NCERT · Class 10 · Social Science · Economics: Money and CreditWhat is 'collateral' in the context of credit/loans?
Step-by-Step Solution
Collateral is an asset that the borrower owns (such as land, building, vehicle, livestock, deposits with banks) and uses this as a guarantee to a lender until the loan is repaid.
Detailed Options Breakdown
Option : Interest rate charged by bank
Incorrect choice. This distractor represents a common misunderstanding of the core principles of Economics: Money and Credit.
Option 1: An asset owned by the borrower used as guarantee (Correct Answer)
Correct choice. Refer to the step-by-step verified solution guidelines above for details.
Option 2: Repayment period of a loan
Incorrect choice. This distractor represents a common misunderstanding of the core principles of Economics: Money and Credit.
Option 3: A type of bank deposit
Incorrect choice. This distractor represents a common misunderstanding of the core principles of Economics: Money and Credit.
💡 Study Guide: This question tests core syllabus concepts from Economics: Money and Credit. For formulas, key summaries, and mock exam reference guides, read the full Economics: Money and Credit Revision Notes.