CLASS 10

ECONOMICS

MOST IMPORTANT
QUESTIONS

HEMANT SINGH
 HEMANT SINGH

ECONOMICS

Q1.Propose any two measures to be taken by India in improving

its HDI. (2014)
Q2.How can the formal sector loans be made beneficial for
poor farmers and workers? Suggest any five measures (2016)
Q3.What do you mean by the term ‘collateral’? Why do banks
ask for collateral while giving loans? (2018)
Q4.“Average income is an important criterion for development.”
Justify. (2018)
Q5.Explain the significance of The Reserve Bank of India in
the Indian economy. (2017)

L
Q6.Explain the interdependence of all three sectors giving
examples from the transportation system. (2019)
A
Q7.What does the history of developed countries indicate about
C

the shifts that have taken place between sectors? (2020)

I
FF

Q8.What are the various sources of credit in rural areas?

Which one of them is the most dominant source of credit and
O

why? (2022)
Q9.Why is it necessary that banks and co-operatives increase
A

their lending in rural areas? Explain. (2016)

EL

Q10.“Conflicting goals can be development goals.” Elaborate

with examples. (2013)
Q11.How are deposits with the banks beneficial for an individual
as well as for the nation? Explain with examples. (2018)
Q12.How is the issue of sustainability important for
development? Explain with three examples. (2014)
Q13.“Money in your pocket may not buy all the goods and
services you need to live well.” Is it true or not? Elucidate.
(2019 C) Money in our pockets cannot buy all the goods and
services that we may need to live well.
 HEMANT SINGH

Q14.In what ways can employment be increased in urban areas?

(2019)
Q15.Why is credit a crucial element in economic development?
(2020) Credit is a crucial element in the economic development of
a country because:

ANSWERS:
answer 1:
Two measures to be taken by India to improve its HDI could be:
● Increase in budgetary allocation on education and healthcare
facilities. India needs to focus on improving access to healthcare
services, especially in rural areas. This could involve building more
hospitals and clinics, training more healthcare workers, and
L
implementing policies to reduce the cost of healthcare. Subsidies
A
can be channelized towards the generation of more employment
IC
opportunities.
● Investing in education: India needs to invest in education to
FF

improve its human capital. This could involve increasing the number
of schools and colleges, providing better teacher training, and
implementing policies to ensure that all children have access to
O

education. Additionally, there needs to be a focus on improving the

quality of education to ensure that students are gaining the skills
A

they need to succeed in the workforce.

EL

answer2:
● The measures to make formal sector loans beneficial for poor
farmers and workers are:
● The formal sector like banks and cooperatives should lend more to
poor people and workers, particularly in rural areas.
● The formal sector should provide cheap and affordable credit to
the poor people so that repayment is easy.
● Formal sector should work out other ways of arranging collateral
from the poor people.
● By providing linkage between self-help groups and banks, the
formal sector of credit can be increased. ● There should be more
cooperatives and banks in rural areas and people should be made
aware of their presence.
 HEMANT SINGH

answer 3: Collateral is an asset that the borrower owns (such as land,

building,
vehicle, livestock, deposits with banks, etc.) and uses this as a
guarantee to a lender until the loan is repaid.
● Banks use collateral as a guarantee until the loan is repaid. If
the borrower fails to repay the loan, the lender has the right to
sell the asset or collateral to obtain payment.
answer 4:Significance of RBI in the Indian economy:
1. In India, the Reserve Bank of India issues currency notes on
behalf of the Central Government.
2. It supervises the functioning of formal sources of loans.
3. The banks maintain a minimum cash balance out of the deposits
they receive.
4. The RBI monitors that the banks actually maintain the cash
balance.
5. The RBI sees that the banks give loans not just to profit-
making businesses and traders but also to small cultivators, small-
scale industries, small borrowers, etc.
6. Periodically, banks have to submit information to the RBI on
B

how much they are lending, to whom, at what interest rate, etc.
U

answer 5:
PH

Significance of RBI in the Indian economy:

1. In India, the Reserve Bank of India issues currency notes on
behalf of the Central Government.
EX

2. It supervises the functioning of formal sources of loans.

3. The banks maintain a minimum cash balance out of the deposits
they receive.
4. The RBI monitors that the banks actually maintain the cash
balance.
5. The RBI sees that the banks give loans not just to profit-
making businesses and traders but also to small cultivators, small-
scale industries, small borrowers, etc.
6. Periodically, banks have to submit information to the RBI on
how much they are lending, to whom, at what interest rate, etc.
 HEMANT SINGH

answer 6:
The tertiary sector does not produce any goods but it helps in
the production of goods in the primary and secondary sectors.
For example:
● In the primary sector, we need the service of transportation
for getting the supply of agricultural inputs and also for selling
food grains in the market or supplying agricultural raw materials
to agro-based industries.
● In the secondary sector, we need the help of transportation for
bringing the raw materials and taking the final products to the
market.
● Transportation is required in the service sector as well such as
for providing medical facilities to the people and other services
like fire services, etc.

answer 7:
During early civilization all economic activity was in the primary
sector. When food production became surplus people’s need for
other products increased. This led to the development of the
secondary sector.
B

● The growth of the secondary sector spread its influence during

U

the industrial revolution in the nineteenth century.

