Banks accept deposits from people who have surplus money by paying interest on these deposits. These deposits are majorly used by the bank to extend loans to those in need of money. The rate charged by the bank from borrowers is slightly higher interest than what they pay to the depositors. The bankRead more
Banks accept deposits from people who have surplus money by paying interest on these deposits. These deposits are majorly used by the bank to extend loans to those in need of money. The rate charged by the bank from borrowers is slightly higher interest than what they pay to the depositors. The bank acts as an intermediary and benefits both the people parties. In this way, banks mediate between those who have surplus money and those who need money.
In the barter system where the goods are exchanged directly without the use of money, the double coincidence of wants is a necessary feature. By serving as a means of exchange, money removes the need for double coincidences of wants and the complications linked with the barter system. For example, iRead more
In the barter system where the goods are exchanged directly without the use of money, the double coincidence of wants is a necessary feature. By serving as a means of exchange, money removes the need for double coincidences of wants and the complications linked with the barter system. For example, it is no longer essential for the farmer to look for a publisher who will buy his cereals as well as sell his books. All he has to do is find a buyer for his cereals. If he has exchanged his cereals for money, he can purchase whatever goods or service he needs. This is because money is the medium of exchange. Medium of exchange is one of the three basic functions of money in mainstream economics. It is a broadly established token which can be exchanged for goods and services.
This statement is true “In situations with high risks, credit might create further problems for the borrower”. Sometimes the interest levied on the credit taken by the borrower forces him to borrow more funds and he falls into a debt-trap. If the interest is on loan is not paid back timely, then theRead more
This statement is true “In situations with high risks, credit might create further problems for the borrower”. Sometimes the interest levied on the credit taken by the borrower forces him to borrow more funds and he falls into a debt-trap. If the interest is on loan is not paid back timely, then the borrower is forced to give up his collateral or asset used as the guarantee, to the lender. If a farmer takes a loan for crop production and the crop fails, loan payment becomes impossible. To repay the loan the farmer has no option but to sell a part of his land which makes his situation worse than before. Since farming is associated with high uncertainty, debt trap is common. Thus, the loan proves to be costlier to the borrower as he ends up losing his assets as well.
How do banks mediate between those who have surplus money and those who need money?
Banks accept deposits from people who have surplus money by paying interest on these deposits. These deposits are majorly used by the bank to extend loans to those in need of money. The rate charged by the bank from borrowers is slightly higher interest than what they pay to the depositors. The bankRead more
Banks accept deposits from people who have surplus money by paying interest on these deposits. These deposits are majorly used by the bank to extend loans to those in need of money. The rate charged by the bank from borrowers is slightly higher interest than what they pay to the depositors. The bank acts as an intermediary and benefits both the people parties. In this way, banks mediate between those who have surplus money and those who need money.
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How does money solve the problem of double coincidence of wants? Explain with an example of your own.
In the barter system where the goods are exchanged directly without the use of money, the double coincidence of wants is a necessary feature. By serving as a means of exchange, money removes the need for double coincidences of wants and the complications linked with the barter system. For example, iRead more
In the barter system where the goods are exchanged directly without the use of money, the double coincidence of wants is a necessary feature. By serving as a means of exchange, money removes the need for double coincidences of wants and the complications linked with the barter system. For example, it is no longer essential for the farmer to look for a publisher who will buy his cereals as well as sell his books. All he has to do is find a buyer for his cereals. If he has exchanged his cereals for money, he can purchase whatever goods or service he needs. This is because money is the medium of exchange. Medium of exchange is one of the three basic functions of money in mainstream economics. It is a broadly established token which can be exchanged for goods and services.
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In situations with high risks, credit might create further problems for the borrower. Explain.
This statement is true “In situations with high risks, credit might create further problems for the borrower”. Sometimes the interest levied on the credit taken by the borrower forces him to borrow more funds and he falls into a debt-trap. If the interest is on loan is not paid back timely, then theRead more
This statement is true “In situations with high risks, credit might create further problems for the borrower”. Sometimes the interest levied on the credit taken by the borrower forces him to borrow more funds and he falls into a debt-trap. If the interest is on loan is not paid back timely, then the borrower is forced to give up his collateral or asset used as the guarantee, to the lender. If a farmer takes a loan for crop production and the crop fails, loan payment becomes impossible. To repay the loan the farmer has no option but to sell a part of his land which makes his situation worse than before. Since farming is associated with high uncertainty, debt trap is common. Thus, the loan proves to be costlier to the borrower as he ends up losing his assets as well.
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In a SHG most of the decisions regarding savings and loan activities are taken by
(b) Members. For more answers visit to website: https://www.tiwariacademy.com/ncert-solutions/class-10/social-science/
(b) Members.
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