Money and Credit Class 10 Economics Chapter 3 in English | CBSE Class 10 Social Science Term-2 Exam

BYJU'S - Class 9 & 10・2 minutes read

Manvi's message initiated the session on economics, covering topics like money, credit, and globalization, with a focus on the evolution of money and credit types, including self-help groups and demand deposits. The discussion highlighted the importance of formal credit sectors supervised by entities like the Reserve Bank of India in providing lower interest rates and transparent processes, despite many rural households still relying on informal sources due to various barriers.

Insights

  • The discussion covered key economic principles regarding money and credit, highlighting the evolution from the barter system to modern forms of money like demand deposits and checks, emphasizing the role of money as a medium of exchange to facilitate transactions and address the limitations of barter.
  • The text underscored the importance of understanding credit arrangements in India, showcasing how different credit sectors cater to diverse individuals, with formal sectors offering lower interest rates but facing challenges due to rural households and the poor relying on informal sources, while self-help groups, exemplified by the Grameen Bank of Bangladesh, play a vital role in empowering women through collective responsibility for loan repayment and providing a platform for support and discussion on various issues.

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Recent questions

  • What are the drawbacks of the barter system?

    Lack of double coincidence, indivisibility of goods.

  • How did money evolve as a medium of exchange?

    Addressed barter system limitations, eased transactions.

  • What are the benefits of demand deposits?

    Easy access, interest earnings, transaction facilitation.

  • How do banks function as intermediaries?

    Take deposits, lend to borrowers, earn interest.

  • What role do self-help groups play in women's empowerment?

    Decision-making units, provide support and discussion platform.

Related videos

Summary

00:00

Economics Discussion: Money, Credit, Globalization Explained

  • Manvi's message was appreciated, and the session began with greetings and checks for visibility and audibility.
  • The discussion focused on two chapters from economics: money and credit, and globalization.
  • Money and credit topics included money as a medium of exchange, modern forms of money, loan activities, credit types, credit terms, credit sectors in India, and self-help groups.
  • The barter system was explained as a direct goods exchange without money, requiring a double coincidence of wants.
  • Drawbacks of the barter system included lack of double coincidence of wants, no common unit of measuring value, and indivisibility of goods.
  • Money evolved as a medium of exchange to address barter system limitations, making transactions easier.
  • Modern forms of money included commodity money, currency money, and demand deposits, evolving from perishable goods to metals and then paper notes and coins.
  • Demand deposits allowed cash deposits in banks for easy access and interest earnings, with checks facilitating transactions without physical cash.
  • Checks provided automatic instructions for transferring funds between bank accounts, enhancing convenience and efficiency in transactions.
  • Potential questions on the topics covered included definitions of the barter system, drawbacks, evolution of money, and benefits of demand deposits and checks.

17:37

Answering Three-Mark Questions: Introduction, Points, Conclusion

  • A three-mark question should have an introduction, three points, and a conclusion.
  • For example, when asked about the benefits of demand deposits over currency notes, an introduction about money deposited in a bank for withdrawal is followed by benefits like safety, interest, checks, and easy withdrawals.
  • The conclusion summarizes demand deposits as essential for money and modern economy.
  • The format for answering three and five-mark questions is similar, with the latter requiring more points.
  • An example of explaining a check transaction involves Suhani paying suppliers through a check, which is deposited and transferred to their bank accounts without cash.
  • Banks act as intermediaries by taking deposits and lending to borrowers, earning interest from both parties.
  • Banks maintain cash reserves to pay depositors and manage withdrawals, typically keeping around 15% of deposits as mandated by the RBI.
  • The primary income source for banks is the difference between interest rates on loans and deposits.
  • Positive credit situations involve borrowers expanding their businesses with loans, while negative situations, like crop failures, can lead to debt traps.
  • Debt traps occur when borrowers cannot repay loans, leading to a cycle of borrowing to pay debts, particularly affecting rural farmers due to crop uncertainties.

34:26

Factors in Loan Decisions: Interest, Repayment, Collateral

  • The first factor to consider when deciding on a loan is the interest rate, determining how much interest will be paid back.
  • Understanding the required documentation for the loan, such as Aadhaar card or PAN card, is crucial.
  • Knowing the mode of repayment, whether lump sum, half-yearly payments, or monthly EMIs, is essential.
  • Collateral, like a car or land, acts as security for the lender in case the borrower cannot repay the loan.
  • Different credit arrangements in India cater to various individuals, from city dwellers to small farmers.
  • Small farmers may resort to traders for loans, facing high interest rates and limited selling options for their crops.
  • Medium farmers may opt for bank loans with lower interest rates and formal terms of credit.
  • Cooperatives offer loans by pooling resources, providing an alternative credit source.
  • The formal credit sector, supervised by entities like the Reserve Bank of India, offers lower interest rates and transparent processes.
  • Despite the benefits of the formal sector, many rural households and the poor still rely on informal sources due to lack of familiarity, documentation, collateral, and personal relationships with lenders.

50:41

Self-help groups empower women through support and loans.

  • Self-help groups play a crucial role in women's empowerment by acting as decision-making units and providing a platform for support and discussion on various issues like health and domestic violence.
  • These groups can obtain loans from banks without collateral because the group itself serves as a guarantee for repayment, with members collectively responsible for ensuring loan repayment.
  • An exemplary success story is the Grameen Bank of Bangladesh, founded by Professor Mohammad Yunus, which started small in 1970 but grew to encompass 8.63 million women members across 8139 villages by October 2014, leading to Yunus being awarded the Nobel Peace Prize in 2006.
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