Talent Public School

Sahokhar, Sohsarai (Nalanda)

Sub – Economics Class- X
DEVELOPMENT
VERY ANSWER TYPE QUESTIONS (1 Mark)
1. What may be a goal of landless rural labourers regarding their income?
Ans. Landless rural labourers would like to have more days of work and better wages.
2. What may be a goal of prosperous farmer of Punjab?
Ans. The goal of prosperous farmer may be assurance of high family income through higher support prices
for their crops and through hardwork and cheap labourers; they will be able to settle their children abroad.
3. How can two persons have different developmental goals?
Ans. Development for one may not be development for other. It may even be destructive for the other.
For e.g. Industrialist may want more dams for electricity but this may submerge the land and disrupt the lives of
people who are displaced.
4. State any two goals of development other than income.
Ans. The two goals of development other than income are freedom and security.
5. Why is per capita income calculated in the US dollars?
Ans. Per capita income is calculated in the US dollars because it is the common currency in use in the world
market.
6. Give any two common developmental goals of the people.
Ans. The two common developmental goals of the people are better income and quality education.
7. Suggest any one way to solve under-employment situation in rural areas.
Ans. To solve the problem of under-employment in the rural areas, the government should help the people in
opening their own business by providing bank loans at lower or no interest rate.
8. Define average income.
Ans.It can be defined as the total income of the country divided by the total population.
9. Suppose there are four families in a country with per capita income of $15000. The income of three
families is $10000, $20000 and $12000. What is the income of the fourth family?
Ans. The income of the fourth family is $18,000.
10. Which countries are known as rich countries on the basis of per capitaincome?
Ans. Countries with PCI more than US$ 12,236 per annum are known as rich countries on the basis of per
capita income.
SECTORS OF THE INDIAN ECONOMY
1. Distinguish between ‘primary’ and ‘secondary’ sectors.
Ans. Primary sector exploits natural resources to produce goods whereas secondary sector change natural
products into other forms through manufacturing.
2. Distinguish between ‘secondary’ and ‘tertiary’ sectors.
Ans. In secondary sector, natural products are changed into other forms through different ways of
manufacturing. On the other hand, tertiary sector includes distribution of services, training and support.
3. When we produce goods by exploiting natural resources, in which category ofeconomic
sector such activities come?
Ans. When we produce goods by exploiting natural resources, it falls in the category of primary sector.
4. When we change natural products into other forms, which category of economicsector such
activity comes?
Ans. It comes under the secondary sector.
5. What does GDP stands for?
Ans. GDP stands for Gross Domestic Product.
6. Where is the disguised employment found mostly?
Ans. The disguised employment is mostly found in the agriculture sector.
7. Mention any one feature of the unorganised sector.
Ans. Unorganised sector is not registered with the government.
8. In which sector are a large number of workers losing their jobs since 1990 ?
Ans : In the organised sector, a large number of workers losing their jobs since 1990.
9. What was the most important sector of economic activities at the earliest stages of development?
Ans. Primary sector was the most important sector of economic activities at the earliest stages of
development.
10. Name the sector which forms the base for all other products.Ans. Primary
sector forms the base for all other products. MONEY AND CREDIT
1. Why do banks or lenders demand collateral against loans?
Ans. The banks or lenders demand collateral against loans because it acts as a proof that the borrower will
return the money.
2. Give any two examples of informal sector of credit.
Ans. The examples of informal sector of credit are money lenders, friends, relatives,traders, etc. (any two)
3. Why is it difficult for poor to get loan from Banks?
Ans. It is difficult for the poor to get a loan from the bank because of the absence of collateral.
4. Highlight the inherent problem, in double coincidence of wants.
Ans. The inherent problem in double coincidence of wants is both the parties (seller and the buyer) have to
agree to buy and sell each other‟s commodities.
5. Why are most of the poor households deprived from the formal sector ofloans?
Ans. Most of the poor households are deprived from the formal sector of loans because they do not have the
collateral to keep with the banks.
6. Compare formal sector loans with informal sector loans regarding interestonly.
Ans. The rate of interest charged by the formal sector is low whereas it is high in case of the informal sector.
7. What is meant by double coincidence of wants?
Ans. Double coincidence of wants means owner of good X, say shoes, to find someone else with good Y. say
wheat, and both being in need of each other‟s good.
