Page 84 - Understanding Economics for Class 10

(c) A is correct but R is wrong.
(d) A is wrong but R is correct.

1. Assertion (A): The problem of double coincidence of wants was a major drawback of barter
Goyal Brothers Prakashan
system.
Reason (R): Barter system involves exchange of goods and services.
Ans. (b) Both A and R are true but R is not the correct explanation of A.

2. Assertion (A): Currency is legal money which nobody can refuse to accept.
Reason (R): Except for big business who have the authority to accept whatever they may
like.
Ans. (c) A is correct but R is wrong.

3. Assertion (A): It is mandatory to keep some collateral while borrowing the money from
bank.
Reason (R): Collateral covers the risk to keep the money of depositors in bank.
Ans. (a) Both A and R are true and R is the correct explanation of A.

iii. case study Based Questions
Read the below extract and answer the following questions:
1. The other form in which people hold money is as deposits with banks. At a point of time,
people need only some currency for their day-to-day needs. For instance, workers who
receive their salaries at the end of each month have extra cash at the beginning of the month.
What do people do with this extra cash. They deposit it with the banks by opening a bank
account in their name. Banks accept the deposits and also pay an amount as interest on
the deposits. In this way people’s money is safe with the banks and it earns an amount as
interest. People also have the provision to withdraw the money as and when they require.
Since the deposits in the bank accounts can be withdrawn on demand, these deposits are
called demand deposits.
(i) When we earn money, usually a part of it is spent and a part is saved. Write one way
in which banks help people in saving their money.
Ans. A part of income which is not spent is saved. People deposit the money which is not
spent or extra cash in the banks by opening a bank account in their name and earn
interest on their deposits. Example: Fixed Deposits- it helps in saving money as well
as people earn interest on it. It is a type of investment as well.
(ii) Amit has extra cash which he has deposited in bank to keep his money safe and to
earn interest on it, but later on due to some uncertain contingencies he needs cash.
According to you what will he do?
Ans. Bank has provided the provision to withdraw the money as and when people require.
Since Amit has surplus cash which is lying there in his account, he will go to bank
and withdraw the amount required.

2. In recent years, people have tried out some newer ways of providing loans to the poor. The
idea is to organise rural poor, in particular women, into small Self Help Groups (SHGs) and
pool (collect) their savings. A typical SHG has 15-20 members, usually belonging to one
neighbourhood, who meet and save regularly. Saving per member varies from25 to 100 or
more depending on the ability of the people to save. Members can take small loans from

Economics Class X E-75