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Question 1.Fill in the following table with some examples of transactions?
Transactions involving rupee notes and coins Transactions not involving rupee notes and coins
# #


Transactions involving rupee notes and coins Transactions involving rupee notes and coins
1) Train journey 1) Crossing the canal on boat in villages
2) Purchase of Electricals e.g.: 1. I travel from Khazipet to Hyderabad by paying for a ticket. 2. We purchase a tubelight for Rs. 45 2) Purchase of salt and Muggu powder", e.g.: 1. We pay two bags of paddy to the person who helps us to cross the Godavari in his boat. 2. My grandmother purchases salt and Muggu Powder by giving handful of paddy
Question 2.Can there be any difficulties or disadvantages in keeping money in a bank? Think and write?

Answer: There will be no problems in keeping money in a bank. But there may be problems due to computers, ATMs and the negligence of employes, e.g

  • Many problems may arise while withdrawing amount from ATMs
  • Deducting the EMis of loans twice a month by overlook
  • Blocking the accounts
Question 3.In what ways have cheques made exchange of money more convenient?

Answer: Nowadays cheques are widely used for making payments and receiving money. When you want to give money to someone, you write a cheque on that persons name. When you want to send money to someone who lives in a different place, you can send a cheque to her by post. You can also use your cheque to transfer money electronically into the other persons account through a bank. For business purposes, where money is frequently received and paid, cheques are very important as a medium for transactions

Thus cheques have made exchange of money more convenient.
Question 4.Only a part of the total deposits is kept as cash in the bank-safe. Why is this so and how does this benefit the bank ?

Answer: Banks keep only a part of the total deposits as cash in the bank of safe. This is so because it helps the daily cash transactions of the bank. The banks lend the remaining amount to their customers on interest. Thus the banks earn profits

Question 5.If a very large number of account - holders do not wish to keep their money in the bank, how will it affect the bank s working?

Answer: If a large number of account - holders do not wish to keep their money in the bank. This affects the reserves of a bank. The bank cannot lend loans to customers. This affects their income. As a result it is impossible to run a bank

Question 6.If many loans are written off (that is, borrowers are not required to pay back the money), how will this affect the working of the bank?

Answer: A bank is a business enterprise. It has to pay interest to its depositors, pay salary to its employees, has to buy and maintain equipment, pay rent and bear all the cost of running a bank and also make profit. If the loans are written off, the bank cannot perform all these activities. So the banks cannot write off the loans. In any case if the government writes off the loans, then the government should bear the losses

Question 7.People have to pay a higher interest on loans than the interest they receive on a fixed deposit for the same time-period. Why do you think this is so?


  • Bank trade with money
  • Fixed deposits means money that is to be kept with the bank for agreed and specified period. When one has to disturb this arrangement, he has to pay penalty for the same
  • Hence banks charge more interest on fixed deposit loans than what they give
  • An other important aspect is discouraging loans on fixed deposits
  • Not only that, the banks should reach number of expenses such as payment of salaries to its employees, has to buy and maintain equipments, pay rents and bear all the cost of running a bank and also make profit. Thats why we should pay more interest on loans
Question 8.Suppose this year the rains are poor and the crop yield is only half as much as was originally expected. Some people say that if this happens the farmers should be asked to pay back only half the amount they have taken as loans. However, other people say that full amount should be repaid, keeping in view the next years crop. In your opinion, what should the bank do and why?


  • Whatever the situation, normally banks ask for full payment of loan
  • When there is a crop failure or less yield, farmers are unable to repay their loans
  • In such situation banks have to reschedule the repayment procedure and has to provide crop loans to the farmers for the next season
  • Government shall support the farmers by waiving interest component and directing the banks to provided necessary loans for next crop
Question 9.Read the Paragraph under the header Types of Loans and answer the following question?
Types of Loans Banks give loans and advances to different sections of the public like traders, industrialists, students (educational loans), farmers, artisans, SHG, etc. Let us examine some of them. "What sort of loans are more common in your area?"


  • Crop loans
  • Housing loans
  • SHG loans
Question 10.Do you feel that the loans taken from SHGs are helpful to the members? How?

Answer: These are very useful to them

  • They need not ensure the bank with securities
  • The group will ensure that loans are paid back by its members
  • Interest is also nominal
  • The loan can be repaid in easy monthly installments

8th Class Social Studies 7th Lesson Money and Banking InText Questions and Answers

Question 1.Are you aware of any exchanges that are done without money?

