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Money & Credit Video Lecture | Crash Course for UAE Grade 10

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FAQs on Money & Credit Video Lecture - Crash Course for UAE Grade 10

1. What is money and credit?
Ans. Money refers to any object or token that is widely accepted as a medium of exchange for goods and services. It can be in the form of currency notes, coins, or even digital transactions. Credit, on the other hand, is the borrowing capacity of an individual or a firm. It allows people to borrow money now and repay it later with interest.
2. What is the difference between money and credit?
Ans. The main difference between money and credit lies in their nature and function. Money is a tangible form of currency that is widely accepted as a medium of exchange, while credit refers to the borrowing capacity of individuals or firms. Money can be used immediately for transactions, whereas credit allows individuals to borrow money now and repay it later with interest.
3. How does the concept of credit work?
Ans. When individuals or firms need money but do not have enough cash, they can borrow from banks or financial institutions. This borrowed money is known as credit. The borrower agrees to repay the borrowed amount along with interest within a specified period. The lender charges interest as a fee for lending money and for taking the risk of non-repayment.
4. What are the advantages of credit?
Ans. Credit offers several advantages, such as: 1. It enables individuals to make purchases even when they do not have enough cash at the moment. 2. It helps in managing emergencies or unexpected expenses. 3. Credit allows people to invest in assets or ventures that can generate returns in the future. 4. It provides a convenient and flexible payment option, especially for large purchases. 5. Credit can also help in building a good credit history, which is beneficial for future borrowing.
5. What are the risks associated with credit?
Ans. While credit offers various advantages, it also involves certain risks, including: 1. Overuse of credit can lead to excessive debt and financial stress. 2. Failure to repay credit on time can result in penalties, higher interest rates, and damage to credit scores. 3. Borrowers may become dependent on credit, leading to a cycle of borrowing and repayment. 4. High interest rates on credit can increase the overall cost of the borrowed amount. 5. Defaulting on credit can have long-term consequences, making it difficult to obtain credit in the future.
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