8. What is the meaning of barter system?
Ans. In the earlier times, before the introduction of money, goods and services were exchanged with goods and
services. This system of exchange was termed as barter system.
9. Define credit.
Ans. Credit refers to an agreement in which the lender supplies the borrower with money,goods or services in
return for the promise of future payments with interest.
10. Which are the two major sources of formal loan for rural households.
Ans. The two major sources of formal loan for rural households are Banks andCooperatives.
GLOBALISATION AND THE INDIAN ECONOMY
1. Distinguish between investment and foreign investment.
Ans.The money that is spent to buy assets such as land, building, machines etc. is called investment whereas
investment made by a MNC to buy such assets is called foreign investment.
2. What is the basic function of foreign trade?
Ans. The basic function of foreign trade is to connect the markets of different countries.
3. Define the term „Liberalisation‟.
Ans. Liberalisation is a policy of removing the trade barriers or restrictions on international trade set by the
government.
4. Why do MNCs setup their offices and factories in those regions where they get cheap labour and other
resources?
Ans. MNCs setup their offices and factories in those regions where they get cheap labour and other resources
so that they can reduce their cost of production and maximize the profit.
5. What is the meaning of investment?OR
Define the term investment.
Ans. Investment can be defined as money spent for buying the inputs for the production like land, buildings,
machines etc.
6. Why had the Indian Government put barriers to foreign trade and foreign investment after
independence? State any one reason.
Ans. To protect the producers within the country from foreign competition.
7. Why did the Indian government remove barriers to a large extent on foreign tradeand foreign
investment?
Ans. The Indian government removed barriers to a large extent on foreign trade and foreign investment so that
the Indian companies could compete in the international market.
8. In which two different forms do we participate in the market? Ans. We
participate in the market as producers and consumers.
9. What is multinational corporation?
Ans. A multinational corporation is a company that owns or controls the production of its goods in more than
one country.
SHORT ANSWER TYPE QUESTIONS (3 Marks)
11. “Consequences of environmental degradation do not respect national or state boundaries.” Justify the
statement.
Ans. Environment is degraded through the depletion of resources like air, water and soil.
It leads to the destruction of the ecosystem and extinction of wildlife. It is now a global issue and has been
debated over decades.
Environmental degradation is not restricted to the nation or state boundaries. Its consequences
have been felt in the surrounding states and the neighbouring countries and sometimes globally.
(a) Pollution in one country may affect the other in the form of acid rains, climatechange etc.
(b) Deforestation in some countries may disturb the rainfall pattern in the surrounding countries.
(c) Land degradation and dam burst can bring massive siltation and flood likesituation.
12. How is the issue of sustainability important for development? Explain with three examples. Ans.
Development, at present, without harming the environment and also keep it safe for the future generation is
termed as sustainable development.
a. Groundwater, which is a renewable resource, is getting depleted because of itsoveruse.
People are facing problem of water crisis due to its indiscriminate use.
b. The development emerged from the fast industrialisation leads to the cutting of forest and its
result is the polluted- environment for the present as well as for the future generations.
c. The crude oil which is a non-renewable resource with limited stock is depletinggradually. So
we need to use it wisely.
13. “Money cannot buy all the goods and services that one needs to live well”. Do you agree with this
statement? Justify your answer with any three suitable arguments.
Ans. It is true to say that money in our pocket cannot buy all the goods and services that we need to live well
because:
a. Money cannot give us a pollution-free environment.
b. It cannot ensure unadulterated medicines to the people.
c. It cannot protect us from infectious diseases.
14. Explain the importance of sustainable development with reference to ground water by giving example.
Ans. Suitable development means development of the present generation by using the earth’s resources as well
as the ability to meet the needs of future generation also.
For example, ground water is a renewable resources but we are overusing it as compare to its
replenish time. Now people face water crisis due to its indiscriminate use.
15. Average income is important but it has limitations while using it. Explain.
Ans. Income is also an important criterion for comparing the countries because it helps in fulfilling the
greater demands of the people. Higher income countries are more developed than the lower income countries.
But it has limitation too.
a. Average income hides the disparity.
b. Average income does not tell us the distribution of income among the people.
c. It is just a material criteria for the comparison.
16. Explain sustainable development. Suggest two measures to ensure sustainabledevelopment.
Ans. Development at present without harming the environment and also keep it safe for the future generation
is termed as sustainable development.
