NCERT Class 10 Social Science Understanding Economic Development: Chapter 3 — Money and Credit
This chapter, "Money and Credit," from NCERT's Understanding Economic Development for Class 10, explores the fundamental concepts of money and credit. It begins by highlighting the pervasive role of money in everyday transactions, contrasting it with the inefficiencies of a barter system that requires a double coincidence of wants. The chapter explains how money acts as a crucial intermediate step, facilitating the exchange of goods and services. It delves into modern forms of money, including currency and bank deposits, and touches upon digital transactions and the impact of demonetisation. The second part focuses on credit, examining its crucial role in economic life, the aspects considered in credit arrangements, and the importance of its availability to all, especially the poor, on reasonable terms. The chapter also references data sources like the NSSO and institutions like the Reserve Bank of India and NABARD. This chapter aims to help students understand the mechanisms of exchange and borrowing in an economy, crucial for their understanding of economic development.
Quick info
| Board | CBSE / NCERT |
|---|---|
| Class | Class 10 |
| Subject | Social Science |
| Book | Understanding Economic Development |
| Chapter | Chapter 3 — Money and Credit |
| Language | English |
| PDF type | NCERT Textbook |
| Session | CBSE 2026 |
| Reading time | 6 minutes |
| Word count | 1144 |
Learning outcomes
- Understand the concept and importance of money as a medium of exchange.
- Differentiate between barter system and monetary transactions.
- Identify modern forms of money and digital transaction methods.
- Explain the basic concepts of credit and its significance in economic activities.
- Recognize the importance of equitable access to credit for development.
Vocabulary
| Word | Meaning |
|---|---|
| Barter system | A system of exchange where goods or services are directly traded without the use of money. |
| Double coincidence of wants | The essential condition in a barter system where both parties must desire to sell what the other wishes to buy. |
| Medium of exchange | An intermediate step in transactions, allowing money to be easily exchanged for any commodity or service. |
| Currency | Coins and banknotes in circulation within a country. |
| Demand deposits | Deposits in banks that can be withdrawn on demand. |
| Demonetisation | The act of stripping a currency unit of its status as legal tender. |
| Digital transactions | Transactions conducted electronically, often using internet or mobile banking, cards, or apps. |
| Credit | The ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future. |
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Practice questions
- What is the main problem with the barter system? Answer: The main problem is the 'double coincidence of wants', where both parties must agree to buy and sell each other's commodities.
- Why is money preferred over barter? Answer: Money acts as a medium of exchange, eliminating the need for a double coincidence of wants and making transactions easier.
- What are the two main forms of money discussed in the chapter? Answer: Currency and demand deposits with banks.
- What is demonetisation? Answer: Demonetisation is when a government declares certain currency notes invalid and replaces them with new ones.
- What is credit? Answer: Credit is an arrangement where one party provides goods or services to another with a promise of future payment.
Frequently asked questions
What is the primary function of money in an economy?
Money serves as a medium of exchange, facilitating the buying and selling of goods and services.
What is the main challenge in a barter system?
The main challenge is the 'double coincidence of wants', requiring both parties to have what the other desires.
What are the modern forms of money mentioned?
Modern forms include currency, demand deposits with banks, and digital transaction methods like cards and UPI.
What does the chapter say about credit?
Credit is a crucial economic element involving borrowing and lending, with emphasis on its availability and terms for all sections of society.
What was the impact of demonetisation in India as mentioned?
Demonetisation aimed to reduce cash transactions, control corruption, and encourage the use of digital transactions.
Where can students find data on credit and banking in India?
Data can be found on the websites of the Reserve Bank of India (RBI), NABARD, and reports from the National Statistical Office (NSO).
Related resources
Important topics
Topics covered
NCERT Class 10 Social Science — Understanding Economic Development — Chapter 3 — Money and Credit. Verified by NCERT Help Editorial Team. Reviewed on 29 Jul 2026. Last updated 10 Aug 2026.