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Macro Economics > Money > Flashcards

Money Flashcards

1
Q

_____ is the foundation stone around which all economic activities revolve/most imp discovery/basic necessity of all economies

A

money

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2
Q

What is barter exchange?

A

exchange of goods for goods

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3
Q

What is Barter economy? What is another name for it?

A

economy where there is a direct barter of goods and services

c-c economy

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4
Q

What is double coincidence of wants?

A

it refers to the simultaneous fulfillment of mutual wants of buyers and sellers

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5
Q

What are the limitations of barter exchange?

A

lack of double coincidence of wants
lack of common measure of value
lack of standard deferred payment
lack of store of value

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6
Q

future payments cannot take place at ease because of _____

A

can be a different quality
can be a different specific commodity
can lose or gain value

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7
Q

What is the definition of money?

A

money is anything which is generally accepted as a medium of exchange, measure of value, store of value and means for standard of deferred payment

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8
Q

What is money supply?

A

total vol. of money held by public at a particular point of time in an economy

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9
Q

What are the features of money supply?

A

stock concept

money held by the public only - individuals and business firms

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10
Q

RBI used narrow measure of money ss till _____

A

1967-68

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11
Q

4 alternative measures of money ss were evolved since _______

A

1977

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12
Q

Explain M1

A

Currency and Coins with Public + Demand Deposits of Commercial Banks + Other Deposits with RBI
currency and coins with public - legal tender money / fiat money
demand deposits - savings a/c and current a/c
other deposits - very small portion of M1, deposits of foreign banks, govts, public financial institutions, IMF etc (doesnt include commercial bank deposits)

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13
Q

Explain M2

A

M1 + Savings Deposits with Post Office Savings Bank

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14
Q

Explain M3

A

M1 + Net Time Deposits with Banks

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15
Q

Explain M4

A

M3 + Total Deposits with Post Office Savings Bank

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16
Q

What is legal tender money?

A

money which can be legally used to make payment of debts or other uses

17
Q

What is fiat money?

A

defined as the money which is under the fiat or order from govt to act as money i.e under law

18
Q

What is High-Powered money?

A

money produced by RBI and the govt

(i) currency held by public
(ii) cash reserves with the banks

19
Q

What is the difference btwn money and high-powered money?

A

Money - currency and demand deposits
H-P money - currency and cash reserves with banks
cash reserves serves as a base for
generation of demand deposits

20
Q

How is M2 evolved?

A

savings deposits with post office savings bank is not withdrawable by cheque so they’re not part of dd deposits with banks

21
Q

What is NSC? Is it part of M4?

A

National Savings Certificate

it is not a part of M4

22
Q

What is the most and least liquid of the four measures?

A

M1 - most liquid

M4 - least liquid

23
Q

What is also called transaction money?

A

M1

24
Q

What is also called the aggregate monetary resources of the society?

A

M3

25
Q

What are the narrow money ss concepts and what are the broader money ss concepts?

A

narrow - M1 and M2

broader - M3 and M4

26
Q

What are the demand deposits?

A

deposits which can be encashed by issuing cheques by any time by the account holders

27
Q

What are limited and unlimited legal tender?

A

limited - legal tender money that can be paid in discharge of a debt up to a certain limit - coins
unlimited - legal tender money that can be paid in discharge of a debt of any amount

28
Q

What is near money?

A

financial assets that are not as liquid as coins and currency notes but can easily be converted into money for paying debts eg: fixed deposit receipts, bonds etc

29
Q

What three types can money be classified into?

A

full bodied money - any unit of money whose face value and intrinsic value are equal
representative full-bodied money - money made out of paper (i)convertible paper money (freely converted into full bodied money) (ii) inconvertible (can’t be converted)
credit money - intrinsic value is much lower than face value

Macro Economics (3 decks)

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