{"id":3629,"date":"2026-06-06T15:36:18","date_gmt":"2026-06-06T10:06:18","guid":{"rendered":"https:\/\/mymockmate.com\/notes\/?p=3629"},"modified":"2026-06-06T15:36:22","modified_gmt":"2026-06-06T10:06:22","slug":"ncert-class-10-economics-chapter-3-exercise-solution-q1-money-and-credit","status":"publish","type":"post","link":"https:\/\/mymockmate.com\/notes\/ncert-class-10-economics-chapter-3-exercise-solution-q1-money-and-credit\/","title":{"rendered":"NCERT Class 10 Economics Chapter 3 Exercise Solution Q1 Money and Credit"},"content":{"rendered":"<div class=\"pdfprnt-buttons pdfprnt-buttons-post pdfprnt-top-bottom-right\"><a href=\"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/posts\/3629?print=print\" class=\"pdfprnt-button pdfprnt-button-print\" target=\"_blank\" ><img decoding=\"async\" src=\"https:\/\/mymockmate.com\/notes\/wp-content\/plugins\/pdf-print\/images\/print.png\" alt=\"image_print\" title=\"Print Content\" \/><span class=\"pdfprnt-button-title pdfprnt-button-print-title\">Print<\/span><\/a> <span class=\"pdfprnt-count-generation\">3<\/span><\/div>\n<h1 class=\"wp-block-heading\">Short Introduction<\/h1>\n\n\n\n<p class=\"wp-block-paragraph\">Credit plays an important role in economic activities. However, when there is uncertainty or high risk, borrowing money can create serious financial problems for borrowers. This question explains how credit may become harmful in risky situations.<\/p>\n\n\n\n<h1 class=\"wp-block-heading\">Quick Information Box<\/h1>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th>Particular<\/th><th>Details<\/th><\/tr><\/thead><tbody><tr><td>Chapter<\/td><td>Money and Credit<\/td><\/tr><tr><td>Class<\/td><td>10<\/td><\/tr><tr><td>Subject<\/td><td>Economics<\/td><\/tr><tr><td>Question No.<\/td><td>1<\/td><\/tr><tr><td>Topic<\/td><td>Risks of Credit<\/td><\/tr><tr><td>Difficulty Level<\/td><td>Easy<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h1 class=\"wp-block-heading\">Concepts Used (Topics Covered)<\/h1>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Credit and Loans<\/li>\n\n\n\n<li>Debt Trap<\/li>\n\n\n\n<li>Risk in Borrowing<\/li>\n\n\n\n<li>Crop Failure<\/li>\n\n\n\n<li>Loan Repayment<\/li>\n\n\n\n<li>Informal Credit Sources<\/li>\n<\/ul>\n\n\n\n<h1 class=\"wp-block-heading\">Important Formulas<\/h1>\n\n\n\n<p class=\"wp-block-paragraph\">No mathematical formula is involved in this question.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Important Concept:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Debt Trap = Inability to repay loan + Accumulating interest + Need for additional borrowing<\/strong><\/p>\n\n\n\n<h1 class=\"wp-block-heading\">Question 1<\/h1>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>In situations with high risks, credit might create further problems for the borrower. Explain.<\/strong><\/p>\n\n\n\n<h1 class=\"wp-block-heading\">Step-by-Step Solution with Explanation<\/h1>\n\n\n\n<h3 class=\"wp-block-heading\">Step 1: Understand High-Risk Situations<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">A high-risk situation is one where income or returns are uncertain. Examples include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Farming affected by droughts, floods, or pests.<\/li>\n\n\n\n<li>Small businesses facing market losses.<\/li>\n\n\n\n<li>Jobs with uncertain income.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Step 2: Understand the Role of Credit<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">People borrow money expecting future income to repay the loan.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For example:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A farmer takes a loan to buy seeds and fertilizers.<\/li>\n\n\n\n<li>A shopkeeper borrows money to expand business.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Step 3: What Happens if Things Go Wrong?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">If the expected income is not generated:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The borrower cannot repay the loan.<\/li>\n\n\n\n<li>Interest continues to increase.<\/li>\n\n\n\n<li>The debt burden becomes larger.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Step 4: Example from the Chapter<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Swapna borrowed money for cultivation.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Pest attacks destroyed her crop.<\/li>\n\n\n\n<li>She could not earn enough income.<\/li>\n\n\n\n<li>She failed to repay the loan.<\/li>\n\n\n\n<li>Debt increased year after year.<\/li>\n\n\n\n<li>Finally, she had to sell part of her land.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Final Answer<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">In high-risk situations, credit can create further problems because repayment depends on future income. If income is not generated due to crop failure, business loss, illness, or any unexpected event, the borrower cannot repay the loan. Interest keeps increasing, leading to a debt burden and sometimes a debt trap. As seen in the case of Swapna, failure to repay the loan forced her to sell a part of her land. Therefore, credit can worsen the financial condition of the borrower in risky situations.<\/p>\n\n\n\n<h1 class=\"wp-block-heading\">Common Mistakes<\/h1>\n\n\n\n<p class=\"wp-block-paragraph\">\u274c Writing only that &#8220;loan becomes difficult to repay.&#8221;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u274c Not explaining how debt increases over time.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u274c Forgetting to mention the debt trap concept.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u274c Not using a suitable example.<\/p>\n\n\n\n<h1 class=\"wp-block-heading\">Exam Tips<\/h1>\n\n\n\n<p class=\"wp-block-paragraph\">\u2705 Mention the term <strong>Debt Trap<\/strong>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u2705 Use the example of <strong>Swapna<\/strong> from the chapter.