Q. 1. Why are transactions made in money?
Ans. A person holding money can easily exchange it for any commodity or service that he or she might want.
Q. 2. How is money beneficial in transactions?
Ans. Money beneficial in transactions It eliminates the need for double coincidence of wants. It acts as a medium of exchange.
Q. 3. Why one cannot refuse a payment made in rupees in India?
Ans. One cannot refuse a payment made in rupees in India: Because it is accepted as a medium of exchange. The currency is authorized by the government of the country.
Q. 4. Highlight the inherent problem in double coincidence of wants.
Ans. The inherent problem in double coincidence of wants is that both parties have to agree to sell and buy each others commodities.
Q. 5. In India, who is authorised to issue notes and currency?
Ans. In India, ‘Reserve Bank of India’ issues currency notes on behalf of the central government
Q. 7. Why is currency accepted as a medium of exchange?
Q. 8.“Banks are efficient medium of exchange.” Support the statement with arguments.
Ans. Banks are efficient medium of exchange:
(i) Demand deposits share the essential features of money.
(ii) The facility of cheque against demand deposit makes it possible to directly settle payment without the use of cash.
(iii) Demand deposits are accepted widely as a means of payment.
Q. 9. What are ‘demand deposits’?
10. Explain any two features each of formal sector loans and informal sector loans.
Ans. Formal Sector Loans
(i) It provides loans at a fixed rates and terms.
(ii) It gives loans not just to profit-making businesses and traders but also to
small cultivators, small-scale industries to small borrowers etc.
Informal Sector Loans
(i) Rates of interest are not fixed. Moneylenders can charge whatever interest rate they choose.
(ii) There is no one to stop them from using unfair means to get their money Back
How is the facility of cheque useful?
Ans. A cheque is a paper instructing the bank to pay a specific amount from a person’s
account to the person in whose name the cheque has been issued. The payer,
who has an account with the bank, makes out a cheque for a specific amount.
The facility of cheques against demand deposits makes it possible to directly
settle payments without the use of cash.
Q11. Why are the deposits in the banks called ‘demand deposits’? What are the benefits of deposits with the banks?
Ans. People deposit extra cash with the bank by opening a bank account in their name. Banks accept the deposits and also pay an amount as interest on the deposits. In this way people’s money is safe with the banks and it earns an amount of interest. People also have the provision to withdraw the money as and when they require. Since the deposits in the bank accounts can be withdrawn on demand, these deposits are called demand deposits.
Q11. What is credit? What is its importance?
Ans. Credit refers to an agreement in which the lender supplies the borrowers with money, goods and services in return for the promise of future payments.
Importance of credit
(i) In some situation, credit helps to increase earnings and therefore the person is better off than before.
(ii) We can understand it with an example. Salim obtains credit to meet the working capital needs of production. The credit helps him to meet the ongoing expenses of production, complete production on time and thereby increase his earnings. Thus, credit plays a rival and positive role in this situation.
12. What are Self-Help Groups? Describe, in brief, their functioning.
13. Write the reasons for the increase in Popularity of Self help Groups SHGs are becoming popular for the following reasons:
(i) They help borrowers overcome the problem of lack of collateral.
(ii) They can get timely loans for variety of purposes and at a reasonable interest rate.
(iii) They are building blocks of the organisation of the rural poor.
(iv) It helps women to become self-reliant.
(v) The regular meetings of the group provide a platform to discuss and act on various social issues such as health, nutrition, domestic violence etc.
14. Grameen Bank of Bangladesh has done a great job in the rural areas of the country. Which values according to you is it able to support?