Page 73 - Understanding Economics for Class 10

(iii) Arun has the capacity to repay the loan and plans to apply for the fresh loan whereas
Shyamal lacks this capacity. Even he is forced to sell his produce to the moneylender
at low prices.
(iv) Arun is free to sell his produce in the market whereas Shyamal is not.
Goyal Brothers Prakashan

5. Can everyone in Sonpur get credit at a cheap rate? Who are the people who can?
Ans. No, everyone in Sonpur cannot get credit at a cheap rate. But there are people who can get
it at cheap rate such as members of cooperative societies, people having land or other assets.

6. Tick the correct answer.
(i) Over the years, Rama’s debt
(a) will rise. (b) will remain constant. (c) will decline.
(ii) Arun is one of the few people in Sonpur to take a bank loan because
(a) Other people in the village prefer to borrow from the moneylenders.
(b) Banks demand collateral which everyone cannot provide.
(c) Interest rate on bank loans is same as the interest rate charged by the traders.
Ans. (i) (a) Over the years, Rama’s debt will rise.
(ii) (b) Arun is one of the few people in Sonpur to take a bank loan because banks
demand collateral which everyone cannot provide.

7. Talk to some people to find out the credit arrangements that exist in your area. Record
your conversation. Note the differences in the terms of credit across people.
Ans. I live in a city and talked to two persons regarding credit and their respective terms of credit.
 A household maid that has taken credit from informal source
 A manufacturer of utensils who has taken loan from formal source.

A household Maid A manufacturer of utensils
Source of credit She has taken credit from He is a manufacturer of
her two employers i.e from utensils and want to expand
the households where she is his business. He has taken loan
working. from Canara Bank.
Documents No documents are required He has submitted all the required
required documents to the bank.
Collateral No Collateral is required He has given the papers of
his factory as collateral and
will get it back only after
repayment of loan.
Interest No interest is charged in this Interest is charged by the bank
case as loan amount is very and it has to be paid along with
small. principal amount.

Mode of She has a choice, either she He has to pay it in instalments
Repayment can refund the whole amount at every month.
once or she can get an amount
deducted from her salary every
month

E-64 Economics Class X