Commerce Exam  >  Commerce Notes  >  Crash Course of Macro Economics -Class 12  >  Scanner Chapter 4 Money,(2014 - 2018) Economics, Class 12

Scanner Chapter 4 Money,(2014 - 2018) Economics, Class 12 | Crash Course of Macro Economics -Class 12 - Commerce PDF Download

Sample Paper 14-15 & 15-16 & 16-17 

(Q1) Read the following dialogue between two people (1M)

Sita : I want 1kg of potatoes

Rani : What will you give in exchange?

Sita : I can give you 2 litres of milk in return for the potatoes.

Rani : I don’t need milk. I want a pair of shoe

Which of the following problem is being faced by Sita and Rani in their exchange process?

(a) Lack of double coincidence of wants 

(b) Absence of common units of value 

(c) Lack of store of value

(d) Lack of standard of deferred payment
Ans: (a)

(Q2) Which of the following is a characteristic of a good?  (1M)

(a) Intangible

(b) Can be stored

(c) Production and consumption must happen simultaneously 

(d) Cannot be transferred
Ans: (b)

(Q3)  Supply of money refers to quantity of money

(a) As on 31st March 

(b) During any specified period of time

(c) As on any point of time

(d) During a fiscal year
Ans: (c)

(Q4) Which of the following agency is responsible for issuing Rs.1 currency note in India? (1M)

(a) Reserve Bank of India.

(b) Ministry of finance

(c) Ministry of Commerce

(d) Niti Aayog            

Ans: (b)

CBSE  2014 

(Q1) What is barter ?   (1M)

(Q2) What are demand deposits ?

(Q3) How does money solve the problem of double coincidence of wants ?  (3M) 

Ans: The problem of double coincidence of wants arises when there is no medium of exchange. In such a case the buyer has to make a search for the seller who also wants to buy the same good which the buyer itself offers for exchange.  (1½M)

 Money has solved the problem by working as a medium of exchange. The seller can sell the goods in the market in return for money and buy the goods he wants to buy in return for the money. (1½ M)

(Q4) Define money supply and its  components ?     

Ans: (c)Stock of money in a country on a particular day is termed as money supply It has two components : currency with public outside banks and demand deposits. Demand deposits are deposits which can be withdrawn by writing cheques. Both the components are usable for carrying out transactions at will. 

CBSE 2015

(Q1) Who regulates money supply ? (Choose the correct alternative) (1M)

(a) Government of India

(b) Reserve Bank of India

(c) Commercial Banks

(d) Planning Commission

Ans: (b) 

(Q2) Which of the following is not a function of money ?             

(a) medium of exchange

(b) price stability

(c) store of value

(d) unit of account

Ans: (b) 

(Q3)  What are demand deposits ?

Ans: Deposits that are withdrawn by cheque.

(Q4) What are time deposits ?                                

Ans: Deposits made for a fixed period. 

(Q5) State the components of money supply.                    

Ans:  (i) Money with the public  (ii) Demand Deposits    

C.B.S.E 2017

(Q1) Explain “difficulty in storing wealth” problem faced in the barter system of exchange (3M)

Ans: Under barter system there were difficulties in storing wealth. Wealth is stored to be used in future. 

All goods cannot be stored. Perishable goods cannot be stored. 

All goods cannot be transported from one place to another. 

All goods may not be acceptable as medium of exchange. 

No single physical good has all these qualities. So in the barter system of exchange there was difficulty wealth.    (3M)

(Q2) Define money supply ? (1M)

Ans: Money supply of a country is a stock of money in circulation at any point of time.    

(Q3) State the meaning and components of money supply

(Q4) Define money. List its components

C.B.S.E 2018

(Q1) Define money supply.   (1M)

(Q2) State the two components of M1 measure of Money Supply. (1M)

Ans: Currency held by public and demand deposits held by banks.     

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FAQs on Scanner Chapter 4 Money,(2014 - 2018) Economics, Class 12 - Crash Course of Macro Economics -Class 12 - Commerce

1. What is the concept of money in economics?
Ans. Money in economics refers to a medium of exchange that is widely accepted in transactions for goods and services. It is a unit of account, allowing for the measurement of value, and is also a store of value, enabling individuals to save and accumulate wealth.
2. How does money play a role in the economy?
Ans. Money plays a crucial role in the economy as it facilitates economic transactions, promotes specialization and division of labor, and allows for the accumulation of wealth. It serves as a medium of exchange, unit of account, and store of value, enabling individuals and businesses to conduct economic activities efficiently.
3. What are the functions of money?
Ans. Money serves three main functions in an economy. Firstly, it functions as a medium of exchange, allowing individuals to trade goods and services with ease. Secondly, it acts as a unit of account, providing a common measure of value for different goods and services. Lastly, it serves as a store of value, allowing individuals to save and hold wealth for future use.
4. How is money created in the modern banking system?
Ans. Money is created in the modern banking system through a process called fractional reserve banking. Banks create money by lending out a portion of the deposits they receive, while keeping a fraction of it as reserves. This process, known as money multiplier, allows for the expansion of the money supply beyond the initial deposits.
5. What are the different types of money in circulation?
Ans. There are several types of money in circulation, including cash, which includes coins and banknotes issued by the government; demand deposits, which are funds held in checking accounts; and electronic money, such as digital currencies and online payment systems. These different types of money serve as mediums of exchange and can be used for various transactions in the economy.
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