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Economics > Money > Flashcards

Money Flashcards

1
Q

What is barter system?

A

It is a system in which, good were directly exchanged for other goods without the use of money

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2
Q

what’re the disadvantages of Barter system? (6 points)

A
  1. Problem of reciprocal demand.
  2. Indivisibility.
  3. Complex calculations
  4. Problems related to deffered (future) payments.
  5. Problems related to store of value.
  6. Inadequate scope of specialisation
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3
Q

Walker’s definition?

A

Money is what money does

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4
Q

“Anything that is generally acceptable as a medium of exchange and at the same time acts as a measure and store of value” Whose definition is this?

A

Crowther and Crowther’s definition

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5
Q

What is commodity money?

A

When various commodities are used as money, it is called commodity money. eg: cowrie shells, leather, animal hides, animals

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6
Q

What is Metallic money?

A

The use of precious metals as money is called metallic money.

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7
Q

What is Legal tender or Fiat money?

A

When the acceptability of any medium of exchange is enforced by law, that medium is called fiat money or legal tender

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8
Q

What is plastic money?

A

Credit cards, debit cards

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9
Q

What is numeraire?

A

The good in terms of which the value or price of all other goods is expressed is called numeraire

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10
Q

Primary Functions of money (2 points)

A
  1. Acting as medium of exchange

2. Acting as measure of value.

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11
Q

Secondary functions of money (3 points)

A
  1. Standard of deffered payment
  2. Store of value
  3. Transfer of value
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12
Q

Contingent functions of money (4 points)

A
  1. Assisting production decisions
  2. Assisting consumption decisions
  3. Assisting distribution of normal income
  4. Assisting the operation of a credit system
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13
Q

Components of money supply

A 
M1 = Currency with the public + demand deposits with the commercial banks + other deposits with the RBI
M2 = M1 + postal savings bank deposits
M3 = M1 + term deposits with the commercial banks
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14
Q

What is Narrow and Broad money?

A

Narrow Money is M1

Broad Money is M3

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15
Q

What is M1?

A

Currency with the public + Demand deposits with commercial banks + other deposits with the RBI

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16
Q

What is M2?

A

M1 + Postal savings bank account

17
Q

What is M3?

A

M1 + Term deposits with the commercial banks

18
Q

……………………. is the most primitive form of money

A

Commodity money

19
Q

Who introduced the first gold coin and when?

A

King Kanishka of Kushan Dynasty during the 1st century A.D

20
Q

What is paper money also called?

A

Standard money

21
Q

Barter system cannot function well because of ……………….. (4 Options)

A

(A) Goods are not always divisible
(B) Transaction costs are minimal
(C) goods are always standard
(D) None of the above

Option A is the right answer

22
Q

Paper currency is known as Fiat money because ……………….

A

it is a decreed legal tender

23
Q

Give an example Digital Banking ………………..

A

ATM card

24
Q

What eliminates the need for double coincidence of wants ?

A

Money

25
Q

Since money acts as an intermediate in the exchange process it is called as ……………………

A

medium of trade or exchange

26
Q

What were the earliest forms of objects used as money in India?

A

Grains and Cattle

27
Q

What came after grains and cattle as medium of exchange in India ?

A

metallic coins

28
Q

What came after metallic coins as medium of exchange in India ?

A

paper money

29
Q

What is paper money also called?

A

token money

30
Q 
The meaning of money supply is ............... 
(A) money deposited in the bank  
(B) cash available with public  
(C) saving in the post office 
(D) all the above
A

(D) all the above

Option D is correct

31
Q

When is credit needed?

A

When we cannot pay for a commodity now

32
Q

It is often said, “Money is a matter of functions four……..” What are those four functions?

A

A medium, a measure, a standard and a store

33
Q

What are the qualities of a good monetary system?

A

1) It should be acceptable to all and act as a medium of exchange
2) it should be easily used to measure the values of different quantities of goods and services
3) it should be effectively used as a standard of deferred payment
4) it should also be used easily as a store of value

34
Q

Who issues the coins and one-rupee notes in India?

A

Finance Ministry of India

35
Q

Who issues the other paper notes in India?

A

The Reserve Bank of India

36
Q

What are those deposits which can be withdrawn at any time called?

A

Demand Deposits

37
Q

What are demand deposits also called?

A

Current account deposits

38
Q

………………………….. plus ………………………………. are the most widely accepted measure of money supply

A

currency + demand deposits or M1

Economics (9 decks)

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