=The two measures to ensure sustainable development are:
A. Judicious use of resources.
B. Stop degrading the natural resources.
17. Compare India and Sri Lanka on the basis of any three indicators of HumanDevelopment
Index for 2004. [CBSE 2009]
Ans. The following is the comparison between India and Sri Lanka on the basis of PCI. life expectancy and
literacy rate used for the Human Development Index in the year 2004:
a. In terms of PCI, India has US $ 3139 whereas Sri Lanka has US $ 4390.
b. In terms of life expectancy. India has 64 whereas Sri Lanka has 74.
c. In terms of literacy rate. India has 61% whereas Sri Lanka has 91%.
So it can be concluded that in all the parameters of development Sri Lanka is far ahead than India.
SHORT ANSWER TYPE QUESTIONS (3 Marks)
11. Why is the ‘tertiary sector’ becoming important in India? Explain any three reasons.
Ans. Tertiary sector is the service sector that provides support to the primary and
secondary sectors and to itself. Over the forty years, between 1973 and 74, and 2013 and 14, while
production in all the three sectors has increased, it has increased the most in the tertiary sector. The
following factors are making the tertiary sector important in India.
(a) Basic services: In any country, several services such as hospitals, educational institutions, post and
telegraph services, police stations, courts, village administrative offices, municipal corporations, defence,
transport, banks and insurance companies, are required. These can be considered as basic services.
In a developing country, the government has to take responsibility for the provision of these services.
(b) Development of primary and secondary sector: The development of agriculture and industry leads to the
development of services such as transport, trade and storage. The greater the development of the primary and
secondary sectors, the more would be the demand for such services.
(c) Rise in income levels: As income levels rise, certain sections of people start
demanding many more services like eating out, tourism, shopping, private hospitals, private schools and
professional training centres. We can see this change quite sharply in cities, especially in big cities.
(d) Rise in information technology:
Over the past decade or so, certain new
services, such as those based on information and communication technology have become
important and essential. The production of these services has beenrising rapidly.
(e) Globalization: Due to globalization, people have become aware of new services and activities, and
communication because of which the tertiary sector has
gained importance. (any three)
12. Distinguish the service conditions of organised sector with that of unorganised
sector.OR
Explain with suitable examples which part of the service sector is not growing inimportance.
Ans. The service conditions of the organised and the unorganised sector are:
a. Service conditions of Organised sector:
1. These are the big units.
2. These units are registered with the government.
3. There are some formal processes and procedures in this sector. Therefore, it iscalled
organized.
4. There is security of employment.
b. Service conditions of unorganised sector:
1. These are the small and scattered units.
2. These units are not registered with the government.
3. There are no formal processes and procedures in this sector. Therefore, it iscalled
Unorganised.
4. There is no security of employment.
13. Name the sector that is the largest employer in India. Why does this sector produce only a quarter of the
national GDP?
OR
Explain the meaning of disguised employment with the help of an example.
Ans. Primary sector is the largest employer sector in India. This sector produce only a quarter of the national
GDP because there is a problem of disguised unemployment in this sector. Thoughalmost 60% people of
India are engaged in this sector but all are not required there. Many of them are extra people. They are forced
to be in this sector as there is less job opportunities in the other sectors.
14. With the example of sugarcane, explain the interdependence of all the three sectors of the economy.
Ans. All the three sectors primary, secondary and tertiary are highly interdependent. They need the help of
each other, without which none of the sectors would be able to complete its production or service.
For example: Cultivation of sugarcane comes under the primary sector. This cultivated sugarcane,
is the raw material for sugar-making industries (comes ponder secondary sector].
Sugarcane is transported to the sugar mills with the help of vehicles which comes under the tertiary sector.
Sugar made by sugar mills are further transported to various markets and sold by retailers and wholesalers using
tertiary sector.
15. Explain disguised unemployment with two examples, one from urban areas and other from rural areas.
Ans. When more than the required people are working in a field, is called disguised
unemployment. In several areas, all the members of a family work in the same agricultural land
(which is small and does not require so much members].
In urban areas, people like plumber, carpenter, painter are not able to find work on a daily basis and hence do
the odd job.
16. Why has the entire tertiary sector not grown in importance? Explain.
Ans. The service sector includes two different kinds of people. One who is highly educated,
skilled and earning very high such as doctors, engineers, software professionals etc., and on the
other hand those who are not educated and unskilledsuch as street vendors, repair persons etc.
