Class 12 Economics Important Chapter 5 Money and Banking Solutions English Medium As Per The New Syllabus to each chapter is provided in the list so that you can easily browse through different chapters ASSEB Class 12 Economics Important Solutions in English and select need one. AHSEC Class 12 Economics Additional Notes Download PDF. HS 2nd Year Economics Additional Solutions.
Class 12 Economics Important Chapter 5 Money and Banking
Also, you can read the NCERT book online in these sections Solutions by Expert Teachers as per Central Board of Secondary Education (CBSE) Book guidelines. ASSEB Class 12 Economics Additional Question Answer are part of All Subject Solutions. Here we have given HS 2nd Year Economics Important Solutions English Medium for All Chapters, You can practice these here.
Money and Banking
Chapter: 5
| PART – A: INTRODUCTORY MICROECONOMICS |
| IMPORTANT QUESTION AND ANSWER |
Short Questions Answers:
1. What is money in legal terms?
Ans: Anything the law declares as legal tender for settling debts.
2. State Crowther’s definition of money.
Ans: “Anything generally acceptable as a means of exchange and at the same time a measure and store of value.”
3. Differentiate intrinsic value and face value.
Ans: Intrinsic is the commodity value of the material; face value is the value stamped on the money.
4. What is full-bodied money?
Ans: Money whose commodity value equals its face value (e.g., old silver rupee).
5. Define token (credit) money.
Ans: Money whose face value exceeds the value of the material in it.
6. What is legal tender money?
Ans: Money that must be accepted by law in settlement of debts.
7. What is the difference between limited and unlimited legal tender?
Ans: Limited is acceptable only up to a ceiling (e.g., coins); unlimited is acceptable for any amount (e.g., notes).
8. Define bank (deposit) money.
Ans: Demand deposits transferable by cheque/draft; widely accepted though not legal tender.
9. What is high-powered money (monetary base)?
Ans: H=C+R+ODH=C+R+ODH=C+R+OD: currency with public (C) + banks’ reserves (R) + other RBI deposits (OD).
10. Name the two primary functions of money.
Ans: Medium of exchange and measure of value.
11. What are the two components of money supply (simple measure)?
Ans: Currency with the public and demand deposits.
12. Give the statutory definition of a commercial bank.
Ans: An institution that accepts public deposits repayable on demand/otherwise and lends/invests them; withdrawals by cheque/draft.
13. List two agency functions of commercial banks.
Ans: Collection of cheques/dividends; purchase/sale of securities for clients.
14. What is the money (credit) multiplier when LRR = 10%?
Ans: 1/LRR=1/0.10=101/\text{LRR} = 1/0.10 = 101/LRR=1/0.10=10.
15. State one key distinction between a central bank and commercial banks.
Ans: Central bank has monopoly of note issue and regulates the system; commercial banks deal with the public for profit.
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