Class 10 Social Science: Money and Credit important questions

Money and Credit is a chapter of Class 10 Social Science for the CBSE. These 12 questions are marked Very Important, Important or Practice, and each answer has been checked by our team. Use them to revise, not as a prediction of what will come in the exam.

1. Practice · 1 marks

   1. Read the information given below and select the correct option Rohan has taken a loan of Rs.5 lakhs from the bank to purchase a house on 12% rate of interest. He has to submit papers of new house and salary record to the bank. What is this process called as? [ A. Interest Rate B. Collateral C. Principal Amount D. Instalments Which of the following international agencies allow free trade and work on mutual trade

   B. Collateral

2. Very Important · 5 marks

   2. Explain the role of Self-Help Groups (SHGs) in the rural society. OR Explain the significance of The Reserve Bank of India in the Indian economy.

   i. The idea is to organize rural poor, in particular women, into small Self Help Groups (SHGs) and pool (collect) their savings. ii. A typical SHG has 15-20 members, usually belonging to one neighbourhood, who meet and save regularly. Saving per member varies from Rs 25 to Rs 100 or more, depending on the ability of the people to save. iii. Members can take small loans from the group itself to meet their needs. iv. The group charges interest on these loans but this is still less than what the moneylender charges. v. After a year or two, if the group is regular in savings, it becomes eligible for availing loan from the bank. vi. Loan is sanctioned in the name of the group and is meant to create self-employment opportunities for the members. vii. Small loans are provided to the members for releasing mortgaged land, for meeting working capital needs viii. Most of the important decisions regarding the savings and loan activities are taken by the group members. ix. The group decides as regards the loans to be granted — the purpose, amount, interest to be charged, repayment schedule etc. Also, it is the group which is responsible for the repayment of the loan. x. Any case of non-repayment of loan by any one member is followed up seriously by other members in the group. xi. Any other relevant point (ANY FIVE POINTS) OR Explain the significance of The Reserve Bank of India in the Indian economy. ANS. i.It supervises the functioning of formal sources of loans. ii.The banks maintain a minimum cash balance out of the deposits they receive. iii.The RBI monitors that the banks actually maintain the cash balance. iv. The RBI sees that the banks give loans not just to profit-making businesses and traders but also to small cultivators, small scale industries, to small borrowers etc. v. Periodically, banks have to submit information to the RBI on how much they are lending, to whom, at what interest rate, etc. vi. Any other relevant point (ANY FIVE POINTS)

3. Practice · 1 marks

   3. Rahul has a sack of cotton but he is in need of wheat and Anush has a sack of wheat and is in need of cotton, under this situation both will be able to exchange their goods. In case of absence of such coincidence of wants, they may not exchange their goods. Which one of the following would be the best option that describes the mutual exchange of goods and eliminate the exchange of goods? Options: a. Double coincidence of want, Exchanging commodity for commodity. b. Double Coincidence of want, Credit on Commodity c. Double coincidence of want, Loan on commodity. d. Double coincidence of want, Money

   d. Double coincidence of want- Money

4. Very Important · 5 marks

   4. A farmer borrowed money from a local moneylender at a high rate of interest. As he could not pay the interest, he was forced to borrow from another landlord to settle the interest owed to the moneylender. State the consequences he may face in this situation.

   The Farmer has fallen into “Debt trap”, He is in a situation where he will not be able to repay the debt incurred because: The Informal sector was the source of credit opted by the farmer, where - the Rate of interest is high, - no proper documentation is sought, - no set of rules and regulations will be followed, - the lenders were often punished and will be ill-treated, - the prime motive of the informal sources of this kind of credit is to make profit. He may face the following Consequences: - The farmer may face ongoing harassment and physical harm from the men sent by the money lender. - He will not be able to make regular interest payments or repay the full amount borrowed. This could lead to significant stress and anxiety, as well as potential physical injuries. - Borrowing from another landlord to repay the original loan may create a cycle of debt for the farmer particularly if the interest rates on the second loan are also high. The farmer may experience personal consequences, such as mental stress, anxiety, and depression due to the constant pressure of repayments and harassment from the lenders. (Any other relevant points) OR “Self –help groups eliminates poverty and empowers women”. Substantiate with suitable answer. Ans: Self Help Groups help the poor to become self-reliant in terms of savings and generating income. - They avail the facilities of loans from formal sources like banks at low rate of interest. - They do not demand collateral and so it is easy to access by the poor. - Self-help groups are exclusively meant for rural women to make them Economically independent through self-employment opportunities. - Helps to improve other development factors such as literacy levels, improved healthcare and better family planning. - Economic empowerment. SHGs provide women with a platform to save and access credit at affordable rates, which enables them to start and expand small businesses. Thus improving the standard of living. Skill development: SHGs in India have also been successful in providing skill development and training opportunities to women. Through training programs, women are equipped with the necessary skills to start and run successful businesses. - Social empowerment. By providing a platform for women to come together, share their experiences, and support each other, SHGs have empowered women to take charge of their lives and become active participants in their communities. (Any other relevant points)

5. Practice · 1 marks

   5. Mr. X has taken credit to make candles during the festive season. Choose the correct options that defines the importance of credit from the given options: i. it plays a vital and positive role in meeting his target and accelerating his income ii. the credit helps him to meet the ongoing expenses of production iii. the credit helps him complete the production on time iv. it helps him in exercising restraint and get into the habit of taking more credit (A) Only 4 (B) 3 and 4 (C) 1, 2 and 3 (D) Only 2

   (C)- 1, 2 and 3

6. Very Important · 5 marks

   6. (A) Miss X wants to start a savoury food store in her village. She wants to supplement her income to raise the standard of living of her family. How, do you think, self-help groups can help, support your answer with reasons? OR (B) Money by providing the crucial intermediate step eliminates the need for double coincidence of wants. Justify the statement highlighting the significance of the modern form of money in India.