Though the service sector has grown over the past few decades but not all of the service sector
has grown equally. The educated and highly skilled workers have grown very high whereas the
uneducatedand the unskilled are still struggling.
17. What is unorganised sector? Describe the working procedure of this sector.
Ans. Unorganised sector are the small and scattered units. These units are not registered with the government.
The working procedure of this sector are:
a. They do not follow the rules and regulations followed by the government.
b. There are no formal processes and procedures in this sector. Therefore, it iscalled
Unorganised.
c. There is no security of employment.
d. There is no fixed working hours and workers are not paid for overtime.
e. There are no benefits like paid holidays, medical facilities, safe working environment, provident
fund etc
SHORT ANSWER TYPE QUESTIONS (3 Marks)
11. Describe the importance of formal sources of credit in the economicdevelopment.
Ans. We need to expand formal sources of credit in India because:
(a) These sources offer cheap loans, which results in higher incomes and higherprofits and
help in the expansion of business.
(b) These sources of loans are under the supervision of a centralized agency, i.e.,Reserve Bank
of India.
(c) In the rural areas where people have to rely on informal sources, this can helpfarmers to
take up agricultural and non-agricultural activities, small-scale industries etc.
(d) Credit can be distributed more equally, benefitting the poor with the help ofcheaper
loans.
12. Why is cheap and affordable credit important for the country‟s development? Explain any three
reasons.
OR
“Cheap and affordable credit is crucial for the country‟s development.” Assess the statement.
Ans. Due to the following three reasons, cheap and affordable credit is important for the country‟s
development:
a. It will help people to take credit for variety of reasons.
b. It will help poor people to get rid of the problem of moneylenders and their highrate of
interest.
c. It will be easy for the people to repay the loan.
13. "Banks are efficient medium of exchange.” Support the statement witharguments.
Ans. Yes, it is true to say that Banks are efficient medium of exchange.
People have extra cash with them. Those having extra cash open a bank account in their name and
deposit the surplus money there.
Out of the total money deposited with the banks 15% of it is kept as minimum cash balance to
pay to the depositors who might come to withdraw money from the bank on any given day. Rest
of the amount is used to extend loan to the borrowers.
14. Why is it necessary for the banks and the cooperative societies to increase their lending
facilities in the rural areas?Explain.

OR
Why is there a great need to expand formal sector of credit in India? Explain any three reasons. Ans. Due to
the following reasons it is necessary for the banks and the cooperative societies to increase their lending
facilities in the rural areas:
a. There is limited availability of the formal sector credit sources in the rural areas.
b. The poor borrowers are bound to take loan from the moneylenders at high rate ofinterest.
c. Due to high rate of interest they are not able to repay the loan and caught in debt-trap.
15. “Money has made transactions easy.” Justify.OR
How is money used as a medium of exchange? Explain with examples.OR
How does money solve the problem of double coincidence of wants? Explain with an example. Ans. In barter
system, if a shoe manufacturer wants to sell shoes and buy wheat, first he has to look for a wheat- growing
farmer who wants to buy shoes and needs to sell wheat.
Money can make it easier to exchange the things. The shoe manufacturer can sellthe shoes for
money and then that money can bed to buy wheat.
16. Explain two points of differences between formal and informal sources ofcredit.
Ans. The two points of differences between formal and informal sources of credit are:
a. Formal sector credit charge less rate of interest whereas informal sector creditcharges very
high rate of interest.
b. Formal sector credit is easy to repay whereas the informal sector credit is difficult to repay.
17. How does the use of money make the exchange of things easier? Explain withexamples.
Ans. In barter system, if a shoe manufacturer wants to sell shoes and buy wheat, and then first he has to look
for a wheat growing farmer who wants to buy shoes and needs to sell wheat.
Money can make it easier to exchange the things. The shoe manufacturer can sellthe shoes for
money and then that money can bed to buy wheat.
SHORT ANSWER TYPE QUESTIONS (3 Marks)
10. How can the Government of India play a major role to make globalisation more fair? Explain with
examples.
Ans. Globalisation is not providing to be a fair deal. Fair globalisation would create opportunities for all and
also ensure that benefits of globalisation are shared better.
The Government of India can play a major role to make globalisation more fair infollowing ways:
(a) Government policies must protect the interests of not only the rich and powerfulbut of all the
people in the country.
(b) Government should ensure that labour laws are implemented properly andworkers get
their due share.
