SEBA Board Solution Class 10 Social Science Economics Chapter 1 Money and Banking
SEBA Board Solution Class 10 Social Science Economics Chapter 1 Money and Banking full exercise Solution by Social Science Economics Sir. Here on this page we have provided SEBA – The Board Of Secondary Education, Assam Class 10 Social Science Economics Chapter 1 all Question Answer Solution.
Board |
SEBA / Assam State Board |
Class |
10 |
Medium |
English Medium |
Subject |
Social Science Economics |
Chapter |
1 |
Chapter Name |
Money and Banking |
Topic |
Solution |
Very Short Answer Type Question:
1.) What is Barter ?
Ans – Barter is the direct exchange of commodities against commodities.
2.) What is money ?
Ans – Anything that is generally accepted as a medium of exchange is called money.
3.) Mention one important function of money .
Ans – i) Money performs the function of medium of exchange as in an economy , commodities are indirectly exchanged through money.
4.) Give an example of non-legal tender money.
Ans – An example of non- legal tender money is – bank Cheque.
5.) What is representative paper money?
Ans- Representative paper money can be of various types like – Metallic money , Commodity money etc.
6.) What is a bank?
Ans – Bank is a financial institution that deals in loans. Bank collects the savings from savers and offers these savings, baring a small part, to the borrowers.
7.) In which year was the Reserve Bank of India set up?
Ans- The Reserve Bank of India was set up in the year 1935.
8) What is current deposit?
Ans- Current deposit may be withdrawn by the saver or depositor at any time.
Short Answer Type Questions :
1.) How does the lack of double coincidence of wants create problems in the barter system?
Ans- The lack of double coincidence of wants means when both the parties in the process of barter system does not possess mutual wants of a commodity . For eg – The problem will arise when B who produces sugarcane needs fish which A does not produce. Let us suppose that C produces fish but C does not want sugarcane. There is lack of double coincidence of wants.
2.) What is meant by store of value?
Ans- Value of goods and services may be stored up in the form of money. As and when the goods and services are needed, money can be easily converted into those goods and services. However, money will continue to act as a store of value as long as its own value does not fall rapidly.
3.) Which characteristic of money is the most important one and why?
Ans- The most important function of money are as follows ( Primary Functions ) :
i) Money performs the function of a medium of exchange. In the barter system commodities are directly exchanged against commodities; in a money economy commodities are indirectly exchanged through money. A single transaction in the barter system is splitted into two transactions in a money economy.
ii) Money acts as a standard of measurement of values of goods and services. All economic goods have prices. The value in exchange expressed in terms of money is price. Money is the common unit of measurement. The value of all economic goods and services are expressed in prices only.
4.) What is liquidity of money?
Ans- Liquidity of money means direct and immediate convertibility of money into goods and services that the holder of money wants. In fact, compared to other assets, the degree of liquidity is the maximum in case of money.
5.) ‘Money is the common unit of measurement of the value of goods and services.’ Explain.
Ans- Money acts as a standard of measurement of values of goods and services. All economic goods have prices. The value in exchange expressed in terms of money is price. Money is the common unit of measurement. The value of all economic goods and services are expressed in prices only.
6.) What is the difference between limited and unlimited legal tender?
Ans- i) When the general acceptability of money as a medium of exchange is supported by the law of the land it is legal tender money, whereas when the general acceptability of money as a medium of exchange has no legal support it becomes non- legal tender money.
ii) Limited legal tender money is money which is acceptable upto a given value of a transaction whereas Refusal to accept non- legal tender money will not mean any violation of the law of the land. (for example, cheque money).
7.) What are the functions of the Regional Rural Banks?
Ans – The functions of the Regional Rural Banks are as follows:
i) To provide loans at low rate of interest to the villagers and liberate them from the clutches of the private money lenders who charge extremely high rate of interest
(ii) to Mobilise rural savings and invest these in various productive activities.
8.) How are the Non Banking Financial Institutions different from the banks?
Ans- There are two main differences between the banks and the NBFIs.
i) First, the depositors can withdraw money from the banks through cheque; NBFI depositors cannot do that.
ii) Secondly, in case of banks there is the Deposit Insurance Scheme to cover the risk of the depositors; NBFIs do not have such schemes.
Long Answer Type Questions:
1.) Explain four demerits of the barter system.
Ans – Four demerits of the barter system are as follows:
i) First, the barter system does not work when there is lack of double coincidence of wants.
ii) Secondly, the barter system lacks a common unit of account. The value of each commodity has to be expressed in terms of the value of another commodity.
iii) Thirdly, the barter ceases to operate when commodities are indivisible.
iv) Fourthly, the barter system lacks a store of value of goods and services. Value is stored up in the sense that commodities are stored up so that the stored up commodity may be exchanged against other commodities as and when such a transaction is required to take place.
2.) Explain any four characteristics of money.
