Podcast
Questions and Answers
What is a key requirement for a barter system to function effectively?
What is a key requirement for a barter system to function effectively?
- Legal regulations
- A common currency
- Double coincidence of wants (correct)
- Trust in banking systems
Which of the following best describes demand deposits?
Which of the following best describes demand deposits?
- Deposits that cannot be withdrawn on demand
- Funds held in bank accounts that can be accessed anytime (correct)
- Deposits that require prior notice for withdrawal
- Deposits kept in cash at home
How do banks serve as intermediaries between those with surplus money and those in need of funds?
How do banks serve as intermediaries between those with surplus money and those in need of funds?
- By accepting deposits and granting loans based on these deposits (correct)
- By creating new money without limitations
- By providing loans to governmental agencies only
- By charging exorbitant interest rates on all loans
What is one significant disadvantage of the barter system?
What is one significant disadvantage of the barter system?
Why is cheap and affordable credit considered crucial for development?
Why is cheap and affordable credit considered crucial for development?
Flashcards
Double Coincidence of Wants
Double Coincidence of Wants
In a barter system, both parties must want what the other party has for an exchange to occur.
Demand Deposits
Demand Deposits
Money held in bank accounts that can be withdrawn on demand.
Barter System Disadvantages
Barter System Disadvantages
The barter system lacks a common medium of exchange, leading to difficulties in exchanging goods and services.
Role of Banks (Mediation)
Role of Banks (Mediation)
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Credit's Role in Development
Credit's Role in Development
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Study Notes
Money and Credit - Worksheet Questions
- Double Coincidence of Wants (Barter System): Requires both parties in a transaction to want what the other party possesses. An example is needed to demonstrate this requirement.
- Demand Deposits: Funds held in bank accounts that can be withdrawn on demand.
- Rupee as Medium of Exchange: The rupee's wide acceptance as a medium of exchange is explained.
- Bank's Role as Mediator: Banks facilitate transactions between those with excess funds (lenders) and those needing funds (borrowers).
- Disadvantages of Barter System: Three disadvantages of a barter system are needed.
- Credit Requirements for Loan/Credit: The reasons for specifying terms of credit associated with a loan or credit arrangement are required.
- Credit's Role in Development: Credit supports development through examples demonstrating a positive impact.
- Negative Impact of Credit: An example illustrating how credit can negatively impact individuals is necessary.
- Cooperatives' Role in Rural Credit: How cooperatives address rural credit issues are presented.
Five Marks Questions
- Reserve Bank of India's Supervision of Banks: Ways the Reserve Bank of India oversees bank operations are described.
- Formal Credit Sources in India: Two primary formal credit sources in India are identified, and reasons for expanding formal credit are included.
- Importance of Affordable Credit: Five crucial points explaining the importance of low-cost credit for national development are required.
- Dependence on Informal Credit: An explanation highlighting why many impoverished households still rely on informal credit avenues is provided.
- Structure of Self-Help Groups (SHGs): The structure of SHGs is described.
- Advantages of SHGs: Advantages of SHGs are highlighted.
- Difference Between Formal and Informal Credit: A comprehensive comparison of formal and informal credit sources is detailed.
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