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u2705 Explain the connection between risk, income loss, and repayment failure.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u2705 Write the answer in logical steps for better marks.<\/p>\n\n\n\n<h1 class=\"wp-block-heading\">Practice MCQs<\/h1>\n\n\n\n<h3 class=\"wp-block-heading\">1. What is the major risk faced by farmers after taking crop loans?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">A. Higher production<br>B. Better income<br>C. Crop failure<br>D. Increased savings<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Answer:<\/strong> C. Crop failure<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">2. When a borrower is unable to repay a loan and debt keeps increasing, it is called:<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">A. Investment<br>B. Profit Cycle<br>C. Debt Trap<br>D. Capital Formation<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Answer:<\/strong> C. Debt Trap<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">3. Credit becomes harmful when:<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">A. Income increases<br>B. Risks are low<br>C. Repayment is easy<br>D. Income generation fails<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Answer:<\/strong> D. Income generation fails<\/p>\n\n\n\n<h1 class=\"wp-block-heading\">FAQ Section<\/h1>\n\n\n\n<h3 class=\"wp-block-heading\">Q1. What is a debt trap?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">A debt trap is a situation where a borrower cannot repay a loan and has to borrow again, causing debt to increase continuously.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Q2. Why did Swapna fall into a debt trap?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Swapna&#8217;s crop failed due to pests, so she could not repay her loan and her debt kept increasing.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Q3. Is credit always harmful?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">No. Credit is useful when it helps generate income and can be repaid on time.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Q4. What makes a credit situation risky?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Uncertain income, crop failure, business losses, natural disasters, and unemployment make credit risky.<\/p>\n\n\n\n<h1 class=\"wp-block-heading\">CTA (Call To Action)<\/h1>\n\n\n\n<p class=\"wp-block-paragraph\">Looking for complete NCERT Solutions, MCQs, Chapter Notes, Previous Year Questions, and Exam Preparation Resources?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Visit <strong><a href=\"http:\/\/www.mymockmate.com\">www.mymockmate.com<\/a><\/strong> and boost your exam preparation with high-quality study materials, solved exercises, practice tests, and expert guidance designed for CBSE students.<\/p>\n<div class=\"pdfprnt-buttons pdfprnt-buttons-post pdfprnt-top-bottom-right\"><a href=\"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/posts\/3629?print=print\" class=\"pdfprnt-button pdfprnt-button-print\" target=\"_blank\" ><img decoding=\"async\" src=\"https:\/\/mymockmate.com\/notes\/wp-content\/plugins\/pdf-print\/images\/print.png\" alt=\"image_print\" title=\"Print Content\" \/><span class=\"pdfprnt-button-title pdfprnt-button-print-title\">Print<\/span><\/a> <span class=\"pdfprnt-count-generation\">3<\/span><\/div>\n    <div class=\"xs_social_share_widget xs_share_url after_content \t\tmain_content  wslu-style-1 wslu-share-box-shaped wslu-fill-colored wslu-none wslu-share-horizontal wslu-theme-font-no wslu-main_content\">\n\n\t\t\n        <ul>\n\t\t\t        <\/ul>\n    <\/div> \n","protected":false},"excerpt":{"rendered":"<p> 3 Short Introduction Credit plays an important role in economic activities. However, when there is uncertainty or<\/p>\n","protected":false},"author":2,"featured_media":3631,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_surecart_dashboard_logo_width":"180px","_surecart_dashboard_show_logo":true,"_surecart_dashboard_navigation_orders":true,"_surecart_dashboard_navigation_invoices":true,"_surecart_dashboard_navigation_subscriptions":true,"_surecart_dashboard_navigation_downloads":true,"_surecart_dashboard_navigation_billing":true,"_surecart_dashboard_navigation_account":true,"postBodyCss":"","postBodyMargin":[],"postBodyPadding":[],"postBodyBackground":{"backgroundType":"classic","gradient":""},"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[5,746],"tags":[2755,2757,2753,2754,2756,2649,2367],"class_list":["post-3629","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-class-10","category-social-science","tag-cbse-economics","tag-class-10-economics-chapter-3","tag-class-10-social-science","tag-money-and-credit-question-answer","tag-money-and-credit-solutions","tag-ncert-class-10-economics","tag-ncert-exercise-answers"],"featured_image_src":"https:\/\/mymockmate.com\/notes\/wp-content\/uploads\/2026\/06\/NCERT-Class-10-Economics-Money-and-Credit-Solutions-Class-10-Economics-Chapter-3-NCERT-Exercise-Answers-Money-and-Credit-Question-Answer.png","author_info":{"display_name":"Madhu","author_link":"https:\/\/mymockmate.com\/notes\/author\/madhusa\/"},"jetpack_publicize_connections":[],"_links":{"self":[{"href":"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/posts\/3629","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/comments?post=3629"}],"version-history":[{"count":1,"href":"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/posts\/3629\/revisions"}],"predecessor-version":[{"id":3632,"href":"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/posts\/3629\/revisions\/3632"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/media\/3631"}],"wp:attachment":[{"href":"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/media?parent=3629"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/categories?post=3629"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mymockmate.com\/notes\/wp-json\/wp\/v2\/tags?post=3629"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}