Chapter 3: Money, Savings and Credit

VVI questions — the ones the board asked most (9)

1. Q1Long answer4 marksAsked: 2024, 2026

   What is money? Discuss the economic importance of money.

   

   Medha Ma’am

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   Hear it from Medha Ma’am · 110 s

   Model answer · meaning and importance of money

   1. 1.Money is a medium of exchange, which acts as a medium for selling and purchasing of goods in the market. It acts as a legal tender, so its noted value and its cognizable features facilitate money's universal acceptability as a means of payment. It serves as a standard medium of exchange and is recognized for making transactions of goods and services convenient.1 mark
   2. 2.Money has removed the inconvenience of barter system and exchange has become easier due to money. It serves as a standard medium of exchange by removing the difficulties of barter system and acts as a convenience of making transactions. In this way, money has simplified economic transactions which were earlier full of difficulties under the barter system.1 mark
   3. 3.Money is an important source of capital formation. People save money and transfer it to productive uses, which accelerates capital formation. People accept capital, as money provides liquidity to capital, and a person with money can buy things according to his necessity. Because of money, establishment of industries is possible on a large scale, and this capital accumulation and investment has accelerated industrial development.1 mark
   4. 4.Credit system is possible only because of money and credit money. The structure of modern business is based on credit. Banks promote small savings of people and provide money on credit to industries, and commercial banks provide credit on the cash reserve basis. Various credit notes are created on the basis of money such as cheque, Hundi, draft etc. Thus money is the basis of credit, which has expanded banking and loan systems and increased economic activities.1 mark

   • Begin the first paragraph with the words 'medium of exchange' and mention 'legal tender'.
   • In the second paragraph, clearly write 'barter system' and say money has removed its difficulties.
   • In the third and fourth paragraphs, use the exact terms 'capital formation' and 'basis of credit' as given in the book.

   Marks split from a structure derived from past papers (checked twice); not Bihar Board’s official scheme

2. Q2Long answer4 marksAsked: 2021

   What is saving ? Define the factors determining saving.

   

   Medha Ma’am

   AskMedha’s AI teacher

   Hear it from Medha Ma’am · 85 s

   Model answer · meaning and factors of saving

   1. 1.The part of income that is not spent on consumption is called savings. The whole income of the society is spent on current goods, which are used immediately or purchasable, and durable goods, which are used in productive activity. The part of total income spent on current goods is known as consumption and the part spent on durable goods is known as saving. Thus, Saving = Income - Consumption. Saving is of two types - saving in cash and saving in goods.1 mark
   2. 2.The capacity to save depends on the level of income because higher income increases the possibility of savings. When income is high, more amount remains after meeting consumption needs, which can be kept as savings. When income is low, most of it is spent on current goods, leaving little scope for saving.1 mark
   3. 3.The desire to save is determined by an individual's future needs and sense of security. A person saves a part of income to meet future needs and to feel secure against future difficulties, which motivates saving in the present.1 mark
   4. 4.The availability of savings facilities like banks, post offices, and financial institutions encourages savings. When such facilities are easily available, people find it convenient and safe to keep their savings with them, which encourages more saving.1 mark

   • Begin with the definition 'Saving = Income - Consumption', using the terms current goods and durable goods.
   • For capacity to save, write that higher income increases the possibility of savings.
   • For desire to save and availability of facilities, name banks, post offices, and financial institutions and link desire to future needs and sense of security.

   Marks split from a structure derived from past papers (checked twice); not Bihar Board’s official scheme

3. Q3Long answer4 marksAsked: 2023

   Explain the functions of money in detail.

   

   Medha Ma’am

   AskMedha’s AI teacher

   Hear it from Medha Ma’am · 130 s

   Model answer · functions of money

   1. 1.Money is a medium of exchange, money acts as a medium for selling and purchasing of goods in market. It serves as a standard medium of exchange by removing the difficulties of barter system and acts as a convenience of making transactions. It acts as a legal tender, so its noted value and its cognizable features facilitate money's universal acceptability as means of payment. Thus money simplifies the buying and selling of goods and services.1 mark
   2. 2.Money acts as a unit of measure of value. In other words, it acts as a yardstick of standard measure of value to which all other things can be measured. Evolution of money has removed the difficulties of measuring value of goods. In modern times, the value of every commodity can be measured in money. With the use of money, the value of exchange has become easier and economic calculation for measuring value have been simplified.1 mark
   3. 3.Human being has tendency to save a part of his income for future to fulfil his future requirements. Money has special feature of being stored and held for future purpose. In barter system, there was difficulty of storing and holding goods because goods can get perished. Money can be stored for longer periods of time. Utility of money is never lost, it can be used in future for purchasing goods and services. Thus money acts as a store of value, allowing purchasing power to be saved for the future.1 mark
   4. 4.In modern era, much of the economic activities are carried on credit, payment is done in future. In other words, money in modern era has helped the people deal effectively with credit transaction. For example, Ram has lend Rs. 100 to Shyam for one year. After one year, Shyam can return Rs. 100 to Ram. Money functions as a standard of deferred payments settling the doubts and future transactions. In modern business credit acts as a backbone and money has made it easier. Barter system was found limited to this facility of lending and borrowing.1 mark

   • Write the exact term for each function: medium of exchange, measure of value, standard of deferred payment, store of value.
   • In the medium of exchange paragraph, write that money acts as a legal tender and removes the difficulties of barter system.
   • In the deferred payments paragraph, give the Ram-Shyam example to show the credit transaction clearly.