Ans- Four characteristics of money are as follows:
i) Money makes exchange easier. It has removed the difficulties of the barter system.
ii) The price system is an important characteristic of a market centered or even a market friendly economy. The price system is dependent on the supply of money
iii) Even in a system where the administrative decisions of the government determine the price and output of commodities and services, and not their demand and supply, the value of output in that system is expressed in terms of money. Without money, no economic system can operate.
iv) Money acts as a standard of deferred payments. Deferred payments are payments made later on and not at the point of time when the product or the service is delivered to the customer. It is taking commodities on credit. Accounts of all such payments are expressed in terms of money.
3.) Explain four major functions of money.
Ans – Four major function of money are as follows:
i) Money performs the function of a medium of exchange. In the barter system commodities are directly exchanged against commodities; in a money economy commodities are indirectly exchanged through money.
ii) Money acts as a standard of measurement of values of goods and services. All economic goods have prices. The value in exchange expressed in terms of money is price. Money is the common unit of measurement. The value of all economic goods and services are expressed in prices only.
iii) Money acts as a standard of deferred payments. Deferred payments are payments made later on and not at the point of time when the product or the service is delivered to the customer. It is taking commodities on credit. Accounts of all such payments are expressed in terms of money.
iv) Money functions as the store of value. Commodity money cannot be stored up as it does not have durability. Saving cannot be done in the form of commodity money. Durability is one of the characteristics of money. Value of goods and services may be stored up in the form of money.
4.) Is cheque money? Give reasons for your answer.
Ans – A cheque is not legal tender money. An individual may refuse to accept payment in cheque. There is no violation of the law of the land. A cheque is a claim against money. A cheque is encashed at the counter of the bank. Although cheque is not money yet the fact remains that cheque is being increasingly used as a means of payment not only in the developed but also in the developing countries.
5.) Mention four problems associated with money.
Ans- The four problems associated with money are as follows:
i) when the value of money continues to fall (or which is the same thing as saying that the price level continues to rise) the consumers will have to spend more money to buy the same amount of goods and services from the market. Similarly, when the value of money continues to rise (the price level continues to fall), the producers face losses because of which they may decide to cut down the level of production. As and when that happens, employment opportunities will also shrink.
ii) Money may be used as one of the instruments to facilitate the concentration of economic power and wealth. In an economy where money is everything money can easily become a means to acquire economic power.
iii) Weakness for money may well be the cause of the erosion of the social value system. Corruption, irregularities, injustice of all types are the end results of degrading values.
iv) When money takes the form of black money, the economy suffers in many different ways. For instance, the government loses considerable amount of revenue due to large scale tax evasion.
6.) Explain any four functions of the Central Bank.
Ans – Four functions of the Central Bank are as follows:
i) The Central bank issues currency. This is the monopoly right of the central bank as no other bank in the country enjoys this right.
(ii) The Central bank controls the volume of credit. Credit money constitutes a big chunk of total money supply. The quantity of credit money depends on the lending capacity of the commercial banks. The Central bank adopts credit control measures to regulate the lending capacity of the commercial banks.
(iii) The Central bank is the bankers bank. The Central bank examines the account of all the member banks. The Central bank is also the friend in need to all other banks. Whenever the banks are in a financial crisis, it is the Central bank that comes to their help.
(iv) The Central bank is the financier, advisor and agent to the government. The Central bank is the financier to the government. The government faces a budgetary deficit when the aggregate expenditure shown in the budget exceeds the aggregate revenue to be earned by the government.
7.) Explain any two major functions of the commercial banks.
Ans- Two major functions of the commercial banks are as follows:
i) The commercial bank mobilises savings. Savings are of three types : (a) current savings or deposit, (b) fixed savings or time deposit and (c) savings deposit. Current savings or deposit may be withdrawn by the saver or depositor at any time. Fixed or time deposits cannot be withdrawn like current deposits.
ii) The commercial bank offers loans. Farmers, artisans, industrialists, the lawallahs, rickshaw pullers and others receive loans. The proper utilisation of bank loans improves the economic status of the people.
8.) Briefly explain any two functions of each of the following : (i) IDBI, (ii) RRBs, (iii) NABARD, (iv) SIDBI.
Ans- Two functions of (i) IDBI are as follows:
i) Offers financial assistance to industries.
ii) To develop the institutions that are related to industrial development of the country.
Two functions of (ii) RRB are as follows:
i) to provide loans at low rate of interest to the villagers and liberate them from the clutches of the private money lenders who charge extremely high rate of interest
(ii) to mobilise rural savings and invest these in various productive activities.
Two functions of (iii) NABARD are as follows:
i) ) NABARD is the apex financial institution among all the institutions related to investment and production in the rural areas.
(ii) NABARD streamlines the process of offering loans, monitors and evaluates the progress of various rural schemes and organises training programmes for the beneficiaries.
Two functions of (iv) SIDBI are as follows:
(i) to promote modernisation and application of improved technology in small industries.
(ii) to create markets for the products of the small industries.