Answer: I know about Barter System. In this system, goods are directly exchanged for each other without the use of money

Question 2.You may have bought things in exchange for old clothes, plastic, newspapers, hair, paddy, etc. Discuss the transaction?
(Textbook Page No. 77)


  • Old clothes : We usually exchange old clothes with steel utensils. This depends mostly on the seller
  • Plastic and Newspapers : We usually exchange these with onion traders. He gives 11/2 kg onions for 1 kg plastic or newspaper
  • Hair: They offer money for hair
  • Paddy: In our village paddy is exchanged for services rendered by washerman, barber etc
Question 3.Complete the following table:
  • # Gopal Seenu Ramu
    Wishes to buy # # #
    Wishes to sell # # #
  • What can we conclude from the above table
  • (Textbook Page No. 78)


  • # Gopal Seenu Ramu
    Wishes to buy Rice Goat Wheat
    Wishes to sell Goat Wheat Rice
  • Trading between these three people is impossible
  • Gopal needs rice. Srinu does not need goat
  • Money helps this transaction
Question 4.Explain in your own words why exchange is not possible between Gopal and Seenu?
(Textbook Page No. 78)

Answer: Gopal needs rice. Seenu has rice. But he doesnt need goat. He needs wheat. So the transaction between Gopal and Srinu is not possible

Question 5. ?
    a) Will the use of money help? Fill in the blanks? (Textbook Page No. 78)

    Answer: The use of money helps this type of transaction

    • If Gopal exchanges for money, his goat with --(i)-- then Gopal uses this --(ii)-- to buy rice from --(iii)-- Now --(iv)-- can use this money to buy --(v)-- from Seenu


    • Seenu
    • money
    • Ramu
    • Ramu
    • wheat
    Question 6.Ask your parents how washermen, barbers, neeti kaavalikaru were paid for their work in villages and towns?
    (Textbook Page No. 78)

    Answer: Nowadays they are paid money only. But 15 years back our parents paid them in the form of paddy

    Question 7.How can the money be used in the transactions between Gopal, Seenu, and Ramu?
    Explain with the help of a flow chart. (Textbook Page No. 78)

    Answer: Gopal should sell his goat for money. ? He should purchase rice with that. ? Seenu should sell wheat for money. ? He should purchase a goat with that. ? Ramu should sell rice for money. ? He should purchase wheat with that

    Question 8.If the role of money as described above were stated as a medium of exchange, would you agree? Explain?
    (Textbook Page No. 78)

    Answer: Yes, I agree with the above statement. In the barter system, the calculation of valuation is not logical and scientific. So I agree with this

    Question 9.For how much rice should Gopal exchange his goat?
    (Textbook Page No. 78)

    Answer: This depends on the demand for goats. If the demand is high, the rice should be in the quantity demanded by Gopal. Otherwise, he should accept the offer of the seller

    Question 10.In a barter system, how do you pay a person who cuts your hair? Discuss?
    (Textbook Page No. 79)

    Answer: In the barter system, I give one kg of rice to the person who cuts my hair. At present, the price of one kg of rice is Rs.30/-. The rate of hair cut is also equal to it

    Question 11.In the above example, complete the conversation, so that they are able to trade?
    (Textbook Page No. 79)

    Gopal: How many bags of rice will you give for this goat? Seetaiah: Two bags. Gopal: I was offered 4 bags for it in other villages. Seetaiah: And I can get a goat for just one bag in that village. Gopal: ................ Seetaiah: ............... Answer: Gopal: I can give this at least for 3 bags. Seetaiah: Okay. Take it

    Question 12.If money was not used by you or any of the traders in your santhalu or weekly market what would happen? Describe in a paragraph?
    (Textbook Page No. 79)

    Answer: Nowadays money is mostly used as a medium of exchange. No one can decide the value of the commodities. Employees and other workers have money only for exchange. The condition is unpredictable

    Question 13.Do you think money can act as a measure of the value of goods and services? Explain?
    (Textbook Page No. 79)

    Answer: Yes, money can act as a measure of the value of goods and services. Public services and private services can be measured. But we cannot and should not measure the values of services of our parents and blood relations. e.g.: Public Services: Transportation - APSRTC Medical facilities - Government hospitals Private Services: Transportation - Private buses Medical facilities - Private hospitals

    Question 14.Can you think of situations when this trust of the goldsmith could break?
    (Textbook Page No. 82)

    Answer: The trust of the goldsmith could break in the following situations

    • debasing the coins
    • maintaining difference in the quality of coins
    • fail to give the coins whenever they asked
    • and any action of cheating
    Question 15.What was the problem faced by the traders in Amsterdam and how did they find a way out?
    (Textbook Page No. 82)

