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Chapter 3: Money and Credit

Economics • Class 10 • Class 10 Understanding Economic Development

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Money and Credit

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Economics • Class 10 • Class 10 Understanding Economic Development

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Prelims High-Yield Explanations & Traps

  • to capture this
  • to first
  • to realise
  • the differences in the terms of credit across people
  • that the formal credit is distributed
  • decisions regarding the
  • for development
  • that the examples
  • that the shoe manufacturer instructs his bank to pay this amount to the leather supplier
  • of payment, along with currency, they constitute money in the modern economy
  • an agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future payment
  • __________ (low/high) interest rate, ______________(easy/ tough) conditions for repayment, ___________(less/more) collateral and documentation requirements
  • to get their money back
  • a larger part of the earnings of the borrowers is used to repay the loan

Essential Definitions & Formulas

MONEY AND CREDIT Money
a fascinating subject and full of curiosities.
It
important to capture this element for the students.
The history of money and how various forms were used at different times
an interesting story.
At this stage the purpose
to allow students to realise the social situation in which these forms were used.
This
the central idea of the first part of the chapter.
Credit is a crucial element in economic life and it
therefore important to first understand this in a conceptual manner.
What are the aspects that one looks at in any credit arrangement and how this affects people
the main focus of the second part of the chapter.
The other crucial issue of credit
its availability to all, especially the poor, and on reasonable terms.
We need to emphasise that this
a right of the people and without which a large section of them would be kept out of the development process.
We need to find new ways and this
one of the social challenges that developing countries face.
Sources for Information The data on formal and informal sector credit used in this chapter
drawn from the survey on rural debt by the National Sample Survey Organisation (All India Debt and Investment Survey, 2003, conducted by NSSO, Report No.
The information and data on Grameen Bank
taken from newspaper reports and websites.
The reason
simple.
This
known as double coincidence of wants.
What a person desires to sell
exactly what the other wishes to buy.
It
no longer necessary for the shoe manufacturer to look for a farmer who will buy his shoes and at the same time sell him MONEYMONEY MONEYMONEY MONEY DAN AND CREDITCREDIT CREDITCREDIT CREDIT CHAPTER 3 MONEY AS A MEDIUM OF EXCHANGE I’LL GIVE YOU SHOES FOR YOUR WHEAT.
U U E S NDERST DG ANDING E E NC CONOMIC D D V EVEL ON OPMENT We have seen that money
something that can act as a medium of exchange in transactions.
The modern currency
without any use of its own.
It is accepted as a medium of exchange because the currency
authorised by the government of the country.
Deposits with Banks The other form in which people hold money
as deposits with banks.

Related PYQs (55)

2016•Prelims•Paper 1 (GS)•Q.4

The establishment of 'Payment Banks' is being allowed in India to promote financial inclusion. Which of the following statements is/are correct in this context?

1
Mobile telephone companies and supermarket chains that are owned and controlled by residents are eligible to be promoters of Payment Banks.
2
Payment Banks can issue both credit cards and debit cards.
3
Payment Banks cannot undertake lending activities.
Economic and Social Development
2016•Prelims•Paper 1 (GS)•Q.26

With reference to 'Stand Up India Scheme', which of the following statements is/are correct?

1
Its purpose is to promote entrepreneurship among SC/ST and women entrepreneurs.
2
It provides for refinance through SIDBI.
Economic and Social Development
2016•Prelims•Paper 1 (GS)•Q.29

The term 'Core Banking Solutions' is sometimes seen in the news. Which of the following statements best describes/describe this term?

1
It is a networking of a bank's branches which enables customers to operate their accounts from any branch of the bank on its network regardless of where they open their accounts.
2
It is an effort to increase RBI's control over commercial banks through computerization.
3
It is a detailed procedure by which a bank with huge non-performing assets is taken over by another bank.
Economy and Banking
2016•Prelims•Paper 1 (GS)•Q.71

What is/are the purpose/purposes of Government's 'Sovereign Gold Bond Scheme' and 'Gold Monetization Scheme'?

