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Explain the role of… (Class 10 Social Science 2023, Q29b)

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Social ScienceCBSE Class 10 · Board exam 2023, set 32/1/1 · 3 marks · Short answer

CBSE Class 10 Social Science 2023: question 29(b)

Set in the CBSE Class 10 board exam of 2023, paper 32/1/1, section C, question 29(b), for 3 marks. Try it first; the hints and our step-by-step solution are below.

Q29(b) · 3 marks · Short answerMoney and Credit

Explain the role of banks with regard to money which they accept from the public.

Source: official question paper from cbse.gov.in (PDF). See it in the full 2023 board paper, set 32/1/1.

Hints

Open one hint at a time and try again before the next.

Hint 1

How much cash do banks keep?

Hint 2

What is done with the rest?

Hint 3

How do banks earn?

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. Banks accept deposits and pay interest on them. They keep only a small proportion (about 15%) as cash to meet daily withdrawals.

    1 mark

  2. They use the major part of deposits to give loans, meeting borrowers' needs and mediating between depositors and borrowers.

    1 mark

  3. They charge higher interest on loans than they pay on deposits; the difference is their main income.

    1 mark

Answer: Banks keep some cash, lend the rest, and earn the interest difference.

Where the marks are

  • Deposits, interest, cash reserve (1 mark)
  • Loans, mediation (1 mark)
  • Interest difference as income (1 mark)

Revise the chapter

  • Chapter: Money and Credit (notes, formulas, where marks are lost and every past question)
Practise this chapterBoard-style questions from Money and Credit, one at a time, marked against the answer key and marking points.Back to the full paper2023 board paper, set 32/1/1: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.