class 10
16. What is money? Why is modern money currency accepted as a medium of exchange? 3
17. What are demand deposits? How is money safe with the banks? Explain. 3
18. Explain the procedure involved in the issuing of a cheque. 3
19. Explain the meaning of ‘terms of credit’. 3
20. Given that a large number of people in our country are poor, does it in any way affect
their capacity to borrow? 3
21. Explain why the supervision of the functioning of formal sources of loans is necessary? 3
22. How is the concept of Self-Help Groups (SHGs) important for poor people? Give your
viewpoint. 3
23. Explain any three drawbacks of barter system. 3
24. What are the modern forms of money? Why the rupee is widely accepted as a medium of
exchange? 3
25. Why do you think that the share of formal sector credit is higher for the richer
households compared to the poorer households? 3
Answers
I think it is debit card and credit card
Answer:
16. WHAT IS MONEY
Money is the medium of exchange that is generally accepted as payment for goods and services
WHY MODERN CURRENCY IS ACCEPTED AS MEDIUM OF EXCHANGE
1. No individual can legally refuse payment in money so it is used as a medium of exchange.
2. It is authorised by the central government of a country. Since it is the government the is incharge of distributing money through various money lending institution the citizens of a country can use it
3. Any person holding money can easily exchange it with any commodity or service he desires.
17. WHAT ARE DEMAND DEPOSITS
Demand deposit refer to money in a current account that can be withdrawn without prior notice.
HOW IS MONEY SAFE WITH THE BANK
1. Money in the bank are federally insured so that it is protected from theft and fire and invade of anything you can get you money refunded.
2. The Central Bank of a country and the government of a country work as the backbone of the banks so if the bank fails in one way the central bank of a country can step in.
3. When money is in bank it earns interest hence enables an individual to save.
18. PROCEDURE INVOLVED IN THE ISSUING OF A CHEQUE.
A cheque is a document that orders a bank to pay a specific amount of money from a person's account to the person whose name has been indicated in the cheque.
The procedures include;
1. Checking if the date is mentioned, that is, is it a current cheque or it will be paid at a later date.
2. Checking the name of the payee: ensuring that the person presenting the cheque his or her name is included there.
3. Checking the amount of the cheque: The amount mentioned in the cheque should not be more than the deposit in the bank.
4. Checking the signature- A cheque presented to the bank must be signed properly.
5. Checking the condition of the cheque - for the cheque to be acceptable it must be in good condition if not the cheque will be rejected.
19.
Terms of Credit is defined as the requirements needed to be satisfied for any credit arrangements.
Terms of Credit vary depending upon the nature of lender, borrower and loan
There are four terms of Credit and they include
a) Interest rate- in this term of credit the borrower has to pay a sum of money as interest along with the principal amount
b) Collateral- in this term of credit the borrower guarantees an asset that he owns to the lender until the loan is fully paid
c) Documentation - in this term of credit proper documents of borrowing with all terms and conditions must be submitted.
d) Mode of repayment- in this term of credit the mode in which the borrower will repay the loan must be clearly stated for example long term loans can be repaid annually, quarterly or monthly installments.
20.
Yes it does affect because of the following reasons
a) Poor people lack proper documentation required by money lending institution hence it will be difficult for them to access loans from money lending institution who offer their loans at a lower interest rate
b) The poor do not have collateral to offer so as to act as a guarantee that they will repay the loan hence they have a low capacity to borrow
21.
a) To ensure that banks give loans not just to profit making organization and traders but also small traders and borrowers hence promoting equality
b) There I supervision to ensure that the formal sources of loans do not exploit the borrowers by charging them a high interest but to ensure loans are affordable and cheap
22.
A self help group (SHG) I a group of about 15-20 members who pool their savings together.
It is important in the following ways;
a) The poor members are able to get loans in the absence of collateral. This is because the group acts as a collection guarantee system for members.
b) The group plays a crucial role in improving the savings and credit of members and also in reducing poverty and social inequalities
c) The group saves them from exploitation of the money lenders and they are able to get loans at a reasonable interest rate.
23. EXPLAIN 3 DRAWBACKS OF BARTER SYSTEM
1. Lack of double coincidence of wants
2. Indivisibility of certain goods -
3. Lack of common measure of value -
24.
The modern form of money is currency which includes 1) Notes and 2) Coins
WHY IS RUPEE WIDELY ACCEPTED AS MEDIUM OF EXCHANGE
1. No individual in India can legally refuse a payment in rupees
2. Rupee is money and one can use it to buy anything he or she wants
3. The Reserve Bank of India issues currency notes on behalf of the central government hence everybody now's rupee is legally accepted and can use it
25.
1. The rich are in a better position to provide collateral and other necessary documents which are required by the banks and co-operatives