1
To bring the idle gold lying with Indian households into the economy
2
To promote FDI in the gold and jewellery sector
3
To reduce India's dependence on gold imports
Economic and Social Development
2016•Prelims•Paper 1 (GS)•Q.73
Pradhan Mantri MUDRA Yojana is aimed at
Economic and Social Development
2016•Prelims•Paper 2 (CSAT)•Q.76
W can do 25% of a work in 30 days, X can do 1/4 of the work in 10 days, Y can do 40% of the work in 40 days and Z can do 1/3 of the work in 13 days. Who will complete the work first?
CSAT
2016•Prelims•Paper 2 (CSAT)•Q.77
The average monthly income of a person in a certain family of 5 is Rs. 10,000. What will be the average monthly income of a person in the same family if the income of one person increased by Rs. 1,20,000 per year?
CSAT
2016•Prelims•Paper 2 (CSAT)•Q.78
In a race, a competitor has to collect 6 apples which are kept in a straight line on a track and a bucket is placed at the beginning of the track which is a starting point. The condition is that the competitor can pick only one apple at a time, run back with it and drop it in the bucket. If he has to drop all the apples in the bucket, how much total distance he has to run if the bucket is 5 meters from the first apple and all other apples are placed 3 meters apart?
CSAT
2016•Prelims•Paper 2 (CSAT)•Q.79
A round archery target of diameter 1 m is marked with four scoring regions from the centre outwards as red, blue, yellow and white. The radius of the red band is 0.20 m. The width of all the remaining bands is equal. If archers throw arrows towards the target, what is the probability that the arrows fall in the red region of the archery target?
CSAT
2016•Prelims•Paper 2 (CSAT)•Q.80
A person allows a 10% discount for cash payment from the marked price of a toy and still he makes a 10% gain. What is the cost price of the toy which is marked Rs. 770?
CSAT
2017•Prelims•Paper 1 (GS)•Q.11

Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)?

1
It decides the RBI's benchmark interest rates.
2
It is a 12-member body including the Governor of RBI and is reconstituted every year.
3
It functions under the chairmanship of the Union Finance Minister.
Indian Economy
2017•Prelims•Paper 1 (GS)•Q.43
Which of the following is a most likely consequence of implementing the 'Unified Payments Interface (UPI)'?
Economy
2017•Prelims•Paper 1 (GS)•Q.79

Consider the following statements:

1
National Payments Corporation of India (NPCI) helps in promoting the financial inclusion in the country.
2
NPCI has launched RuPay, a card payment scheme.
Economy
2018•Prelims•Paper 1 (GS)•Q.6
Which one of the following best describes the term "Merchant Discount Rate" sometimes seen in news ?
Economy
2018•Prelims•Paper 1 (GS)•Q.28

With reference to digital payments, consider the following statements :

1
BHIM app allows the user to transfer money to anyone with a UPI-enabled bank account.
2
While a chip-pin debit card has four factors of authentication, BHIM app has only two factors of authentication.
GS-III - Science and Technology- developments and their applications and effects in everyday life
2018•Prelims•Paper 1 (GS)•Q.46
Which one of the following statements correctly describes the meaning of legal tender money ?
Economics
2018•Prelims•Paper 2 (CSAT)•Q.77

If x - y = 8, then which of the following must be true?

1
Both x and y must be positive for any value of x and y.
2
If x is positive, y must be negative for any value of x and y.
3
If x is negative, y must be positive for any value of x and y.
CSAT
2019•Prelims•Paper 2 (CSAT)•Q.19
Rakesh and Rajesh together bought 10 balls and 10 rackets. Rakesh spent ₹ 1300 and Rajesh spent ₹ 1500. If each racket costs three times a ball does, then what is the price of a racket?
CSAT
2019•Prelims•Paper 2 (CSAT)•Q.56
Suppose you have sufficient amount of rupee currency in three denominations : ₹ 1, ₹ 10 and ₹ 50. In how many different ways can you pay a bill of ₹ 107 ?
CSAT
2020•Prelims•Paper 1 (GS)•Q.66

Under the Kisan Credit Card scheme, short-term credit support is given to farmers for which of the following purposes?

