MONEY AND CREDIT
I. Fill in the blanks.
1. Indian rupee is derived from _
2. Cheque is an instrument from _
3. The banks which deals with foreign currency are called as _____________
4. The Reserve Bank of India was established in the year _____________
5 The money of Japan is __________
6 Government of India nationalized 14 commercial Sanks In ______________
Ans: (1) Sanskrit word 'Rupya'; (2) bank; (3) Exchange bank; (4) April 1st 1935; (5) Yen; (6) 1969
II. Answer the following in a sentence each:
1. What is Barter exchange system?
Ans: In the primitive stage, men exchanged goods for goods without the use of money. This was called barter system. Barter was extremely difficult method of trade involving lot of time and energy.
2. State the means of Money?
Ans: Different means are used as money. Some of them are
(i) Commodity money - different commodities were regarded as commodity money at different economies.
(ii) Metallic money - precious metals like gold, silver, bronze were used as metallic money.
(iii) Paper money - written documents issued by known financers as evidence. People became accustomed to bank notes as money.
(iv) Bank money - cheques, drafts, credit and debit cards etc.
3. Which is the central bank of India?
Ans: Reserve Bank of India is the Central bank of India.
4. Explain the functions of Money?
Ans: Functions of money are classified into
(i) Primary function: (a) Medium of exchange - Money is used to buy the goods and services. (b) Measure of value - Prices of all goods and services are expressed in terms of money.
(ii) Secondary function: (a) Standard of differed payments - money helps the future
payments too. (b) Store of value or store of purchasing power - money helps to save it for future as it is not perishable. (c) Transfer of value or transfer of purchasing power - The introduction of money has made the exchange of goods to distant places as well as abroad.
(iii) Contingent functions: (a) Basis of credit - Money forms the basis of credit. (b) Increase productivity of capital-Money in the form of capital is put to several uses.
5. Mention the different types of bank?
Ans: Types of Banks are- (i) Industrial bank, (ii) Exchange banks, (iii) Savings banks, (iv) Co-operative Banks and (v) Land Mortgage Banks.
6. Explain the functions of RBI?
Ans: Some of the functions of RBI are as follows:
(i) Monopoly of note issue - It has the monopoly of issuing currency notes of Rs 2 and above.
(ii) Acts as banker to government - The RBI accepts the deposits of Central and State governments.
(iii) Bankers bank - It controls all banks of the country.
(iv) Acts as National Clearing House - It acts as the clearing house for settlements of banking transactions economically
(v) Acts as the controller of credit - It controls or expands the credit creation of commercial banks, according to desired monetary situation in the economy.
(vi) It acts as the Custodian of foreign exchange reserves.
(vii) RBI collects statistics on economics and financial matters and publishes it periodically.
(i) The RBI institutionalizes savings through the promotion of banking habit and expansion of the banking system in unbanked areas.
(ii) It extends indirect financial facilities to agriculture regularly