NCERT QUESTION AND SOLUTIONS CH: MONEY AND CREDIT 1. In situations with high risks, credit might create further problems for the borrower. Explain. In situations with high risks, credit might create further problems for the borrower. This is also known as a debt-trap. Taking credit involves an interest rate on the loan and if this is not paid back, then the borrower is forced to give up his collateral or asset used as the guarantee, to the lender. If a farmer takes a loan for crop production and the crop fails, loan payment becomes impossible. To repay the loan the farmer may sell a part of his land making the situation worse than before. Thus, in situations with high risks, if the risks affect a borrower badly, then he ends up losing more than he would have without the loan. 2. How does money solve the problem of double coincidence of wants? Explain with an example of your own. In a barter system where goods are directly exchanged without the use of money, double coinci