Class Ten Economics Chapter 3 NCERT
Chapter 3: Money and Credit
Very Short Answer Type Questions. [1 Mark]
1. What is known as double coincidence of wants?
Ans. Under double coincidence of wants, both parties agree to sell and buy each other’s commodities without the use of money.
2. Define money.
Ans. Money is anything which is widely accepted in payments for goods, or, in the discharge of other kinds of transactions.
3. What is the primary function of money?
Ans. The primary or main function of money is to facilitate the exchange of goods and services.
4. Indian currency possesses the status of ‘Legal Tender Money’. What is meant by legal tender in the context of money?
Ans. As per Indian law, no one can refuse the use of rupee as a medium of payments in settling transactions and this is why it possesses the status of ‘Legal Tender Money’.
5. Why money is called a medium of exchange?
Ans. Because money acts as an intermediate in the exchange process and it is authorised by the government of the country.
6. What do you mean by the barter system?
Ans. Barter system refers to the system of exchange where goods and services were exchanged directly for other goods and services.
7. What is the other name for the barter economy?
Ans. The barter economy is also known by the name C-C Economy.
8. What are the two types of deposits?
Ans. The two types of deposits are demand deposits and time deposits.
9. What is a cheque?
Ans. A cheque is a paper instructing the bank to pay a specific amount to the person in whose name the cheque has been issued.
10. Name the government authority who issues currency notes in India.
Ans. The Reserve Bank of India issues currency notes in India.
11. What do people do with extra money in their hands?
Ans. People deposit extra money in banks by opening a bank account in their name.
12. Name the various commodities used as money in ancient times.
Ans. In ancient times, many commodities such as grain, cattle, tobacco etc. were used as money.
13. State the modern forms of money.
Ans. Modern forms of money include currency i.e., paper notes and coins and demand deposits in banks.
14. How does money eliminate the need for double coincidence of wants?
Ans. With the use of the money, we can purchase anything at any time as we wish.
15. Except for currency, name the other form in which people hold money.
Ans. The other form in which people hold money is as deposits with banks.
16. What do the banks do with the deposits which they accept from the public?
Ans. Banks keep only a small proportion of their deposits as cash with themselves and use a major portion of the deposits to extend loans.
17. What is the main source of income of banks?
Ans. The difference between what is charged from borrowers and what is paid to depositors is the main source of income of banks.
18. What is meant by credit?
Ans. Credit refers to an agreement in which the lender supplies the borrowers with money, goods or services in return for the promise of future payment.
19. What is meant by ‘debt trap’?
Ans. In case of a debt trap, the credit pushes the borrower into a situation from which recovery is painful.
20. In rural areas, the main demand for credit is for which purpose?
Ans. For crop production.