● After the growth of economic activity a support system was
PH

needed to facilitate industrial activity.

● Certain sectors like transport and finance play an important
role in supporting the industrial activity and comprise the tertiary
EX

sector.

answer 8:
Moneylenders are the most dominant amongst sources of credit
for rural households. They constitute an informal source of
credit. They charge a very high rate of interest on loans as they
do not require any collateral. They are the most convenient
source of credit in the rural areas. Other sources of rural credit:
(i) Cooperative Societies are another major source of rural
credit. They are a source of formal sector credit. Members of a
Cooperative pool their resources for helping one another, e.g.,
Farmers. Cooperatives, Weavers. Cooperatives, etc. They offer
cheap credit in rural areas for their members. Once these loans
are repaid, another round of loans is offered.
 HEMANT SINGH

(ii) Agricultural traders, relatives and friends are other informal

sources of rural credit. Some farmers borrow from agricultural
traders who supply the farm inputs (such as seeds, fertilizers,
pesticides, etc.) on credit at the beginning of the cropping season
and repay the loans after the harvest.
(iii) Commercial banks also give loans to rural households.
However, not many rural households borrow from banks as they
require proper documentation and collateral.

answer 9:
1. To save people from the exploitation of the informal sector
2. To save and reduce the dependence on informal sources of
credit
3. Formal sources charge a low rate of interest on loans. 4. Higher
Income through cheap borrowing
5. To save from debt trap and exploitation.
6. It provides cheap and affordable credit. Cheap and affordable
credit is crucial for the country’s development
7. RBI also supervises the formal sector credit through various
B

rules and regulations which ensures that banks give loans to small
cultivators, small borrowers, etc., and not just to profit-making
U

businesses and traders.

PH

8. It is important that formal credit is distributed more equally

so that the poor can benefit from cheaper loans.
EX

answer 10:
● At times two people or groups of people may seek things that
are conflicting. A girl expects as much freedom and opportunity
as her brother and he also shares in the household work. Her
brother may not like this.
● Similarly, to get more electricity, industrialists may want more
dams but this may submerge the land and disturb the lives of
people who are displaced, such as tribals.
 HEMANT SINGH

answer 11:
The benefits of deposits with the banks are:
1. This ensures the safety of money and they also earn interest
from the bank.
2. Demand deposits can be withdrawn whenever the person wants.
It also allows payments to be made through cheque.
3. Through cheques, the money gets directly transferred between
banks. So, no direct payment of cash needs to be made.
4. Banks extend loans from the deposits they receive so they
mediate between people having surplus funds and people in need
of more funds through these deposits.
5. Since bank deposits are also white money, the nation’s economy
is more transparent.

answer 12:
Development, at present, without harming the environment and
also keeping it safe for future generations is termed sustainable
development.
● Groundwater, which is a renewable resource, is getting depleted
because of its overuse. People are facing the problem of a water
B

crisis due to its indiscriminate use.

U

● The development that emerged from the fast industrialization

leads to the cutting of forests and its result is a polluted-
PH

environment for the present as well as for future generations.

● Crude oil which is a non-renewable resource with limited stock
is depleting gradually. So we need to use it wisely.
EX

answer 13:
Money in our pockets cannot buy all the goods and services that
we may need to live well.
● Money cannot buy us a pollution-free environment.
● Money cannot buy us a disease-free life and might not be able
to get protection from infectious diseases.
● Besides money, people also like to have equal treatment in
society, freedom, dignity, and honor in their lives, which money
cannot buy them.
 HEMANT SINGH

answer 14:
There are a number of ways to increase urban employment in
India, including:
Encouraging foreign investment:
Attracting foreign investment can create jobs in a variety of
industries, including manufacturing, technology, and services.
Developing small and medium-sized enterprises (SMEs): SMEs
are a major source of employment in urban areas, and policies
that support their growth and development can help to create
jobs.
Providing vocational training: Vocational training can help to
match workers with the skills that are in demand in the urban
labor market.
Promoting the growth of the service sector: The service
sector, including tourism, retail, and healthcare, is a major source
of urban employment in India. Policies that encourage the growth
of this sector can help to create jobs.
Focusing on Infrastructure development: Infrastructure
B

development can create jobs in the short term, as well as make it

U

easier for businesses to operate and for people to move around in

the long term.
PH

Encouraging entrepreneurship: Encouraging entrepreneurship can

help to create new businesses and jobs, particularly in the
informal sector.
EX

Improving access to credit: Improving access to credit can help

entrepreneurs and small businesses grow, which can create jobs.

answer 15:
1. It helps to meet the ongoing expenses of production.
2. It helps in increasing earnings and encourages people to invest
in agriculture, engage in business, and set up small industries.
3. It helps in completing production on time.
4. Cheap credit will end the vicious cycle of a debt trap.
5. Cheap and easy credit would inspire better investment in
technology and would increase competition
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