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SAI International School
                                                 Session- 2025-2026

                                                     Lesson notes
                                     Subject- Economics Ch- 3- MONEY AND CREDIT



               NOTES:

                     Definition of Credit:
                       Credit, or a loan, involves an agreement between a lender and a borrower.
                       The lender provides money, goods, or services to the borrower.
                       In return, the borrower promises to make future payments to the lender.

                     Festival season - Positive Impact of Credit:
                       Credit enables Salim to meet ongoing production expenses and complete the order
                       on time.

                       Increases earnings by fulfilling the order during the festival season.
                       Outcome:
                       Successfully delivers the order, makes a profit, and repays borrowed funds.
                       Demonstrates how credit plays a vital role in facilitating business operations and
                       growth.
                     Swapna’s Problem- Negative Impact of Credit:
                            Unable to repay the moneylender due to the failed crop, resulting in the debt
                       accumulating over time.
                            Takes another loan the following year for cultivation, hoping for a better outcome.
                            Struggles with mounting debt, leading to the eventual sale of a portion of her land to
                        settle the outstanding amount.

                     Rural Credit Demand:
                       Mainly for crop production in rural areas.
                       Involves significant costs like seeds, fertilizers, pesticides, water, electricity, and

                       equipment repairs.
                     Timing of Credit:
                       Farmers require credit at the beginning of the season, with a repayment period after
                       harvest.
                       Crop loans are crucial for farmers to cover expenses during the agricultural cycle.
                     Dependency on Crop Income:
                       Loan repayment heavily relies on income from farming.
                       Success of loan repayment is contingent upon the success of the crop yield.
                     Debt Trap:
                       Concept of being trapped in a cycle of debt.
                       Credit intended to improve earnings can leave borrowers worse off in case of
                       unforeseen circumstances like crop failure.
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