What are the primary functions of money in an economy?

The primary functions of money in an economy are as a medium of exchange, a unit of account, and a store of value.

Money simplifies exchanges by eliminating the need for ___, which is a requirement in barter systems.

Double coincidence of wants

True or False: Money must be easily convertible and universally accepted to serve as a store of value.

True

Fill in the blank: Money provides a standard measure for valuing goods and services, known as a ___ of account.

Unit

What is the impact of inflation on money's function as a store of value?

Inflation can erode money's purchasing power, making it less effective as a store of value.

I am a concept that allows you to trade goods without needing to find someone who wants what you have. What am I?

Money

Which function of money allows individuals to express the relative value of different goods, such as valuing a wristwatch at Rs 500?

Unit of account

In a barter system, what major difficulty is removed by the use of money?

The need for a double coincidence of wants

What makes money more convenient than other assets like gold or property for storing value?

Money is easily convertible and has universal acceptance.

Riddle: I am used to buy and sell, I can be coins or notes, what am I?

Money

What are the key components of a cashless economy?

A cashless economy relies on digital transactions, using digital money transfers instead of physical currency.

Fill in the blank: The Indian government's financial reforms aim for greater inclusion through ___ accounts, ___ enabled payment systems, and e-wallets.

Jan Dhan, Aadhaar

True or False: The central bank is not essential for the supply of money in a modern economy.

False: The central bank is crucial for the supply of money in a modern economy.

What role does income play in the demand for money?

As income increases, people engage in more transactions, thus increasing their demand for money.

Riddle: I am needed for transactions, but my value can change with interest rates. What am I?

Money

What is the relationship between interest rates and demand for money?

When interest rates rise, people prefer to earn interest rather than hold cash, leading to a decrease in their demand for money.

Fill in the blank: The Reserve Bank of India (RBI), established in 1935, is India's ___ bank.

Central

What are the two types of institutions that create the supply of money in an economy?

The central bank and commercial banking institutions.

What is the primary role of a central bank in terms of money supply?

To issue currency and control the money supply through methods like adjusting the bank rate and reserve ratios.

Fill in the blank: Commercial banks earn profit by charging borrowers a higher interest rate than they pay to ___ on deposits.

Depositors

True or False: Banks can lend out all the money they receive in deposits without any restrictions.

False. Banks must keep a portion of deposits to ensure they can meet withdrawal demands.

What are the two main functions of commercial banks in the economy?

Accepting deposits and lending money to borrowers.

Riddle: I hold your money safe and sound, but I do not spend a dime. I help you make transactions with ease, what am I?

A bank.

Fill in the blank: The difference between the interest rate charged to borrowers and the interest rate paid to depositors is known as the ___.

Spread.

What ensures that depositors feel confident in keeping their money in banks?

The availability of funds for withdrawals and the safety of storing money in banks.