Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

12vi > Money and Banking, Macroeconomics > Flashcards

Money and Banking, Macroeconomics Flashcards

1
Q

Barter System

A

A system of exchange in which participants in a transaction directly exchange goods or services for other goods or services

Trading good or services between two or more parties without money

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

DIsadvantages of Barter System

A

Lack of coincidence of wants
Lack of common measure of value
Lack of store of value
Lack of standard of deferred payments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Money

A

Money is any item or medium of exchange that is accepted by people for the payment of goods and services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Primary requirements of Money

A

Being accepted as :
Measure of value
Medium of exchange

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Secondary requirements of Money

A

Being accepted as :
Store of value
and Standard of deferred payments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Money Supply

A

Total volume of money held by the public at a particular point of time

It’s a Stock concept

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Measure of Money Supply

A

The RBI uses four measures of money supply denoted as M1,M2,M3,M4. M1

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

M1

A

Currency held by the public
Demand deposits of Commercial Banks
Other deposits with RBI

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

M2

A

M1 + Saving deposits with the Post Office

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

M3

A

M1 + Fixed Deposits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

M4

A

M3 + All Saving deposits with Post Office (Not the currency held by the public)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Commercial Bank

A

An institution which performs the function of Accepting Funds, Lending Funds and making investments with the main aim of earning profits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Primary Functions of a Commercial Bank

A

Accepting and lending money

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Secondary Functions of a Commercial Bank

A

Overdraft Facility
Discounting bills of exchange
Agency Functions
General utility functions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Types of Deposits

A

Demand Deposit, Fixed Deposit, Saving Deposit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Demand Deposit

A

Is for Current Account; A bank account from which deposited funds can be withdrawn at any time, without advance notice

Are commonly used by Business Firms
Has Check facility available

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Fixed Deposit

A

An investment instrument offered by bank for Savings with a higher rate of interest than a regular savings account

Long Term Deposits

18
Q

Saving Deposit

A

A limited number of Withdrawals, a lack of Cheque and linked Debit Card facilities

Combined features of both
Interest is also provided (but less than FDs)

19
Q

Types of Loans

A

Cash Credit
Demand Loans
Short Term Loans

20
Q

Cash Credit

A

Short-term source of financing given against assets for a company

Interest is charged monthly and only on the money withdrawn

21
Q

Demand Loans

A

A loan that a lender can require to be repaid in full at any time

Interest is charged

Genreally short term
Interest is charged on the money withdrawn

22
Q

Short Term Loan

A

Loans with little to no collateral that are to be repaid in a year or less,

Are offered to salaried employees of reputed companies in form of CC

23
Q

Overdraft Facility

A

Overdraft Facility is a credit facility through which you can withdraw money from your savings or current account

Interest is charged at month end and delaying payment effects Credit Score

24
Q

Discounting BIlls of Exchange

A

Encashment of a bill before its maturity date is referred to as discounting bills of exchange

25
Q

Agency Functions of a Commercial Bank

A

Transfer of Funds
Collection and Payment of items
Purchase and Sale of Securties
Income Tax Consultancy

26
Q

General Utility Functions

A

Locker Facility
Traveller’s Cheque
Letter of credit

27
Q

Assumptions

A

Entire bommercial banking systen is one unit, termed as ‘Bank’
All the Reciepts & Payments are routed through Bank

28
Q

Formula of Money Multiplier

A

1/LRR

29
Q

LRR

A

Legal Reserve Ratio

30
Q

Money Multiplier

A

A bank loans or invests its excess reserves to earn more interest

31
Q

Central Bank

A

‘Apex Body’ that controls, regulates and directs the entire Banking & Money structure of the country

Such as : RBI, Federal Reserve, Bank of England

32
Q

Currency Authority/Bank of Issue

A

RBI issues Currency except one rupee notes or coins

33
Q

Bank to the Govt

A

Maintains a current a/c
Responsible for managing Public Debt
Advises the Government on various monetary matters

34
Q

Banker’s Bank and Superviser

A

Custodian of cash reserves
Lender of last resort
Clearing house

35
Q

Cutodian of Foreign Exchange

A

Acc. to Regulations of Foreing Exchange, transactions must be routed through RBI

36
Q

Controller of Money Supply

A

Due to economic fluctuations, RBI controls money supply and credit

37
Q

Repo Rate

A

Rate at which the RBI lends money to Commercial Bank. ST

38
Q

Bank Rate

A

ate at which the RBI lends money to Commercial Bank. LT

39
Q

Legal Reserve Requirement

A

Cash Reserve Ratio
Staturay Liquid Ratio

40
Q

CRR

A

Money reserved by Commercial Banks in Central Bank

41
Q

SLR

A

Money reserved by commercial banks in the form of cash or assets

42
Q

Margin Requirement

A

The difference between the current value of the security offfered for loan

12vi (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions