Social Science · Textbook solutions

Money and Credit

Every solved example, exercise, and miscellaneous question, in the order the textbook teaches them. · 43 questions

Money as a Medium of Exchange

2 q

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Practice · 2

LW 3.1 Q1 $How does the use of money make it easier to exchange things?$
LW 3.1 Q2 $Can you think of some examples of goods / services being exchanged or wages being paid through barter?$

Modern Forms of Money

3 q

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Practice · 3

LW 3.2 Q1 $M. Salim wants to withdraw Rs 20,000 in cash for making payments. How would he write a cheque to withdraw money?$
Tick the correct answer.
LW 3.2 Q2 $After the transaction between Salim and Prem, (i) Salim's balance in his bank account increases, and Prem's balance increases. (ii) Salim's balance in his bank account decreases and Prem's balance increases. (iii) Salim's balance in his bank account increases and Prem's balance decreases.$
LW 3.2 Q3 $Why are demand deposits considered as money?$

Two Different Credit Situations

3 q

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Practice · 3

LW 3.3 Q1 $Fill the following table, comparing Salim and Swapna on why they needed credit, what the risk was, and what the outcome was.$
LW 3.3 Q2 $Supposing Salim continues to get orders from traders. What would be his position after 6 years?$
LW 3.3 Q3 $What are the reasons that make Swapna's situation so risky? Discuss factors — pesticides; role of moneylenders; climate.$

Terms of Credit

3 q

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Practice · 3

LW 3.4 Q1 $Why do lenders ask for collateral while lending?$
LW 3.4 Q2 $Given that a large number of people in our country are poor, does it in any way affect their capacity to borrow?$
Fill in the blanks choosing the correct option from the brackets.
LW 3.4 Q3 $While taking a loan, borrowers look for easy terms of credit. This means __________ (low/high) interest rate, ______________ (easy/tough) conditions for repayment, ___________ (less/more) collateral and documentation requirements.$

Variety of Credit Arrangements

7 q

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Practice · 7

LW 3.5 Q1 $List the various sources of credit in Sonpur.$
LW 3.5 Q2 $Underline the various uses of credit in Sonpur in the above passages.$
LW 3.5 Q3 $Compare the terms of credit for the small farmer, the medium farmer and the landless agricultural worker in Sonpur.$
LW 3.5 Q4 $Why will Arun have a higher income from cultivation compared to Shyamal?$
LW 3.5 Q5 $Can everyone in Sonpur get credit at a cheap rate? Who are the people who can?$
Tick the correct answer.
LW 3.5 Q6 (i) $Over the years, Rama's debt - will rise. - will remain constant. - will decline.$
Tick the correct answer.
LW 3.5 Q6 (ii) $Arun is one of the few people in Sonpur to take a bank loan because - other people in the village prefer to borrow from the moneylenders. - banks demand collateral which everyone cannot provide. - interest rate on bank loans is same as the interest rate charged by the traders.$

Formal Sector Credit in India

4 q

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Practice · 4

LW 3.6 Q1 $What are the differences between formal and informal sources of credit?$
LW 3.6 Q2 $Why should credit at reasonable rates be available for all?$
LW 3.6 Q3 $Should there be a supervisor, such as the Reserve Bank of India, that looks into the loan activities of informal lenders? Why would its task be quite difficult?$
LW 3.6 Q4 $Why do you think that the share of formal sector credit is higher for the richer households compared to the poorer households?$

Exercises

21 q

Ex 3 Q1 $In situations with high risks, credit might create further problems for the borrower. Explain.$
Ex 3 Q2 $How does money solve the problem of double coincidence of wants? Explain with an example of your own.$
Ex 3 Q3 $How do banks mediate between those who have surplus money and those who need money?$
Ex 3 Q4 $Look at a 10 rupee note. What is written on top? Can you explain this statement?$
Ex 3 Q5 $Why do we need to expand formal sources of credit in India?$
Ex 3 Q6 $What is the basic idea behind the SHGs for the poor? Explain in your own words.$
Ex 3 Q7 $What are the reasons why the banks might not be willing to lend to certain borrowers?$
Ex 3 Q8 $In what ways does the Reserve Bank of India supervise the functioning of banks? Why is this necessary?$
Ex 3 Q9 $Analyse the role of credit for development.$
Ex 3 Q10 $Manav needs a loan to set up a small business. On what basis will Manav decide whether to borrow from the bank or the moneylender? Discuss.$
In India, about 80 per cent of farmers are small farmers, who need credit for cultivation.
Ex 3 Q11 (a) $Why might banks be unwilling to lend to small farmers?$
In India, about 80 per cent of farmers are small farmers, who need credit for cultivation.
Ex 3 Q11 (b) $What are the other sources from which the small farmers can borrow?$
In India, about 80 per cent of farmers are small farmers, who need credit for cultivation.
Ex 3 Q11 (c) $Explain with an example how the terms of credit can be unfavourable for the small farmer.$
In India, about 80 per cent of farmers are small farmers, who need credit for cultivation.
Ex 3 Q11 (d) $Suggest some ways by which small farmers can get cheap credit.$
Fill in the blanks:
Ex 3 Q12 (i) $Majority of the credit needs of the _________________ households are met from informal sources.$
Fill in the blanks:
Ex 3 Q12 (ii) $___________________ costs of borrowing increase the debt-burden.$
Fill in the blanks:
Ex 3 Q12 (iii) $__________________ issues currency notes on behalf of the Central Government.$
Fill in the blanks:
Ex 3 Q12 (iv) $Banks charge a higher interest rate on loans than what they offer on __________.$
Fill in the blanks:
Ex 3 Q12 (v) $_______________ is an asset that the borrower owns and uses as a guarantee until the loan is repaid to the lender.$
Choose the most appropriate answer.
Ex 3 Q13 (i) $In a SHG most of the decisions regarding savings and loan activities are taken by (a) Bank. (b) Members. (c) Non-government organisation.$
Choose the most appropriate answer.
Ex 3 Q13 (ii) $Formal sources of credit does not include (a) Banks. (b) Cooperatives. (c) Employers.$