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PPT - Money and Banking | Economics Class 12 - Commerce PDF Download

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 Page 2


?
Money
?
History of Money
?
Bartering
?
Definition of Money
Page 3


?
Money
?
History of Money
?
Bartering
?
Definition of Money
?
How did people pay for 
goods before we had 
“money” as we know it 
today?
?
A system known as bartering
Page 4


?
Money
?
History of Money
?
Bartering
?
Definition of Money
?
How did people pay for 
goods before we had 
“money” as we know it 
today?
?
A system known as bartering Today, bartering no longer exists, 
Today, bartering no longer exists, 
except perhaps between friends. 
except perhaps between friends. 
E.G. _____________
E.G. _____________
Page 5


?
Money
?
History of Money
?
Bartering
?
Definition of Money
?
How did people pay for 
goods before we had 
“money” as we know it 
today?
?
A system known as bartering Today, bartering no longer exists, 
Today, bartering no longer exists, 
except perhaps between friends. 
except perhaps between friends. 
E.G. _____________
E.G. _____________
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FAQs on PPT - Money and Banking - Economics Class 12 - Commerce

1. What is money and banking?
Ans. Money and banking refer to the system by which a country's currency is issued, circulated, and controlled. It involves the processes of creating, storing, and transferring money, as well as the management of financial institutions such as banks.
2. How does the money creation process work?
Ans. The money creation process involves commercial banks creating new money through the process of fractional reserve banking. When a bank receives a deposit, it keeps a fraction of it as reserves and lends out the rest. This new loan becomes a deposit in another bank, which in turn lends out a fraction of it, and the process continues. This creates new money in the economy.
3. What is the role of central banks in the banking system?
Ans. Central banks, such as the Federal Reserve in the United States, play a crucial role in the banking system. They are responsible for controlling the money supply, regulating commercial banks, and maintaining stability in the financial system. Central banks also act as lenders of last resort, providing liquidity to banks during times of financial stress.
4. What are the functions of commercial banks?
Ans. Commercial banks perform various functions, including accepting deposits from individuals and businesses, providing loans and credit, facilitating payments and transfers, issuing banknotes and coins, and offering financial services such as investment advice and insurance.
5. How does the banking system contribute to the overall economy?
Ans. The banking system plays a vital role in the economy by mobilizing savings and channeling them towards productive investments. Banks provide credit to individuals and businesses, which stimulates economic growth. They also facilitate the smooth functioning of the payment system, enabling the exchange of goods and services. Additionally, banks provide a safe and secure place for individuals and businesses to store their money, promoting financial stability.
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