Tag: introduction to money - barter system

Questions Related to introduction to money - barter system

The open market Operations occur when the government:

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. reduces spending

  2. buys and sells bonds and securities

  3. increases taxation

  4. increases the exchange rate

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Correct Option: B
Explanation:

Open market operation (OMO) is a monetary policy by the central bank in which the bank through government deals in the sale and purchase of securities and bonds in the open market to control the supply of money in the economy. By selling the securities and bonds, the government soaks liquidity from the economy which controls the inflation in the economy by decreasing the purchasing power of the people and by buying the securities and bonds, the government releases liquidity which controls deflation in the economy by increasing the purchasing power of the people.

Credit creation is

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. Process where money is given by banks through loan

  2. Process where the money is taken by lenders

  3. Process by which the money is taken by depositors

  4. All of the above

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Correct Option: A

Because money serves as a medium of exchange, it eliminates

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. the need to write checks.

  2. The need for specialization.

  3. The use of commodities as money

  4. The need for a double coincidence of wants

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Correct Option: D

Money's function as a medium of exchange means that

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. money is a common denominators for expressing the value of goods and services.

  2. money can be sued to store wealth.

  3. money serves as an acceptable means of payment.

  4. money is a standard f deferred payment on exchange contracts extending into the future.

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Correct Option: C

Limitations for the demand of credit are

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. Demand should exist in the market

  2. Amount of loan granted should increase the paying capacity of borrower

  3. Bad debts should be avoided

  4. All of the above

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Correct Option: D

Banks lend money mainly for ___________.

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. industrial purposes 

  2. commercial Purpose 

  3. Both (a) and (b)

  4. None of the above.

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Correct Option: C

At the time of independence India had ___________________.

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. no banking system

  2. had very few banks

  3. well developed banking system

  4. fairly developed banking system

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Correct Option: D

Which of these is a Quantitative Method of Credit Control?

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. Bank Rate

  2. Moral Suasion

  3. Margin Requirements

  4. All of the above.

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Correct Option: A

An asset owned by borrowers and pledged as a guarantee to obtain loan is known as _____ .

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. rate of interest

  2. term of credit

  3. collateral

  4. document

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Correct Option: C
Explanation:

An asset owned by borrowers and pledged as a guarantee to obtain loan is known as collateral.
Collateral is a form of security taken from the borrowers of loan by the banks or co-operative societies to lend loans.
Collateral is a part of terms of credit of the formal sources of credit.

In Self Help Groups, _____ decide the savings and loan activity option.

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. RBI

  2. Co-operatives

  3. Banks

  4. Members

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Correct Option: D
Explanation:

In Self Help Groups, group members decide the savings and loan activity options.
SHG is a mutual help group.
They come together to solve their economic issues and earn income.