Money and Credit Class 10 Economics full chapter (Animation) | Class 10 Economics Chapter 3 | CBSE
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Chapter 3 of class 10th Economics discusses the history and forms of money, the banking system, and how money facilitates transactions. It explores the evolution of money from the barter system to modern currency, the role of banks in providing credit, and the importance of formal loans in economic development.
Insights
- The transition from the barter system to the use of money significantly streamlined transactions by eliminating the need for a double coincidence of wants, allowing for smoother exchanges of goods and services.
- The prevalence of informal sector credit in both rural and urban areas underscores the importance of increasing formal credit availability through banks and corporate societies to provide affordable and accessible loans, with Self Help Groups (SHGs) emerging as a successful model in addressing credit gaps, particularly in rural communities, empowering women and addressing social issues.
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Recent questions
What is the history of money?
Money evolved from barter to metallic coins.
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Summary
00:00
Evolution of Money and Credits in Economics
- Chapter 3 of class 10th Economics is about Money and Credits, covering the history and forms of money, as well as the banking system.
- Transactions today are primarily done using money as a medium of exchange, allowing for easy buying and selling.
- In ancient times, the barter system was used for transactions, where goods were exchanged without money.
- The barter system faced challenges due to the double coincidence of wants, requiring both parties to agree on the exchange.
- The introduction of money solved the double coincidence of wants issue, making transactions smoother.
- Early forms of money in India included grains, cattle, and metallic coins like gold, silver, and copper.
- Modern currency consists of paper notes and coins, authorized by the government for transactions.
- Deposits in banks are considered money, with demand deposits allowing for easy withdrawal.
- Cheques are used for transactions, instructing banks to pay a specific amount to the recipient.
- Banks use deposited money to provide loans to borrowers at higher interest rates, earning income from the interest difference.
- Credit, or loans, can be beneficial or detrimental, depending on the borrower's situation and ability to repay.
14:31
"Loans, Debt, and Challenges in Business"
- Salim is a shoe manufacturer who is sold 3000 pairs of shoes by a trader.
- Salim promises to complete the order in a month and manages production expenses by taking loans from a leather supplier and a trader.
- Salim successfully delivers the order of 1000 pairs of shoes by the end of the month.
- Sopana, a farmer, takes a loan for groundnut farming but faces crop failure, leading to debt accumulation.
- Sopana sells part of her land to pay taxes due to loan repayment challenges.
- Farmers often take loans for crop expenses, facing challenges if the crop fails.
- Terms of credit include interest rate, collateral, documentation requirements, and mode of repayment.
- Interest rate is the extra amount paid by the borrower to the lender for a loan.
- Collateral is an asset used as a guarantee for the lender in case of loan default.
- Documentation requirement refers to the paperwork needed to secure a loan, while mode of repayment details how the loan must be repaid.
28:21
"Formal Sector Loans Vital for Financial Inclusion"
- Loans are taken from various sources: 25% from money lenders, 25% from corporate societies, and 8% from banks, along with loans from relatives, friends, and the government.
- In rural areas, the majority of loans are obtained from money lenders, highlighting a concerning trend.
- To address the reliance on informal sector credit, it is crucial to increase loans provided by banks and corporate societies in India to offer affordable and accessible credit.
- Urban households predominantly rely on the informal sector for loans, with poor households at 85% and 15% from the formal sector.
- The availability of loans from the formal sector increases as the wealth and assets of families improve, with rich families primarily obtaining loans from formal sources.
- Self Help Groups (SHGs) have emerged as a solution to the lack of formal credit access in rural areas, enabling members to pool funds, provide loans at lower interest rates, and eventually qualify for bank loans, empowering women and addressing social issues.
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