(c) Small producers should be supported to improve their productivity andperformance
so that they can compete for international market.
(d) Government can use trade and investment barriers, if needed.
(e) Government should be ready to negotiate at WTO for ensuring fairer rules.
(f) If necessary, government should align with countries with similar interests tooppose the
domination of major and powerful players in WTO.
11. What measures can be taken by the government of India to make globalisationfairer?
Explain.
Ans. The various measures that can be taken by the government of India to makeglobalisation
fairer are:
a. Labour laws should be implemented properly and the workers get equal rights.
b. Government should use trade barriers if required.
c. Government should negotiate at the WTO for fairer rules.
12. How have our markets been transformed? Explain with examples.OR
In recent years how our markets have been transformed? Explain with examples.OR
“A wide ranging choice of goods are available in the Indian markets.” Support the statement with examples in
context of globalisation.
Ans. It is true to say that now there is wide ranging choice of goods are available in the Indian markets. It is
possible due to the policy of liberalisation, privatization and
globalisation followed by India since 1991. Before 1990, we had limited brands and
limited variety of products in the market but now the market is flooded with variety of brands. For example,
earlier we had just Ambassador and Fiat cars 011 the Indian
roads but now we have so many brands from all over the world.The same happened in the field of TV, mobile
phones, garments etc.
13. “Technology has stimulated the globalisation process.” Support the statement withexamples.
OR
“Information and Communication Technology has played a major role in spreading ourproduction of services
across countries”. Justify the statement with examples.
OR
How has Information and Technology stimulated globalisation process? Explain with examples.Ans. It is
true to say that the Information and Communication Technology has played a major role in spreading our
production of services across countries. Development in technology is one of the most important factors that
has enabled the process of globalization. It can be studied under two different headings:
A. Developments in transport technology: The world has done tremendous
improvements in the field of transportation technolog}'. Now we have different fastest means
of transport with the help of which we can reach to different partsof the world in less time and
can control trade and integrate the markets easily.
B. Developments in ICT (Information and Communication Technology): It includestelephones,
mobile phones, computers, internet, fax, e-mails etc. A remarkable development can be seen in
the field of ICT throughout the world. Now the world is just a click away. With the help of ICT
we can share and obtain information instantly across the globe at negligible cost.
14. How do Multinational Companies manage to keep the cost of production of their goods low? Explain with
examples.
Ans. Due to the following reasons the Multinational Companies manage to keep the cost of production of their
goods low:
A. They set up their production units where there is easy availability of cheap andskilled
labour.
B. They look for the locations from the markets are close so that they will have topay
lesstransportation cost in supplying the final goods to the consumers.
C. They set up their business in the countries where the government policies are favourable for them. Such as
in India the Indian government has given them the
benefit of flexibility in labour laws.
15. What is the main aim of the world trade organisation? Explain its functions.Ans. The
main aim of WTO is to liberalise international trade.
The various functions of the World Trade Organisation are:
A. It makes rules regarding international trade and checks that these rulds arefollowed.
B. WTO says that there should be no trade barriers i.e. members of WTO shouldliberalise their
trade policies and trade between countries should be free.
C. But in practice it can be seen that developing countries follow these ruleswhereas the
developed countries have not liberalized their trade policies.
16. Explain any three conditions that determine MNCs setting up production in other countries. Ans. The
three conditions that determine MNCs setting up production in other countries are:
a. They set up their production units where there is easy availability of cheap andskilled
labour.
b. They look for the locations from the markets are close so that they will have to pay less
transportation cost in supplying the final goods to the consumers.
c. They set up their business in the countries where the government policies are favourable for them.
Such as in India the Indian government has given them the benefit of flexibility in labour laws.
17. Explain how globalisation can be made fairer.
Ans. The government can play the following roles to make the globalisation fairer:
A. Government policies should protect both rich and the poor.
B. Labour laws should be implemented properly and the workers get equal rights.
C. Government should support the small producers so that they can improve theirperformance
and compete.
D. Government should use trade barriers if required.
E. Government should negotiate the WTO for fairer rules.
F. All the developing countries government should group together to fight againstthe
developed countries at WTO.
G. Governments can campaign and protest regarding the unfair rules.

LONG ANSWER TYPE QUESTIONS (5 Marks)

18. “What may be the development for one may be the destruction for the other.” Explain the statement
with appropriate examples.