   Self Help Groups help the poor to become self-reliant in terms of savings and generating income. 1. Can avail the facilities of loans from formal sources like banks at a low rate of interest. 2. They do not demand collateral and so she can easily access. 3. Self-help groups are exclusively meant for rural women like Miss X to make them economically independent through self-employment opportunities. 4. This will help her to start and expand her business and thus improving the standard of living. 7 Social Science-MS-X-2024-25 5. Skill development: SHGs in India have also been successful in providing skill development and training opportunities to women. Through training programs, she can be equipped with the necessary skills to start and run a successful business. 6. Social empowerment. By providing a platform for women to come together, share their experiences, and support each other, SHGs have empowered women to take charge of their lives and become active participants in their communities. (Any other relevant points) OR 1. Ans.- In a barter system where goods are directly exchanged without the use of money, double coincidence of wants is an essential feature. In contrast, in an economy where money is in use, money by providing the crucial intermediate step eliminates the need for double coincidence of wants. 2. People with the help of money can purchase whatever he needs. No goods or other items are needed for exchange anymore. Since money acts as an intermediate in the exchange process, it is called a medium of exchange. 3. Modern forms of money include currency — paper notes and coins. Unlike the things that were used as money earlier, modern currency is not made of precious metals such as gold, silver and copper. And unlike grain and cattle, they are neither of everyday use. The modern currency is without any use of its own. 4. It is accepted as a medium of exchange because the currency is authorised by the government of the country. In India, the Reserve Bank of India issues currency notes on behalf of the central government. As per Indian law, no other individual or organisation is allowed to issue currency. Moreover, the law legalises the use of rupee as a medium of payment that cannot be refused in settling transactions in India. No individual in India can legally refuse a payment made in rupees. Hence, the rupee is widely accepted as a medium of exchange. (Any other relevant point)

7. Practice · 1 marks

   7. Which one of the following issues currency notes in India? A. Finance Ministry. B. Reserve Bank of India. C. State Bank of India. D. Central Bank of India.

   B – Reserve Bank of India

8. Practice · 1 marks

   8. Person Z tries to explain how the requirement of a double coincidence of wants in a barter system limits trade and exchange. Which of the following justification do you think will be used by him/her? A. It makes trade more complicated, as each person must have what the other person wants, limiting the pool of potential trade partners. B. The barter system allows trade to be conducted more efficiently since both parties already know what they need from the transaction. C. It increases the number of exchanges because each person can trade for exactly what they want. D. The system creates value for goods by ensuring that both parties have a direct need for each other’s goods.

   A - It makes trade more complicated, as each person must have what the other person wants, limiting the pool of potential trade partners.

9. Important · 3 marks

   9. ‘Expanding access to loans in the formal sector is important, yet it is equally critical that these loans are accessible to all people for national development.’ Justify the statement.

   - Higher cost of borrowing from informal sources means a larger part of the earnings of the borrowers is used to repay the loan. Hence, borrowers have less income left for themselves (as we saw for Shyamal in Sonpur). - In certain cases, the high interest rate for borrowing can mean that the amount to be repaid is greater than the income of the borrower. -This could lead to increasing debt (as we saw for Rama in Sonpur) and debt trap. -Also, people who might wish to start an enterprise by borrowing may not do so because of the high cost of borrowing. -For these reasons, banks and cooperative societies need to lend more. This would lead to higher incomes and many people could then borrow cheaply for a variety of needs. -They could grow crops, do business, set up small-scale industries etc. They could set up new industries or trade in goods. Cheap and affordable credit is crucial for the country’s development -Or any other relevant point(s) - Any

10. Practice · 1 marks

    10. Why is money described as a medium of exchange? A. It is used to compare the value of different goods. B. People accept it in return for goods and services, making trade easier. C. Money helps individuals save their wealth safely for the future. D. It enables record-keeping of every transaction made in the economy.

    B. People accept it in return for goods and services, making trade easier.

11. Practice · 1 marks

    11. Which of the following factors is NOT included in the terms of credit? A. Interest rate B. Mode of repayment C. Collateral D. Inflation rate

    D. Inflation rate

12. Important · 3 marks

    12. Explain how Self-Help Groups (SHGs) help banks to minimize risk when providing loans to poor women, who do not have any collateral.

    - SHG members are responsible collectively for repayment, so banks have assurance of repayment. - The group monitors individual members and follows up on non-repayment cases. - Regular savings and organized meetings show discipline and reliability, making banks confident to lend. (Or any other relevant point) – (any 3)