Money and Credit — Class 10 Social Science NCERT Solutions (Free)

Free step-by-step NCERT solutions for Class 10 Social Science chapter "Money and Credit" — 6 important questions with detailed answers for CBSE board exam preparation.

TL;DR: Free step-by-step NCERT solutions for Class 10 Social Science chapter "Money and Credit" — 6 important questions with detailed answers for CBSE board…

By Syllab.in · Updated Jun 17, 2026

Key Questions Covered:

What is money and what are its main functions?
What are the different types of money in the modern economy?
What is credit and what role does it play in the economy?
What is the role of banks in the economy and in credit provision?
What are the differences between formal and informal credit sectors?
What measures can expand access to credit for poor and marginalized groups?

Solutions Summary:

Question	Status
What is money and what are its main functions?	✓ Solved
What are the different types of money in the modern economy?	✓ Solved
What is credit and what role does it play in the economy?	✓ Solved
What is the role of banks in the economy and in credit pr…	✓ Solved
What are the differences between formal and informal cred…	✓ Solved
What measures can expand access to credit for poor and ma…	✓ Solved

Showing 6 of 6 questions

Q1: What is money and what are its main functions?

Money is a medium of exchange universally accepted in transactions. Main functions include: (1) Medium of exchange—enables trade without barter, (2) Store of value—money can be saved and used later, (3) Unit of account—prices expressed in monetary units, (4) Standard for deferred payment—facilitates credit transactions. Money evolved from commodities like gold to government-issued currency.

Q2: What are the different types of money in the modern economy?

Types include: (1) Fiat money—currency declared legal tender by government with no intrinsic value, backed by government authority, (2) Commodity money—money with intrinsic value like gold, (3) Bank money—credit in the form of deposits and loans, (4) Digital money—cryptocurrency and digital payments. Modern economies primarily use fiat money and bank money.

Q3: What is credit and what role does it play in the economy?

Credit is the provision of resources by a lender to a borrower with repayment expected later. Credit enables: (1) Consumption smoothing—buying things before having cash, (2) Investment—businesses borrowing for expansion, (3) Economic growth—capital available for productive use. Banks provide most credit. Credit is essential for modern economies but excessive credit can cause financial crises.

Q4: What is the role of banks in the economy and in credit provision?

Banks accept deposits from savers and provide loans to borrowers. They: (1) Pool resources from many depositors for lending, (2) Assess creditworthiness of borrowers, (3) Provide financial services like money transfer and insurance, (4) Create money through credit expansion, (5) Support investment and consumption. Banks are central to financial systems and economic growth.

Q5: What are the differences between formal and informal credit sectors?

Formal credit comes from banks, government institutions, and regulated lenders. It involves documentation, interest rates, and legal protections. Informal credit comes from moneylenders, traders, and relatives, often without documentation and at high interest rates. While formal credit is regulated and safer, informal credit is more accessible to poor and rural populations. Both sectors coexist in India.

Q6: What measures can expand access to credit for poor and marginalized groups?

Measures include: (1) Microfinance institutions providing small loans, (2) Self-help groups enabling cooperative borrowing, (3) Government schemes providing subsidized credit, (4) Reducing documentation requirements, (5) Financial inclusion through banking outreach, (6) Skill development enabling productive use of credit, (7) Regulation of informal lenders preventing exploitation. Expanded credit access promotes economic opportunity.

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