Money and Credit

Class 10 Economics Chapter 3
Money and Credit
Important Questions

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In this chapter students have the opportunity to delve into the fascinating history of money and its diverse forms across different historical periods. Furthermore, in Class 10 Economics Money and Credit students will acquire insights into the complex interplay between modern money systems and the banking sector. This holistic approach to the subject is designed to furnish students with a profound understanding of the pivotal roles occupied by money and credit in the current economic landscape.


CBSE Class 10 Economics Chapter 3, "Money and Credit," Within this chapter, students will explore the captivating history of money, delving into how various forms of currency were employed during different historical periods. Additionally, they will gain insights into the intricate relationship between modern forms of money and the banking system. This comprehensive approach to the subject aims to provide students with a deeper understanding of the pivotal role that money and credit play in the contemporary economic landscape.

money and credit class 10 important questions and answers

Class 10 Money and Credit Important Questions and Answers

Q1. Which of the following sector does not come under the service sector in India?


(a) Transport
(b) Agriculture
(c) Real estate
(d) Restaurants

Ans. (b)

The service sector, also known as the tertiary sector, is the third tier in the three-sector economy. Instead of product production, this sector produces services maintenance and repairs, training, or consulting. The primary activities comprise those occupations that seem to be closely associated with the man's natural environment. Agriculture,gathering, animal rearing, pastoral, farming, fishing and hunting are significant examples of primary activities.

Q2. Activities that help in the development of Primary and Secondary sectors come under which one of the following sectors?


(a) Primary 
(b) Secondary
(c) Tertiary  
(d) Quaternary

Ans. (c)

After primary and secondary, there is a third category of activities that falls under the tertiary sector and is different from the above two. These are activities that help in the development of the primary and secondary sectors.

Q3. How do we count various goods and services for calculating Gross Domestic Product (G.D.P.) of a country? Explain with examples.

Gross Domestic Product (GDP) is the market value of the final goods and services produced during a year within the domestic territory of a country. While calculating GDP, final goods and services are counted to avoid the problem of double counting.
For e.g. a farmer sold wheat to a flour mill for ₹10 per kg. The mill grinds the wheat and sells the flour to a biscuit company for ₹12 per kg. The biscuit company uses the flour, sugar and butter to make 5 biscuit packets. It sells the biscuit to the consumer at ₹15 per biscuit packet. Here biscuits are the final goods that are purchased by the consumer. Wheat and wheat flour are the intermediate goods used in the production of final good. The value of ₹15 already includes the value of flour ₹12. Hence, only the value of final goods and services are included in GDP.

Q4. Why is the organised sector preferred by the employees ? Explain.

The organised sector preferred by the employees because of following reason :
(i) It will provide job security for all employees and even a certain amount of money is kept apart from the salary every year to pay the lump-sum amount to the employees after retirement.
(ii) It covers those enterprises or places of work where the terms of employment are regular and therefore, people have assured work.
(iii) They are registered by the government and have to follow its rules and regulations which are given in various laws such as the Factories Act, the Minimum Wages Act, the Payment of Gratuity Act, Shops Act, etc.

Q5. What is the basic reason for change in the economic structure?

It has been observed from the histories of many developed countries, that at their initial stages of development, the primary sector was the most important sector of economic activity in terms of production as well as employment. As the methods of farming improved and the agriculture sector began to prosper, it started producing much more food than before which is called surplus. This helped many people to think of and take up activities other than agriculture. Hence, an increasing number of craft-persons and traders began to emerge. Trading activities increased by leaps and bounds. These other activities were manufacturing and service. So for a long time, due to the prominence of the primary sector in production, it used to be the main sector of employment. But as the activities in the secondary sector started expanding, new production units were set up in this sector. Hence, the people who had earlier worked in the primary sector now started to work in factories in large numbers. Secondary sector gradually started becoming the most important sector in terms of total production and employment. Hence, over time, a shift had taken place, i.e., the importance of the sectors had changed their places. Thereafter, a further shift from secondary to tertiary sector began to take place in developed countries. The service sector includes the services. Most of the people are now employed in the service sector. Though this is the general pattern observed in developed countries, yet developing countries like India have also followed the similar pattern.

