. Banks not only accept but also pay interest on deposits.
Demand deposits are deposits in bank accounts that can be withdrawn. Payments are made with cheques rather than cash.
Cheques
Cheques are a piece of paper that tells the Bank to transfer a specific amount from one person’s account to the one indicated on the check.
The points mentioned above give a brief about India’s modern forms of currency. Get more details on Extramarks NCERT Solutions for Class 10 Economics Chapter 3.
Loan activities of Bank
Extramarks NCERT Solutions for Class 10 Economics Chapter 3 explains about Loan activities of a Bank as follows:
- Banks only keep a tiny percentage of their deposits in cash. For example, in India, banks today hold around 15% of their deposits in cash. This is kept as a reserve to pay depositors who may come to the Bank to withdraw money on any given day.
- Banks use most deposits to extend loans. Loans are in great demand for a variety of economic activities. As a result, banks impose a higher interest rate on loans than on deposits.
- The difference between what banks charge borrowers and what they pay depositors is a primary source of revenue for banks.
Two different Credit situations
A credit (loan) agreement is when the lender gives the borrower money, goods, or services in exchange for the promise of future payment.
Credit issues can be divided into two categories as per Extramarks NCERT Solutions for Class 10 Economics Chapter 3:
- In scenario one, a person borrows Money for production purposes to return the loan after job completion at the end of the year. By the end of the year, they will have generated a significant profit from manufacturing activities and will be able to return the loan. As a result, the individual is in a stronger position than before.
- In scenario two, a person borrows Money for production purposes with the promise of returning the debt when the production task is completed at the end of the year. By the year end, they will have slipped into debt. As a result, the person’s circumstance has worsened.
Terms of Credit
In addition to the principal payments, every loan agreement specifies an interest rate that must be paid to the lender. In exchange for loans, lenders also want collateral (security). Mentioned below are specific terms of Credit as stated in Extramarks NCERT Solutions for Class 10 Economics Chapter 3:
- An asset that the borrower owns that is pledged against a debt is called a Collateral. This collateral is pledged to a lender until the loan is repaid, such as land, a building, a car, livestock, or bank deposit. The lender could sell the asset or collateral to recover payment if the borrower fails to repay the loan.
- The interest rate, collateral, paperwork requirements, and the repayment method are all part of the credit terms. It changes based on the personality of the lender and borrower.
Formal Sector Credit in India
For the prosperity of a nation, low-cost, readily available Credit is necessary. Therefore, the various types of loans may be Classified, as per Extramarks NCERT Solutions for Class 10 Economics Chapter 3, as follows:
- Formal Sector Loans: Bank and cooperative loans are examples of traditional sector loans. The Reserve Bank of India (RBI) oversees and regulates all official credit sources. Banks must declare to the RBI how much Money they are lending, to whom they are lending it, and at what interest rate.
- Informal Sector Loans: Moneylenders, dealers, employers, relatives, and friends, among others, provide loans in the informal sector. There is no regulatory agency that regulates informal lenders’ lending activity. Therefore, nobody can stop them from getting their Money in unlawful ways.
Formal and Informal Credit
Extramarks NCERT Solutions for Class 10 Economics Chapter 3 describes the Formal and Informal Credit in the following way:
- Formal Credit: The RBI regulates the functioning of traditional lending providers such as banks and cooperatives. To guarantee that the Bank maintains a minimum cash balance and that loans are supplied to small producers, small scale companies, small borrowers, and so on, rather than only profit-making firms and dealers. The RBI requires banks to disclose their actions regularly.
- Informal Credit: A few examples are money lenders, traders, employers, family, and friends. No one oversees keeping track of their credit activities. They are free to charge any interest rate they wish. Considering these are informal credit options, there is no governing or legal body to monitor their unethical activities of recovering their money.
Self Help groups for the Poor
Poor households that are not playing a major role in the formal economy continue to rely on informal sources of Credit. These factors as presented by Extramarks NCERT Solutions for Class 10 Economics Chapter 3:
- In rural India, banks are not everywhere.
- Even if banks are present, obtaining a bank loan is substantially more difficult because adequate documentation and collateral are required.
Self-Help Groups were formed to address these issues. Self Help Groups are small organisations of poor people that encourage their members to save small amounts of money. A typical Self-Help Group includes 15-20 members who regularly meet and save from the same neighbourhood.
Advantages of Self-Help Groups
- It assists borrowers in overcoming the absence of collateral issues.
- People receive loans on schedule as well as a fair interest rate for several objectives.
- SHGs are the rural poor’s organizational building blocks.
- They assist rural women in becoming financially self-reliant.
- The group’s frequent meetings give a forum for discussing and acting on various social concerns such as health, nutrition, domestic abuse, etc.
The above-mentioned advantages of Self-Help Groups as per Extramarks NCERT Solutions for Class 10 Economics Chapter 3. These solutions are prepared systematically.
NCERT Solutions for Class 10 Economics Chapter 3 Money and Credit NCERT Solutions
Extramarks NCERT Solutions for Class 10 Economics Chapter 3 Money and Credit NCERT Solutions consists of explanations of essential concepts and other key topics covered in the Class 10 Economics subject. Students should read the chapter carefully multiple times to understand it thoroughly.
Students may access NCERT Solutions for Class 10 Economics Chapter 3 and other Chapters by clicking here.
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NCERT Solutions for Class 10 Economics Chapter 3 provides detailed and authentic answers to the questions related to money and credit given in the NCERT text book.
Key Features of NCERT Solutions for Class 10 Economics Chapter 3
Studying NCERT Solutions is one of the best and easiest ways to excel in any subject. Therefore, Extramarks has developed NCERT Solutions for Class 10 Economics Chapter 3. These solutions prove to be a boon for students and are created by Extramarks for all students that need to excel. Some strong reasons why one must choose Extramarks are as elucidated below:
- Students who go through Extramarks NCERT Solutions to understand all the chapter’s concepts find it easier to meet their intended understanding outcomes and get a good score.
- These solutions are prepared systematically in the most straightforward language possible.
- Students not only understand the solutions completely, there is also a much higher recall value because of these solutions.