CBSE Class 10 Social Science: Money and Credit NCERT Solutions

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NCERT Solutions PDF Class 10 PDF

This chapter delves into the fundamental concepts of Money and Credit, crucial for understanding economic transactions. The NCERT Solutions for Class 10 Social Science, Chapter 3, provide clear explanations and step-by-step answers to exercises. Key topics covered include the role of money as a medium of exchange, the functioning of banks, the concept of demand deposits, and the importance of credit in economic activities. These solutions aim to simplify complex ideas, helping students grasp how money facilitates trade and how credit systems operate. By working through these problems, students will develop a solid understanding of financial concepts essential for their academic success and future economic literacy, making exam revision more effective.

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Quick info

BoardCBSE
ClassClass 10
SubjectSocial Science
Session2026
LanguageEnglish
TypeNCERT Solutions
ChapterChapter 3

Chapter summary

Chapter 3 of NCERT Social Science for Class 10 focuses on Money and Credit. The solutions explain the functions of money as a medium of exchange and a unit of value, contrasting it with the barter system. It also covers the role of banks, how demand deposits are considered money, and the process of withdrawing money using cheques. The chapter highlights the significance of credit and its impact on economic transactions, providing a foundational understanding of financial systems.

Learning outcomes

  • Understand the role of money as a medium of exchange.
  • Explain the concept of double coincidence of wants and how money solves it.
  • Describe how banks function and the importance of demand deposits.
  • Illustrate how to fill a cheque for withdrawing cash.
  • Analyze the impact of transactions on bank account balances.
  • Recognize examples of barter system in modern contexts.

Topics covered

Paper topics

  • Money as a medium of exchange
  • Double coincidence of wants
  • Barter system
  • Functions of money
  • Role of banks
  • Demand deposits
  • Cheques and withdrawals
  • Credit and its importance

Important topics

  • Money as a medium of exchange
  • Demand deposits
  • Role of banks
  • Credit
  • Barter vs. Money

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Questions and Solutions

Q.1

How does the use of money make it easier to exchange things?
Solution: Money significantly simplifies the exchange of goods and services primarily because it is widely accepted as a medium of exchange. This means people can use money to buy whatever they need without having to find someone who has what they want and also wants what they have. Furthermore, money serves as a convenient unit of value, allowing us to easily compare the worth of different items. By overcoming the 'double coincidence of wants' that plagues the barter system, money makes transactions much more efficient and less complicated.

Q.2

Can you think of some examples of goods and services being exchanged or wages being paid through the barter system?
Solution: Yes, examples of the barter system, where goods and services are exchanged directly without the use of money, can still be found, especially in certain contexts:

1. Rural Exchanges: In some rural areas, farmers might directly exchange one type of crop for another. For instance, a farmer growing rice might trade some of their rice with a neighbor who grows wheat, if both parties agree on the quantities and quality.

2. Government Schemes: In certain government employment guarantee schemes, laborers might receive a portion of their wages in kind. For example, instead of receiving full cash payment, a worker might be given a certain quantity of food grains, like wheat, for a day's work.

3. Informal Services: In communities, people might exchange services directly. For example, a tailor might mend clothes for a carpenter in exchange for the carpenter fixing a piece of furniture.

Q.1

M Salim wants to withdraw ₹20,000 in cash for making payments. How would he write on a cheque to withdraw money?
Solution: To withdraw ₹20,000 in cash from his bank account using a cheque, M Salim needs to fill out the cheque carefully. Here's how it would typically be done:

1. Pay to: He should write "Self" or his own name in the space provided for the payee's name. This indicates that he himself is the recipient of the money.

2. Amount in Words: In the line designated for the amount in words, he must write "Twenty Thousand Rupees only". This is a crucial step for security.

3. Amount in Figures: In the box provided for the amount in figures, he should write "₹20,000" or "20,000".

4. Signature: Finally, he must sign the cheque in the designated space, usually at the bottom right corner. This signature must match the specimen signature provided to the bank.

Additionally, the date must be correctly filled in, and the cheque should be presented to the bank on or after that date.

Q.2

Tick the correct answer. After the transaction between Salim and Prem, Salim's balance in his bank account increases, and Prem's balance increases. Salim's balance in his bank account decreases and Prem's balance increases. Salim's balance in his bank account increases and Prem's balance decreases.
Solution: Let's analyze the transaction. The question implies a transfer of money from Prem to Salim. When Prem transfers money to Salim's account, Prem is sending money out of his own account. Therefore, Prem's bank account balance will decrease. Simultaneously, Salim is receiving this money into his account, so Salim's bank account balance will increase.

Based on this, the correct statement is: Salim's balance in his bank account increases and Prem's balance decreases.

Q.3

Why are demand deposits considered as money?
Solution: Demand deposits are considered a form of money because they represent funds held in a bank account that can be withdrawn by the account holder at any time, or 'on demand'. Unlike fixed deposits, there is no waiting period or penalty for accessing these funds. Because they can be readily accessed and used for making payments, they function as a medium of exchange, which is a primary characteristic of money. People use cheques or other payment instruments to transfer these demand deposits to others, effectively using them just like cash for transactions.

Common mistakes

  • Confusing the functions of money with its other roles.
  • Misunderstanding the impact of transactions on account balances.
  • Difficulty in differentiating between barter and monetary exchange.
  • Incorrectly filling out cheque details for withdrawals.

Revision tips

  • Review the definitions of money and credit thoroughly.
  • Practice filling out a cheque for different withdrawal scenarios.
  • Compare and contrast the barter system with the use of money.
  • Understand the relationship between banks, deposits, and withdrawals.
  • Focus on the examples provided to grasp real-world applications.

Practice MCQs

Q1. What primary problem does the use of money solve in exchange?

Q2. Which of the following is considered a function of money?

Q3. In the context of banking, what are demand deposits?

Q4. When Prem transfers money to Salim's account, what happens to Prem's bank balance?

Q5. The barter system is inefficient primarily because it requires:

Frequently asked questions

What is the main function of money discussed in this chapter?

The chapter emphasizes money's role as a medium of exchange, which simplifies transactions by eliminating the need for a double coincidence of wants.

How do banks facilitate the use of money?

Banks accept deposits and provide loans. Demand deposits, which can be withdrawn on demand, are considered a part of the money supply and facilitate payments.

Why is the barter system less efficient than using money?

The barter system requires a 'double coincidence of wants,' meaning both parties must have goods or services the other desires, making exchanges difficult and time-consuming.

What does it mean for demand deposits to be considered money?

Demand deposits are considered money because they can be easily withdrawn and used for payments, functioning similarly to cash.

How does a cheque help in withdrawing money?

A cheque is an order to the bank to pay a specified amount from the drawer's account to the person named on the cheque or the bearer.

What is the impact of a bank transaction on account balances?

When money is withdrawn or transferred from an account, the account balance decreases. When money is deposited, the balance increases.

Important links

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