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CBSE Class 10 Social Science Chapter wise Important Questions

Chapter No. Chapter Name
Chapter 1 The Rise of Nationalism in Europe
Chapter 2 Nationalism in India
Chapter 3 The Making of a Global World
Chapter 4 The Age of Industrialization
Chapter 5 Print Culture and the Modern World
Chapter 6 Resources and Development
Chapter 7 Forest and Wildlife Resources
Chapter 8 Water Resources
Chapter 9 Agriculture
Chapter 10 Minerals and Energy Resources
Chapter 11 Manufacturing Industries
Political Science
Chapter 12 Power – sharing
Chapter 13 Federalism
Chapter 14 Gender, Religion and Caste
Chapter 15 Political Parties
Chapter 16 Outcomes of Democracy
Chapter 17 Development
Chapter 18 Sectors of the Indian Economy
Chapter 19 Money and Credit
Chapter 20 Globalization and The Indian Economy
money and credit class 10 important questionsmoney and credit class 10 important questions

Conclusion's diverse range of questions is aimed at enhancing students' comprehension of the chapter's concepts and fostering a comprehensive understanding of the subject matter. These thoughtfully designed questions provide students with a valuable resource to deepen their engagement with the content, ultimately aiding in their preparation and mastery of the topic.

Frequently Asked Questions

Q1 : How does money solve the problem of double coincidence of wants?

Ans: Money solves the problem of double coincidence of wants by acting as a medium of exchange. Double coincidence of wants implies a situation where two parties agree to sell and buy each other’s commodities., i.e., what one party desires to sell is exactly what the other party wishes to buy. Money does away with this tedious and complex situation by acting as a medium of exchange that can be used for one and all commodities.

Q2: How do banks mediate between those who have surplus money and those who need money?

Ans: Banks serve as intermediaries between individuals with surplus money and those in need of loans by offering account services. Typically, banks maintain a cash reserve of around 15% to meet daily withdrawal demands. Individuals with extra funds are encouraged to invest in the bank and receive interest payments. Conversely, individuals seeking loans are charged interest. The discrepancy between interest payments to depositors and interest receipts from borrowers constitutes the bank's earnings. In this way, banks facilitate both those with surplus money and those in need of funds, acting as a beneficial intermediary for both parties.

Q3 : Why do we need to expand formal sources of credit in India?

Ans: Expanding formal sources of credit in India is crucial for two primary reasons. First, it helps reduce reliance on informal credit sources, which often impose high interest rates and offer limited benefits to borrowers. Second, by enhancing formal credit channels, a larger segment of the population can access loans, as many individuals have greater trust in government-sanctioned credit systems compared to private lending institutions.

Q4 : What is the basic idea behind the SHGs for the poor?

Ans: The core concept behind Self-Help Groups (SHGs) for the poor is to empower economically disadvantaged individuals, particularly in rural areas, to become self-reliant in financial matters. These groups consist of members who pool their savings and offer loans to each other at lower interest rates than those charged by informal lenders. When an SHG operates effectively for a certain duration, it becomes eligible for loans from banks. These bank loans are then utilised to create self-employment opportunities for impoverished individuals, elevating their economic status and reducing their dependence on moneylenders.

Q5 : How does the Reserve Bank of India supervise the functioning of banks, and why is this necessary?

Ans: The Reserve Bank of India oversees the loan portfolios and cash reserves of banks. It ensures that banks extend loans not only to profit-oriented enterprises but also to small-scale cultivators, small industries, and individual borrowers. Banks are required to periodically report to the RBI about the loans they have disbursed, including details about the recipients and interest rates.This monitoring is essential to uphold fairness and inclusivity in the financial sector, allowing small industries and individuals to access financial support and opportunities for growth.

Chapter Wise  Important Questions for CBSE Board Class 10 Economics

money and credit class 10 important questions
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