1
Working capital for maintenance of farm assets;
2
Purchase of combine harvesters, tractors and mini trucks;
3
Consumption requirements of farm households;
4
Post-harvest expenses;
5
Construction of family house and setting up of village cold storage facility.
Economics
2020•Prelims•Paper 2 (CSAT)•Q.56
What is the remainder when 51 x 27 x 35 x 62 x 75 is divided by 100?
CSAT
2020•Prelims•Paper 2 (CSAT)•Q.57
A sum of 2,500 is distributed among X, Y and Z in the ratio 1/2 : 3/4 : 5/6. What is the difference between the maximum share and the minimum share?
CSAT
2020•Prelims•Paper 2 (CSAT)•Q.58
For what value of n, the sum of digits in the number (10^n + 1) is 2?
CSAT
2020•Prelims•Paper 2 (CSAT)•Q.59
In a class, there are three groups A, B and C. If one student from group A and two students from group B are shifted to group C, then what happens to the average weight of the students of the class?
CSAT
2020•Prelims•Paper 2 (CSAT)•Q.60
How many different sums can be formed with the denominations 50, 100, 200, 500 and 2,000 taking at least three denominations at a time?
CSAT
2021•Prelims•Paper 1 (GS)•Q.1

Consider the following statements :

1
The Governor of the Reserve Bank of India (RBI) is appointed by the Central Government.
2
Certain provisions in the Constitution of India give the Central Government the right to issue directions to the RBI in public interest.
3
The Governor of the RBI draws his power from the RBI Act.
Polity
2021•Prelims•Paper 1 (GS)•Q.5

With reference to 'Urban Cooperative Banks' in India, consider the following statements :

1
They are supervised and regulated by local boards set up by the State Governments.
2
They can issue equity shares and preference shares.
3
They were brought under the purview of the Banking Regulation Act, 1949 through an Amendment in 1966.
Polity
2024•Prelims•Paper 1 (GS)•Q.52

Consider the following statements:

Statement-I
Syndicated lending spreads the risk of borrower default across multiple lenders.
Statement-II
The syndicated loan can be a fixed amount/lump sum of funds, but cannot be a credit line.

Which one of the following is correct in respect of the above statements?

Economic and Social Development
2023•Prelims•Paper 2 (CSAT)•Q.44
A principal P becomes Q in 1 year when compounded half-yearly with R% annual rate of interest. If the same principal P becomes Q in 1 year when compounded annually with S% annual rate of interest, then which one of the following is correct?
CSAT
2023•Prelims•Paper 2 (CSAT)•Q.45
How many natural numbers are there which give a remainder of 31 when 1186 is divided by these natural numbers?
CSAT
2023•Prelims•Paper 2 (CSAT)•Q.54
40 children are standing in a circle and one of them (say child-1) has a ring. The ring is passed clockwise. Child-1 passes on to child-2, child-2 passes on to child-4, child-4 passes on to child-7 and so on. After how many such changes (including child-1) will the ring be in the hands of child-1 again?
CSAT
2024•Prelims•Paper 2 (CSAT)•Q.36
Consider the following: Weight of 6 boys = Weight of 7 girls = Weight of 3 men = Weight of 4 women. If the average weight of the women is 63 kg, then what is the average weight of the boys?
CSAT
2024•Prelims•Paper 2 (CSAT)•Q.37
How many times the hour hand and the minute hand coincide in a clock between 10:00 a.m. and 2:00 p.m. (same day)?
CSAT
2024•Prelims•Paper 2 (CSAT)•Q.40
What is the angle between the minute hand and hour hand when the clock shows 4:25 hours?
CSAT
2025•Prelims•Paper 2 (CSAT)•Q.6
Three prime numbers p, q and r, each less than 20, are such that p - q = q - r. How many distinct possible values can we get for (p + q + r)?
CSAT
2025•Prelims•Paper 2 (CSAT)•Q.7
How many possible values of (p + q + r) are there satisfying 1/p + 1/q + 1/r = 1, where p, q and r are natural numbers (not necessarily distinct)?
CSAT
2025•Prelims•Paper 2 (CSAT)•Q.9
Team X scored a total of N runs in 20 overs. Team Y tied the score in 10% less overs. Had team Y's average run rate (runs per over) been 50% higher, the scores would have been tied in 12 overs. How many runs were scored by team X?
CSAT
2025•Prelims•Paper 2 (CSAT)•Q.10
The price (p) of a commodity is first increased by k%; then decreased by k%; again increased by k%; and again decreased by k%. If the new price is q, then what is the relation between p and q?
CSAT
2026•Prelims•Paper 1 (GS)•Q.87
An e-commerce revenue model where the seller has control over pricing but doesn't keep products in stock and instead transfers customer orders and shipment details to a third-party supplier, who then ships the goods directly to the customer, is called:
Economy
2026•Prelims•Paper 1 (GS)•Q.90
Which one of the following statements about Unified Payments Interface (UPI) and Central Bank Digital Currency (Digital Rupee) is not correct?
Science and Technology
2026•Prelims•Paper 1 (GS)•Q.91

Which of the following statements about Real-World Assets (RWA) Tokenization are correct?