   Marks split from a structure derived from past papers (checked twice); not Bihar Board’s official scheme

4. Q4Short answer2 marksAsked: 2021

   Define barter system.

   How the model answer begins

   1. Barter system is a system in which goods are exchanged for goods. Barter means direct exchange of goods and services, where both sale and purchase of goods and services takes place between two persons.

   The full answer from Medha Ma’am →
5. Q5Short answer2 marksAsked: 2022

   What do you mean by self help group ?

   How the model answer begins

   1. Self-help groups are groups of 15 to 20 members, especially women, in rural areas who regularly pool their savings.

   The full answer from Medha Ma’am →
6. Q6Short answer2 marksAsked: 2022

   What do you mean by self help group?

   How the model answer begins

   1. Self-help groups are groups of 15 to 20 members, especially women, in rural areas who regularly pool their savings.

   The full answer from Medha Ma’am →
7. Q7Short answer2 marksAsked: 2023

   Explain economic offence.

   How the model answer begins

   1. Economic offence refers to those illegal activities which violate laws related to money or property for individual or collective economic gain.

   The full answer from Medha Ma’am →
8. Q8Short answer2 marksAsked: 2023

   What benefits did consumers get from the emergence of money ?

   How the model answer begins

   1. Money has removed the inconvenience of barter and exchange has become easier due to money. Buying and selling process has become simple and can be done at the global level, since money is accepted as a mode of exchange.

   The full answer from Medha Ma’am →
9. Q9Short answer2 marksAsked: 2024

   What is the role of self-help group in women empowerment ?

   How the model answer begins

   1. Self-help groups organize women and make them self-reliant and economically independent. These groups encourage women to do regular saving, which helps them to become financially strong and self-dependent.

   The full answer from Medha Ma’am →

Objective questions with the board’s key (10)

1. 1. Bihar Board 2026

   Who creates buffer stock of food grains in India ?

   • (A) NITI Aayog
   • (B) NABARD
   • (C) Food Corporation of India ✓
   • (D) Bharatiya Kisan Union

   Answer: (C)

2. 2. Bihar Board 2026

   Which of the following is/are the characteristic(s) of money ?

   • (A) General acceptability
   • (B) Legal tender
   • (C) Medium of exchange
   • (D) All of these ✓

   Answer: (D)

3. 3. Bihar Board 2026

   What is required for the equilibrium of the economy ?

   • (A) Consumption = Investment
   • (B) Saving = Investment ✓
   • (C) Income = Saving
   • (D) Income = Investment

   Answer: (B)

4. 4. Bihar Board 2026

   Which of the following is the source of non-institutional finance ?

   • (A) Regional Rural Bank
   • (B) Land Development Bank
   • (C) Moneylender ✓
   • (D) Cooperative Bank

   Answer: (C)

5. 5. Bihar Board 2025

   What is the primary function of money ?

   • (A) Store of value
   • (B) Transfer of value
   • (C) Medium of exchange ✓
   • (D) Both (A) and (C)

   Answer: (C)

6. 6. Bihar Board 2025

   Which of the following assets has the least liquidity?

   • (A) Currency
   • (B) Bond
   • (C) Real estate ✓
   • (D) Bank deposit

   Answer: (C)

7. 7. Bihar Board 2024

   What is the difference between income and consumption called?

   • (A) Production
   • (B) Saving ✓
   • (C) Exchange
   • (D) Distribution

   Answer: (B)

8. 8. Bihar Board 2023

   Who creates buffer stock in India ?

   • (A) Food Corporation of India ✓
   • (B) Food and Agriculture Organisation
   • (C) United Nations Organisation
   • (D) None of these

   Answer: (A)

9. 9. Bihar Board 2023

   Which of the following accounts is exclusively for traders ?

   • (A) Fixed Deposit
   • (B) Current Deposit ✓
   • (C) Savings Deposit
   • (D) Recurring Deposit

   Answer: (B)

10. 10. Bihar Board 2023

    When did Prime Minister Narendra Modi announce demonetization ?

    • (A) 8th November, 2016 ✓
    • (B) 16th November, 2016
    • (C) 25th November, 2015
    • (D) 8th November, 2018

    Answer: (A)

Questions parents and students ask

How many marks does "Money, Savings and Credit" carry in Bihar Board Class 10 Social Science?

In the Bihar Board papers of 2021–2026, this chapter carried about 2 marks and about 3 questions a year; by marks it ranks 15 in Social Science.

Which are the most important (VVI) questions of "Money, Savings and Credit"?

The 9 questions above are from the board’s real papers, each with the years it was asked; the most-asked come first with their full model answers. All 9 written questions of this chapter, with answers, are in the AskMedha app.

Do the answers follow the board’s marking scheme?

BSEB does not publish a marking scheme. Each answer is written point by point on a structure derived from past papers and checked by a second, independent model; it is never called the board’s official scheme.