    Answer: Amsterdam was a major trading centre in Europe. Here, there were 846 silver and gold coins recognised by the government that could be accepted for exchange. However, traders were always suspicious of each other - everyone would doubt the purity and weight of these coins. The merchants of Amsterdam got together and solved this problem in a unique manner. They created a bank owned by the city

    Question 16.Draw the picture of a bank cheque in your notebook and pay Rs.1,50,000/- to your friend sitting next to you?
    (Textbook Page No. 84)


    Question 17. ?
    • If Suresh Babu wants to deposit 1,75,000, electronically into Kancharla Sujathas account through his bank, how can this be done
    • What more information would he require ? Visit a bank and find out
    • (Textbook Page No. 84)


    • This can be done through NEF transfers. According to this process any account holder can transfer to another account holder of any other bank in the country without any charges. The maximum limit is Rs.2,00,000.
    • For this she needs the account number, name of the receiver, branch name and city of Sujatha
    Question 18.Discuss and make a list of the payments that people make electronically without using a cheque ?
    (Textbook Page No. 84)

    Answer: People can make payments electronically without using cheques by using the internet

    • Sale and purchase of goods
    • Raising capitals
    • Repaying debts
    • Paying electricity and Phone bills
    • Transfer of money
    • Paying income tax
    • Paying house taxes etc
    Question 19.What is the difference between a savings account and a current account?
    (Textbook Page No. 84)

    Answer: Savings account: The savings account holders are mostly employees and common people. They get interested on their amount in the account. Money will be safe. The account holder can withdraw it at any time he/she wants. The bank promises to pay on demand. Current Account: Business people and traders maintain this account. There are no restrictions on the number of times you can deposit or withdraw the money from a current account. Transactions can be made by way of cheques. The bank does not pay any interest on money deposited in a current account but will collect service charges

    Question 20.Match the statement in column A with the word(s) / terms in column B?
    (Textbook Page No. 86)

    Answer: a-iv, b-i, c-v, d-ii, e-iii

    Question 21.When should one opt fixed deposits for savings ?
    (Textbook Page No. 86)

    Answer: The money invested in fixed deposits should not be withdrawn in the given period. Then only one can use fixed deposits for savings

    Question 22.How is an SHG loan different from an individual loan?
    (Textbook Page No. 88)

    Answer: One should mortgage ones property when he/she takes individual loan. The SHG will ensure that loans are paid back by its members. They need not mortgage any asset

    Question 23. ?
    • Hari cultivates vegetables like tomatoes, okra, green leaves etc. He wants to buy fertiliser after three months. He cant keep these vegetables with him to pay for the fertiliser after three months. If he does not use money what arrangement will he get into with the person supplying fertilisers
    • Do you find any such arrangements in villages around you
    • Many a times farmers may not benefit from such arrangements. Discuss
    • (Textbook Page No. 79)


    • Hari should sell his vegetables to the trader of fertilisers. Then in future he can get the fertilisers for the same rate. Thus they should enter into an agreement
    • We have no such arrangements in our village
    • These arrangements are beneficial to the farmers. Values differ in different seasons. So government should plan the substitutes
    Question 24.Have you ever been inside a bank? What are the names of some banks you know?
    (Textbook Page No. 82)

    Answer: Yes. I have visited the banks many times. Names of Banks

    • Kotak Mahindra
    • State Bank of India
    • Andhra Bank
    • Indian Bank
    • Vijaya Bank
    • Dena Bank
    • Kanakadurga Grameena Bank
    Question 25.If you step inside a Bank, you will find some employees sitting at different counters with their computers/ ledgers and dealing with the customers. You can also observe people depositing money at some counters and withdrawing money at other counters. There is one cabin where the manager sits. What do these bank employees do?
    (Textbook Page No. 82)

    Answer: My name is Subba Rao. Once I went to the State Bank of India branch in Mudinepalli One gentleman sat inside a cabin. There is a name plate before him. ANASINGARAJU VENKATA CHALAPATHI RAO - B.M. He was going through some documents and discussing with some others. My mother came there to withdraw some amount. She filled up the withdrawal form and handed over it to the person in counter no. 2. The person in the counter verified the form and the book. He signed it and gave us a token no. 4. We waited there for sometime. In the meanwhile one known person Sri K. Yagnaiah came there and deposited some amount. He wished my mother and went away. Rama Krishna, my brothers friend, came to the bank to open a new account. He was enquiring about it. Bank people were drafting D.D.s, verifying accounts, opening new accounts and helping the locker holders etc. After 40 minutes there was a call from No. 6 counter. We went to the counter and took our money. I was told by my mother that the Manager looks after the bank management issues and any other problems