1
Tokenization is the process of turning real world assets into digital tokens using blockchain technology.
2
Tokenization of real world assets offers 24 x 7 access, promoting financial inclusion.
3
Tokenization of real world assets will allow the access to high growth investment opportunities for individuals in India.
Science and Technology
2026•Prelims•Paper 2 (CSAT)•Q.66
A is a 2-digit number with different digits. B is also a 2-digit number and is obtained by reversing the digits of A. If A - B is a multiple of 27, where A > B, how many such different A's are possible?
CSAT
2021•Mains•GS-I•Q.19
What is Cryptocurrency? How does it affect global society? Has it been affecting Indian society also?
GS-I
2013•Prelims•Paper 1 (GS)•Q.66

Consider the following statements:

1
Inflation benefits the debtors.
2
Inflation benefits the bond-holders.
Economics
2013•Prelims•Paper 1 (GS)•Q.74

Consider the following liquid assets:

1
Demand deposits with the banks
2
Time deposits with the banks
3
Savings deposits with the banks
4
Currency The correct sequence of these assets in the decreasing order of liquidity is
Economics
2013•Prelims•Paper 2 (CSAT)•Q.65
The tank-full petrol in Arun's motor-cycle lasts for 10 days. If he starts using 25% more everyday, how many days will the tank-full petrol last?
CSAT
2013•Prelims•Paper 2 (CSAT)•Q.66
A person can walk a certain distance and drive back in six hours. He can also walk both ways in 10 hours. How much time will he take to drive both ways?
CSAT
2014•Prelims•Paper 1 (GS)•Q.47
"Price is not the same thing as value. Suppose that on a day the price of everything viz., coal, bread, postage stamps, a day's labour, the rent of houses, etc. were to double. Prices then certainly rise, but values of all things except one would not." The writer wants to say that if prices of all things were doubled
Economic and Social Development
2014•Prelims•Paper 1 (GS)•Q.48
A and B decide to travel from place X to place Y by bus. A has ₹ 10 with him and he finds it is 80% of the bus fare for two persons. B finds that he has ₹ 3 with him and hands it to A. In this context, which one of the following statements is correct?
CSAT
2014•Prelims•Paper 1 (GS)•Q.49
As per agreement with a bank, a businessman had to refund a loan in some equal instalments without interest. After paying 18 instalments he found that 60 percent of his loan was refunded. How many instalments were there in the agreement?
CSAT
2014•Prelims•Paper 2 (CSAT)•Q.20
A gardener increased the area of his rectangular garden by increasing its length by 40% and decreasing its width by 20%. The area of the new garden
CSAT
2014•Prelims•Paper 2 (CSAT)•Q.23
If Sohan, while selling two goats at the same price, makes a profit of 10% on one goat and suffers a loss of 10% on the other
CSAT
2014•Prelims•Paper 2 (CSAT)•Q.49
As per agreement with a bank, a businessman had to refund a loan in some equal instalments without interest. After paying 18 instalments he found that 60 percent of his loan was refunded. How many instalments were there in the agreement?
CSAT
2015•Prelims•Paper 1 (GS)•Q.1
'Pradhan Mantri Jan-Dhan Yojana' has been launched for
Economic and Social Development
2015•Prelims•Paper 2 (CSAT)•Q.26
Vast numbers of Indian citizens without bank accounts live in rural areas, are financially and functionally illiterate, and have little experience with technology. A research study was conducted in a particular area in which electronic wage payments in Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) are meant to go directly to the poor. It was observed that recipients often assume that the village leader needs to mediate the process, as was the case under the previous paper-based system. Among households under this research study area who claimed to have at least one bank account, over a third reported still receiving MGNREGS wages in cash directly from a village leader. What is the most logical, rational and crucial message that is implied in the above passage?
CSAT