Class Ten Economics Chapter 3 Additional Q-answers

Chapter 3: Money and Credit

Very Short Answers Type Questions-answers [1 Mark ]

21. What costs are involved in crop production?

Ans. Crop production involves considerable costs on irrigation, seeds, fertilisers, pesticides, labour and repair of equipment, etc.

22. Which are the two types of customers in banks?

Ans. Depositors and borrowers.

23. Who are the depositors in the banks?

Ans. People who have surplus funds deposit money in the bank. These people are known as depositors.

24. Who are the borrowers?

Ans. People who are in need of funds and take loans from banks are called borrowers.

28. When do farmers take and repay loans?

Ans. Farmers usually take loans at the beginning of the season and repay the loan after harvest.

26. Name a cooperative society functioning in rural areas.

Ans. Krishak cooperative

27. Besides banks, what is another major source of cheap credit in rural areas?

Ans. Cooperative societies or cooperatives.

28. What are the two types of loans?

Ans. (i) Formal sector loans (ii) Informal sector loans

29. Which are the two major sources of formal loan for rural households?

Ans. Banks and cooperatives.

30. Which lenders charge much higher interest on loans?

Ans. Informal lenders charge higher interest on loans.

31. What is very crucial for the country’s development?

Ans. Cheap and affordable credit is crucial for the country’s development

32. What comprise the terms of credit?

Ans. Interest rate, collateral, documentation requirement and the mode of repayment together comprise the terms of credit.

33. What is collateral?

Ans. It is an asset that the borrower owns and uses this as a guarantee to a lender until the loan is repaid.

34. Which is the single largest source of credit in rural areas?

Ans. Moneylenders.

35. What should be done to reduce dependence on informal sources of credit in rural areas?

Ans. Banks and cooperatives should increase their lending in rural areas.

38. Prove with an argument that there is a great need to expand formal sources of credit in rural India.

Ans. Formal sector credit needs to be expanded to save people, especially poor farmers and workers, from the exploitation of the informal sector credit.

37. Why are most of the households deprived of the formal sector of loans?

Ans. Because formal sectors strictly follow the terms of credit, which includes the interest rate, collateral, documentation, etc., which all households cannot follow.

38. Why is the supervision of the functioning of formal sources of loans necessary?

Ans. So that RBI knows how much money banks are lending, to whom they are lending and at what interest rate, etc.

39. Which organisation supervises the functioning of formal sources of loans?

Ans. Reserve Bank of India.

40. Who extend informal sector loans?

Ans. Moneylenders, traders, employers, relatives and friends.

41. How does an SHG help borrower?

Ans. It helps borrowers overcome the problem of lack of collateral. The group can borrow from a bank at a reasonable rate of interest.

42. Name a cooperative society functioning in rural areas.

Ans. Krishak cooperative.