Ans. It is true to say that what may be the development for one may be the destruction for the other. Sometimes
the developmental goals of people may be conflicting in nature and prove destructive for others. For example,
A. Construction of dam could be a development goal for the industrialist but it is a conflicting goal as it
would affect the lives of the people living in that area as the
local people may get displaced and their livelihood may get disrupted.
B. If there is slum near the high rise buildings then the people of that high rise
building will have the developmental goal to remove the slum from that locality which will be a conflicting
goal as it would displace the slum people.
19. What is sustainable development? Suggest any two ways in which resources can beused judiciously.
Ans. Sustainable development is a pattern of development that promises the use ofresources in a
way that meets human needs while preserving the environment so that these needs can be met not
only in the present, but also for generations to come.
In basic understanding, like today we are able to use the resources given to us, the future
generations should also be able to use them for which we need to keep a tab on our usage and use
the resources judiciously.Today,
we need to fuel the concept of sustainable development to make sure that resources are also available for the
future generations.
Resources can be used judiciously in the following manner.
(A) Using bicycle or walking for short distances rather than using a two wheeler orfour wheeler
can help in saving fuel and also will help in reducing air pollution.
(B) Urbanization without deforestation can help us to sustain the natural environment.
(C) By using CNG in place of petrol, we can help in reducing air pollution.
(D) Judiciously using water resources and not polluting them will help us to preserveour water
resources.
20. What is the main criteria used by the World Bank in classifying different countries? OR What are the
limitations of this criteria, if any? In what respects is the criteria used by the UNDP for measuring
development different from the one used by the World
Bank?
Ans. The main criterion used by the World Bank in classifying different countries is per capita income.
Limitations of using average income for comparison:
A. Average income hides the disparity.
B. Average income does not tell us the distribution of income among the people.
C. It is just a material criteria for the comparison.
The criteria used by the UNDP for measuring development is different from the one used by the World Bank on
the following basis:
A. World Bank uses PCI as a criteria for comparing the countries whereas UNDPuses PCI.
Health status and educational levels for the comparison.
B. The criteria used by the World Bank is just a material criteria whereas the criteria used by the
UNDP is both material and non-material criteria.
C. The criteria used by the World Bank does not give us a real picture ofdevelopment
as it is given by the UNDP.
LONG ANSWER TYPE QUESTIONS (5 Marks)
18. Compare the economic activities of the private sector with that of the publicsector?
19. Explain with suitable examples how public sector contributes to the economicdevelopment
of the nation.
Ans. (A) Creation of infrastructure: Public sector promotes the economic development since it brings about
creation and expansion of infrastructure and the
infrastructure plays an important role in economic development.
(B) Generates financial resources: Public Sector provides for various employment opportunities since
major part of public sector depends on manpower and higher employment opportunities implies higher
generation of financial resources for economic development.
(C) Contributes to HDI: Public sector majorly contributes to the Human Development
Index since health and education industries come under thepurview of public sector.
(D) Availability of goods: Public sector helps in availability of goods at moderaterates, which
helps in maintaining financial security and thus helps in economic development.
(E) Provides encouragement: It provides encouragement to small, medium andcottage
production units. It also strives for the creation of welfare state.
20. Describe the provisions of National Rural Employment GuaranteeAct, 2005.
Ans. Mahatma Gandhi National Rural Employment Guarantee Act:
A. This act was passed in the year 2005.
B. According to this Act, 100 days of guaranteed employment is provided to allthose who
are able to work and are in need of work in the rural areas.
C. Unemployment allowanceis provided to the workers if the government is not ableto provide
them work within 15 days.
D. This act helps in providing income and livelihood to the people in the rural areas.
LONG ANSWER TYPE QUESTIONS (5 Marks)
18. What are self-help groups? How are they emerging as an import ant source of credit? Explain.
OR
„Self-Help Groups' help borrowers to overcome the problems of lack of collateral. Examine the statement.
Ans. This is a new idea to organize rural poor particularly women who pool their savings.
Generally, this group has 15-20 members. Members belong to the neighbourhood so
that they can meet and save regularly. Saving per member varies from Rs 25 to Rs100 or more, depending on
the economic condition of the member.
When the group is regular in saving for a year or two then the group is eligible for getting loan
from the bank. Bank provide loan in the name of the group and then theSHG gives loan to its
members at very low rate of interest.
Loan matter is taken very seriously as, if any one member is not able to repay the loan then it is
followed by other members and because of this feature, they get loan from the bank even though
they have no collateral.
