Money and Credit Class 10 Notes

Functions of Money:

• Medium of Exchange: Money eliminates the need for barter system, where goods are directly exchanged for other goods. It allows for easy exchange of goods and services.
• Measure of Value: Money assigns a common value to all goods and services, making it easier to compare prices.
• Store of Value: Money can be saved and used later, unlike perishable goods.
• Unit of Account: Money acts as a standard unit for recording debts and measuring economic transactions.

Evolution of Money:

• Barter System: Direct exchange of goods and services.
• Commodity Money: Objects with intrinsic value, like gold, silver, or seashells.
• Metallic Money: Coins made from precious metals.
• Paper Money: Notes issued by a central authority, not backed by physical commodities.
• Modern Forms of Money: Bank deposits, credit cards, digital wallets, etc.

The Role of Credit:

• Credit allows people to borrow money to purchase goods and services today, with the promise to repay later with interest.
• It promotes economic growth by allowing investments and business expansion.

Formal and Informal Sources of Credit:

• Formal Sources: Banks, cooperatives, etc., regulated by the RBI (Reserve Bank of India) and offer lower interest rates.
• Informal Sources: Moneylenders, friends, family, etc., not regulated and often charge higher interest rates.

Terms of Credit:

• Interest Rate: The cost of borrowing money, expressed as a percentage of the principal amount.
• Principal Amount: The actual amount borrowed.
• Collateral: An asset pledged as security for a loan, which the lender can seize if the loan is not repaid.

Importance of Credit in Economic Development:

• Credit plays a crucial role in financing businesses, infrastructure projects, and agricultural activities.
• Easy access to affordable credit can improve living standards and economic opportunities.

Remember:

• These are just some key points. Refer to your textbook and class notes for a more detailed understanding.
• You can find additional resources online and practice questions to solidify your understanding of the concepts