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Short and Long Answer Questions (without Solutions) - Money and Banking | SSC CGL Tier 2 - Study Material, Online Tests, Previous Year PDF Download

SHORT AND LONG ANSWER QUESTIONS

  1. Define Central Bank.
  2. Give the meaning of money.
  3. Discuss the functions of money.
  4. Describe how money over comes the problems of barter system?
  5. What are the measures of money supply?
  6. What do you mean by High powered money?
  7. Describe the process of money creation or credit creation by commercial banks.
  8. Why only a fraction of deposits is kept as Cash Reserves?
  9. Discuss the functions of Central Bank.
  10. Bring out the role of Central Bank as the controller of money supply or credit
  11. Explain the various qualitative and quantitative instruments used by the central bank in controlling the money supply during the times of a) excess demand/inflation b) deficient demand/deflation.
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FAQs on Short and Long Answer Questions (without Solutions) - Money and Banking - SSC CGL Tier 2 - Study Material, Online Tests, Previous Year

1. What is money and banking?
Ans. Money and banking refer to the financial system that involves the creation, circulation, and management of money in an economy. It includes activities such as currency issuance, banking services, lending, and monetary policy.
2. What is the importance of money and banking in the economy?
Ans. Money and banking play a crucial role in the economy by facilitating transactions, providing a medium of exchange, and promoting economic growth. They enable individuals and businesses to save, invest, and access credit, which stimulates economic activities.
3. How does the banking system work?
Ans. The banking system works by accepting deposits from customers and using those funds to provide loans and other financial services. Banks earn profits through the interest charged on loans and other fees. They also play a vital role in the creation of money through the fractional reserve system.
4. What is the role of central banks in money and banking?
Ans. Central banks, such as the Federal Reserve in the United States, have the authority to control the money supply and interest rates in an economy. They regulate commercial banks, provide liquidity, and implement monetary policies to stabilize the economy and maintain price stability.
5. How does monetary policy impact the economy?
Ans. Monetary policy refers to the actions taken by the central bank to influence the money supply and interest rates. By adjusting interest rates and controlling the money supply, monetary policy can affect inflation, employment levels, and economic growth. It is used to manage economic cycles and stabilize the economy.
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