19. Describe the vital and positive role of credit with examples.OR
How does credit plays a vital and positive role? Explain with suitable example.
Ans. Credit : Credit is an agreement between the lender and the borrower in which the borrower promises to
pay the lender in the future.
Positive role of credit: Credit plays a positive role when the borrower is able to return the loan amount on time
and also made some profit with the use of that money. For example:
Salim, a shoe manufacturer took a loan from different sources to complete
the order of 3000 pair of shoes, in the end he delivered the order, made profit andrepaid the loan.
20. What are the two categories of sources of credit? Mention four features of each.
Ans. The two categories of sources of credit are formal sector credit and informal sector credit. Four features of
formal sector credit are:
A. Formal sector credit sources includes banks and cooperatives.
B. Mostly people in the urban areas and the well-off households use it.
C. Formal sector credit need proper documents and collateral before lending.
D. They charge less rate of interest in comparison to that of informal sector. Thusthe cost of
borrowing is less.
Four features of informal sector credit are:
A. Informal sector credit sourcesincludes moneylenders, friends, relatives, traders etc.
B. Mostly people in the rural areas and the poor households use it. Many a timesinformal
sector don‟t ask for documents and collateral as they know the borrowers personally.
C. They charge high rate of interest in comparison to that of formal sector. Thus the cost of borrowing is
high.
D. Due to high cost of borrowing, the borrowers have to repay more and they will have less saving,
which will hinder individual economic development.
LONG ANSWER TYPE QUESTIONS (5 Marks)
18. How has foreign trade been integrating markets of different countries? Explain with examples.
Ans. Following points show that the opening up of foreign trade has integrated themarketsacross the
countries.
(A) Trade has been the main channel for connecting countries since time immemorialthrough
exports and imports.
(B) It leads to expansion of local markets as it creates an opportunity for the
producers to reach beyond the domestic markets. Producers can sell their produce not only in markets located
within the country but can also compete in markets located in other countries of the world.
(C) Allows better choice for the buyers because of the expansion of trade.
Consumers get more variety and quality goods at cheaper rates. Similarly, for the
buyers, import of goods produced in another country is one way of expanding thechoice of goods beyond
what is domestically produced. In other words, goods travel from one market to another and thus increase
choice of the consumers.
(D) Prizes tend to decrease with the expansion of market. The prices of similar goodsin the two markets tend
to be equal so as to survive in the market and expand
sales.
(E) Trade promotes the competition both within as well as outside the nation. Producers of
different countries now closely compete against each other eventhough they are separated
by thousands of miles.
Foreign trade is the most important component of globalization. Trade has played a very important role in
stimulating the process of globalization.
19. Explain by giving examples how multinational corporations are spreading their products in different
ways.
OR
How are multinational corporations spreading their products? Explain withexamples.
Ans. The following are the three ways in which multinational corporations are spreading their products in
different ways:
A. Buying up the local companies: This is most common route for MNC investmentand
expanding production. MNCs can do so because they have huge wealth. For example: Cargill
Foods an American MNC has bought Indian company named
Parakh Food. Now the control on the large marketing network and the four oil refineries has shifted to the
Cargill Food. Cargill Food has now become the largest producer of edible oil in India.
B. Joining hand with local companies: Sometimes the MNCs join hands with the local
companies and do the production. In this process, the local companies gettwin benefits:
(i) they get foreign investment and (ii MNCs provide newertechnology to them for the production. For
example:
In 1995. Ford Motors an American company joined hand with the Indian company called Mahindra and
Mahindra (manufacturer of jeeps and trucks).
C. By placing orders: Sometimes MNCs just place orders with small producers around the
world for the production of garments, footwear and sports items. Afterthat, the products are
supplied to the MNCs and sold under the brand name of the MNCs.
20. How is foreign trade interconnecting the markets in different countries? Explain with examples.
Ans. Foreign trade means trade with other countries. When we trade with other countries then we connect
with the markets of different countries.
For example,
Chinese toys in the Indian market. In this process the goods and services and produced and sold at global
level. There is movement of technologyand people between the countries. It gives opportunity to the local
producers to reach beyond the domestic market. Buyers get different choice, price and quality.
An MNC from USA producing the industrial equipment is designing its product in the
research centres of the US, its components are manufactured in China, theassembling and the export work is
done from Mexico and Eastern Europe and its call centres are there is India.