MONEY AND CREDIT Flashcards
WHY TRANSACTIONS ARE MADE IN MONEY ?
A PERSON HOLDING MONEY CAN EASILY EXCHANGE IT FIR ANY COMMODITY OR SERVICE THAT ONE . ELIMINATES THE NEEDS OF DOUBLE COINCIDENCE OF WANTS.
WHAT IS AN ESSENTIAL FEATURE IN BARTER SYSTEM?
DOUBLE COINCIDENCE OF WANTS
WHAT IS DOUBLE COINCIDENCE OF WANTS?
WHEN BOTH PARTIES HAVE TO AGREE TO SELL AND BUY EACH OTHER COMMODITIES , WHAT A PERSON DESIRES TO SELL IS WHAT THE OTHER PERSON WISHES TO BUY.
WHAT IS MONEY ALSO CALLED?
A MEDIUM OF EXCHANGE
WHAT OBJECTS WERE USED AS MONEY IN VERY EARLY AGES?
GRAINS AND CATTLE
THEN METALLIC COINS MADE OF PRECIOUS METALS LIKE GOLD, SILVER AND COPPER.
WHY IS MODERN CURRENCY ACCEPTED AS A MEDIUM OF EXCHANGE, WITHOUT HAVING ANY USE OF ITS OWN ?
THE CURRENCY IS AUTHORISED BY THE GOVERNMENT OF INDIA.
IN INDIA WHAT ISSUES THE CURRENCY NOTES ON BEHALF OF THE CENTRAL GOVT.
RESERVED BANK OF INDIA
WHAT IS THE ROLE OF RBI.
IT ISSUES THE CURRENCY NOTES ON BEHALF OF THE CENTRAL GOVT.
WHAT ARE DEMAND DEPOSITS?
PEOPLE DEPOSIT THE EXTRA CASH THEY HAVE IN BANKS AND RECIEVE A RATE OF INTEREST BY THE BANKS . THESE DEPOSITS CAN BE TAKEN OUT ON DEMANDS , WHENEVER THERE IS A NEED
WHAT DO YOU KNOW bout a cheque?
a cheque is a paper instructing the bank to pay a specific amount from the person;s account to the person whose name has been issued.
how much bank hold the their deposits as cash?
15%
what does the bank do with the major portions of the deposits ?
bank use the major portions of the deposits to extend loans
what is the main source of income of banks?
banks charge a higher rate of interest on loans than what they offer on deposits . the difference between what is charged by the borrowers and what is paid to depositors is their main source income.
what is credit?
credit also known as loan refers to an agreement between the lender and the borrower to provide money , goods or services in return for the promise of future payment.
what is the main demand for credit is for in rural areas.
crop production.
WHAT IS A DEBT TRAP?
A debt trap occurs when a person borrows money and finds itself in a situation where it is unable to repay its debt due any reason and credit , instead of helping them improve their earning left them worse off.
what is collateral ?
a collateral is an asset that the borrower own which acts as a guarantee to the lender until the loan is repaid.
what are the terms of credit?
interest rate
collateral
mode of repaynment
documentation requirement
who supervises the functioning of formal sectors of loans?
the reserved bank of India
what does rbi monsters in the foam sectors of loans?
- it monitors the banks in actually maintaining cash balance
- banks does not only give loans to profit-making businesses but to small scale industries, cultivators etc.
what is crucial for the country’s development?
cheap and affordable credit
why is it necessary for the formal sector to be distributed more equally
so that everyone can be benefitted from the cheaper loans
what are poor households dependent on informal sector ?
banks are not present everywhere
much easier
proper documentation
absence of collateral
how many members does a typical SHG have?
15 to 20