    Question 26.Read the promise on paper notes used today. Who is making the promise and to whom? Why is this important? Discuss. (Textbook Page No. 82)

    Answer: I find the following promise on the hundred rupee note. "I PROMISE TO PAY THE BEARER THE SUM ON ONE HUNDRED RUPEES." - GOVERNOR. This promise is given by the Reserve Bank Governor, Dr. Raghuram Rajan. This promise is given to the owner of the note. Without this promise this note can be treated as a paper. So this is important

    Question 27.Visit a commercial bank which is near to your locality and fill up the following table?
    (Textbook Page No. 88)
    S.No Type of Loan Loan amount Duration of loan Documents required Interest rate Mode of payment Security, if any
    1 Vehicle # # # # # # #
    2 # # # # # # #
    3 # # # # # # #


    S.No Type of Loan Loan amount Duration of loan Documents required Interest rate Mode of payment Security, if any
    1 Vehicle 6,00,000 18Month 1) Six months bank state¬ment etc. 2) 2 photos 10.50% p.a MonthEMI #
    2 Housing Loan 15,00,000 15Year 1) IT Pancard Address proof 10% p.a. " Government employees signature or any other security
    3 Educa¬tion loan 4,00,000 3Year " 13.50% p.a. After getting job or 6 months after completion of the education Signature of a government official or any other security
    Question 28.Why were metals preferred for use as money?
    (Textbook Page No. 80)

    Answer: Copper, bronze, silver and gold are durable, can be divided into parts and be carried around Since they were scarce they became acceptable by all. So the metals were preferred for use as money

    Question 29.Do you think minting of coins was a good idea?
    (Textbook Page No. 80)

    Answer: Yes, I think so. But the quality and measurement should be perfect as per norms

    Question 30.In what ways would minting of coins benefit the rulers? Can you think of three different reasons?
    (Textbook Page No. 80)


    • The trade transactions in their kingdom will be perfect. This strengthens their treasury
    • Minting coins is an industry. The income through this also strengthens their treasury
    • They print their favourite designs on the coins. This act enables the future generation to know about the interest of the past people. Eg. : If we find any musical instrument on the coin, it tells us that they were the lovers of music
    Question 31.Why do the receipts of the goldsmith work as money?
    (Textbook Page No. 82)

    Answer: The goldsmiths charged fees for keeping their valuables safe and making them available whenever they wanted. This practice became popular and the trust in some of the goldsmiths or shroffs grew. These goldsmiths would also give loans and had branches in many cities leading to a new system of paper money or hundis. With the great confidence on the goldsmiths, the people treated the receipts as money

    Question 32.Why is a crossed cheque safe? Discuss?
    (Textbook Page No. 84)

    Answer: The crossed cheque can be deposited and cashed in the account holders account only. No other person can cash it. This system can create confidence in the customers. Otherwise it can be misused

    Question 33.Why do banks ask for security while lending?
    (Textbook Page No. 88)

    Answer: There is no personal relation and identification between the bank people and their customers. If the bank people failed to recollect the debts, it leads to bankrupt. So banks ask for security while lending

    Question 34.Which is a better source of loans - banks or money lenders? Why?
    (Textbook Page No. 88)

    Answer: Banks are a better source of loans. Reasons

    • The Bank interest is nominal
    • The loan can be paid in easy instalments
    • If any customer fails to repay, the bank gives reasonable time for the repayment
    Question 35.After two centuries, this bank collapsed. Can you guess what could have been the reasons for this? Discuss?
    (Textbook Page No. 82)

    Answer: Amsterdam Bank opened many branches in many European countries. It was called Wissel Bank in Dutch. There was debasement problem in Dutch. It was often. Due to that the customers of the Bank usually repaid the coins of lesser values. So the customers were dissatisfied. As Dutch was a small country, the problem raises many times. Due to this the name of the bank was defamed

    The decline of the Bank accelerated with the fourth Anglo-Dutch war (1780-84). The British blockade of Holland and the capture of many Asian colonies put tremendous pressure on the Dutch East India Company. Loans were issued to all. The metallic stock of the bank was dropped from 20 million to 6 millions (1780-84). The French revolution led the bank towards failure. At last it was closed in 1819

    Question 36.How would she (Geeta) withdraw the money from an ATM?
    (Textbook Page No. 82)


    • Geeta would follow the instructions displayed on the screen of the ATM
    • Instructions :
    • Insert the card/Remove the card
    • Feed the PIN number
    • Feed the amount, press ok
    • Take the money
    • Take the receipt
    • Press the Clear Button
    • Leave the room
    • By following the given instructions Geetha would withdraw the money from an ATM
    Question 37.What would she (Geeta) do if she went to her bank branch?
    (Textbook Page No. 82)

    Answer: She would stand in a queue for 30 to 40 minutes to get the amount. She had to fill the withdrawal slip and stand in the queue. When her turn comes she gives the slip and passbook in the counter. Then she gets token. After a few minutes she will be paid in another counter

    Question 38.How much money will Manaswini get from her Fixed Deposit till five years, if the rate of interest is 8%?
    (Textbook Page No. 86)

    Answer: Manaswini gets Rs. 15000/- approximately after the period of 5 years

    Question 39.Suppose she needs the money urgently for some medical treatment. Can she withdraw it from the Fixed Deposit at the bank? What will happen?
    (Textbook Page No. 86)

    Answer: She can withdraw her deposit whenever she wants. But she will not receive 8% of interest. She receives less percentage as per bank norms

    Question 40.Will the same rate of interest be charged for all types of borrowers from a bank?
    (Textbook Page No. 87)

    Answer: The rate of interest changes from loan to loan. For e.g.: They charge 8% on housing loans and 14% on personal loans

    Question 41.What will happen if some borrowers do not repay the bank loan ?
    (Textbook Page No. 87)

    Answer: The bank collects the loan from the guarantors or disposes the mortgage. For e.g.: If any customer fails to repay the housing loan, the bank sells the house in auction. It takes the loan amount and gives the remaining amount to the customer

    Classroom Activity

    Suppose you need Rs. 2,000. You fill a cheque and give it to your sister and send her to get the money in cash?

    Answer: Self cheque

    • I will write a cheque for Rs. 2,000/- on my friends name and ask her to get cash from the bank
    • I will sign on the down and back of the cheque
    • I will give her instructions where to handover the cheque in the bank and how to receive cash in counter
    • No need of any account to my friend in the bank
    • Cross cheque: If I wrote an amount on cross cheque, my sister needs an account in any of the banks to change the check into cash.


    Question 1.Visit a bank or invite a bank employee to the school and find out?
    • How to open a saving account in your name
    • How are cheques cleared by the banks
    • How do banks make NEFTransfers? (National Electronic Funds Transfer)
    • What security precautions are necessary for an ATM to work? What does the computer check
    • Apart from cheques, people can also exchange money through Bank Drafts/online transaction etc. Find out
    • For the person receiving the money, what is the advantage of online transaction compared to a cheque
    • The following Interest rates on saving deposit #
      Interest rate on fixed deposit #
      Interest rate for loans given to farmers #
      Interest rate for loan given to housing #
      Interest rate for loans given for education #


    • The person should take two photographs, address proof, income proof, personal identifi¬cation to the bank. He/she should fill the application form and get the introduction signa¬ture. He/she should handover these papers in the counter, his/her account can be opened
    • Cheques are cleared by the banks in the Clearing Bank
    • All the banks in the country are interconnected with computers and internet. A person can transfer a particular amount (less than 2,00,000/-) from his account to others account in other bank. This transaction can be done through NEFT. The Bank will not charge any rate for this
    • Security precautions necessary, for an ATM to work
    • Computer should be checked whether working properly or not
    • Receipt system and printer should be checked
    • The machine should understand the orders of the user
    • The count of notes should be proper
    • There must be a watchman
    • A camera should be fixed in the ATM room
    • In addition to the PIN number, a system should be improved which records the thumb prints. Computer checks the PIN number and balances in the accounts
    • Yes, there are bank drafts and online transactions etc., to exchange money. Drafts take sometime to be encashed. But online transactions take no time. One can withdraw the amount immediately after a click
    • When compared to a cheque, online transaction is the best. The person can receive the money without any delay. But a cheque takes 2 to 4 days time to be encashed. So the receiver can save his time
    • The following Interest rates on saving deposit 4%
      Interest rate on fixed deposit I year 8% II year - 9%
      Interest rate for loans given to farmers I year 8% II year - 9%
      Interest rate for loan given to housing 10 .50%
      Interest rate for loans given for education 13.50% - 14%
    Question 2.Please visit and read comics on financial inclusion / financial literacy themes?

    Answer: Student Activity

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