Class 12 Economics Chapter 3 Money and Banking Full Explanation in English
Complete notes for Class 12 Economics Chapter 3 Money and Banking, including definitions, types, functions, the role of the Reserve Bank, and important questions and answers, are available in easy Hindi. This is the best material for board exam preparation, prepared by the excellent teachers of Studinios.com.
Q. 1 – What is the main function of money?
Answer – Medium of exchange
Q. 2 – What is meant by a measure of value?
Answer – Measuring the value of goods in terms of money
Q. 3 – What does store of value mean?
Answer – Saving money for the future.
Q. 4 – What is the standard of deferred payment?
Answer – Money being the medium for future payments
Q. 5 – What is a savings account?
Answer – An account where the public deposits money.
Q. 6 – What is a current account?
Answer – An account used by traders for frequent transactions.
Q. 7 – What is a fixed deposit?
Answer – When a person deposits money for a fixed period of time, it is called a fixed deposit.
Q. 8 – Give an example of bank money.
Answer – Cheque
Q. 9 – What is Lone?
Answer – The amount given by the bank on interest.
Q. 10 – What is the objective of the bank rate policy?
Answer – To control the quantity of credit.
Class 12 Economics Chapter 3 Money and Banking Hindi Notes
(Short Answer Questions)
Q. 1 – Define money.
Answer – Money is the medium through which goods and services are exchanged.
Q. 2 – Write two functions of money.
Answer – Medium of exchange and measure of value
Q. 3 – What is a bank?
Answer – A bank is an institution that accepts deposits and gives loans.
Q. 4 – What is the meaning of a commercial bank?
Answer – A commercial bank is a bank that accepts deposits and gives loans for commercial purposes.
Q.5 – What is a Central Bank?
Answer – The Central Bank is the supreme monetary institution of a country, which controls the entire banking system in a country.
Q.6 – What is the full form of RBI?
A. – Reserve Bank of India
Q.7 – How many RBIs are there in India?
Answer – There is 1 RBI in India.
Q.8 – What do you understand by credit creation?
Answer – When a bank gives more loans than its deposits, it is called credit creation.
Q.9 – What is the bank rate?
Answer – The rate at which the central bank lends money to commercial banks is called the bank rate.
Q.10 – What is the Cash Reserve Ratio (CRR)?
Answer – It is the percentage of deposits that banks are required to keep with the central bank in cash.
“Class 12 Economics Chapter 3 Money and Banking Hindi Notes”
Detailed Questions
Q.1 – What is money? Explain.
Answer – Money:-Money is an object that is generally accepted in the exchange of goods and services.
In other words:-Money is the medium through which we buy something.
Functions of Money:- Money has the following functions:
1 – Medium of Exchange:- Money is used to exchange one commodity for another. Thus, money eliminates the problem of bartering goods for goods.
2 – Measure of Value:- Money helps in measuring value. The value of goods and services is measured through money, and this measurement is accurate and precise.
3 – Store of Value:– Storing value means saving money for the future so that there are no problems in the future.
4 – Standard of Deferred Payment:- All payments to be made in the future are possible only through money.
Types of Money:- There are the following types of money.
- Commodity Money – Gold, Silver
- Fiat Money – Currency issued by the government
- Bank Money – Checks, drafts, digital money
- Credit Money – Money based on credit
Q-2 What is a Bank? Explain.
Answer – Bank:-A bank is an institution that accepts deposits from the public and provides loans. In other words, a bank is an institution that accepts deposits from the public and pays interest on them.
The main objective of a Bank is to utilize money effectively and promote savings so that economic activities can progress. A bank is a reliable medium for monetary transactions.
Origin of the word “Bank:- The word “bank” originates from the Italian word “banco,” which means “bench,” revealing the fundamental purpose of the word. At that time, merchants conducted business while sitting at tables. Today, this system has evolved into the modern banking system.
Types of Banks:- Based on their functions, powers, and objectives, banks can be classified into several types:
-
Class 12 Economics Chapter 3 Money and Banking Full Explanation in English Central Bank
- Commercial Bank
- Cooperative Bank
- Regional Bank
- Development Bank
- Investment Bank
- Foreign Bank
① Central Bank:- This is the largest bank in India. It is the bank of banks; the entire banking system is controlled and regulated by the central bank.
“The Reserve Bank of India is the central bank of India.” The RBI was established on April 1, 1935. The headquarters of the Reserve Bank of India (RBI) are located in Mumbai. Monetary policy is formulated by the RBI.
Main objectives of the Reserve Bank of India:
- To provide financial advice and funds to the government of the country.
- To maintain stability in the country’s currency and banking system.
- The Reserve Bank of India performs commendable work in promoting economic development.
- The RBI does not accept deposits from the public. It maintains trust between the public and the banks.
Major functions of the Reserve Bank of India (RBI):
① Issuance of notes:-The Reserve Bank of India does not issue the 1 rupee note. The issuance of all other notes is done by the RBI.
② Acting as the government’s bank and advisor:-The Reserve Bank of India (RBI) provides financial advice to the Government of India from time to time. It advises the government on where to invest funds and where not to.
(3) Loans to banks:-The Reserve Bank of India (RBI) provides loans to banks; it is the lender of last resort for banks.
(4) Monetary policy:-Monetary policy is controlled by the RBI.
⑤ Settlement of payments:-The RBI arranges for the settlement of checks and payments between banks.
⑥ Monetary policy:-The RBI formulates and implements monetary policy.
Q-3 – Describe the types of Money.
Answer – The following are the types of money:
① Legal Tender:- This is the currency that is legally accepted.
Examples – Notes and coins
② Bank Money:-This is used through deposits in bank accounts, such as checks, drafts,
(3) Credit Money:- This type of money is created by banks based on credit.
Example: Gold coins
(4) Representative Money:-This is money that represents a valuable commodity.
Q. 4 – What are commercial banks? What are their functions? Explain.
Answer – A commercial bank is an institution that accepts deposits and provides loans.
Main functions of commercial banks:-The main functions of commercial banks are as follows-
① Accepting deposits and operating various types of accounts.
② Providing loans, such as personal, business, and industrial loans, etc.
③ Providing check facilities to its customers.
④ Transferring funds.
⑤ Providing foreign exchange services.
Q. 5 – What is Monetary Policy? What are its objectives and instruments?
Answer: Monetary policy is the policy through which the RBI controls the quantity of money and credit.
Objectives:-
① Price stability
② Economic development
③ Employment growth
④ Improvement in the balance of payments
Instruments:-
① Bank rate
② Repo rate
③ Reverse repo rate
④ Cash Reserve Ratio
⑤ Statutory Liquidity Ratio
⑥ Moral suasion
⑦ Open market operations
IMPORTANT QUESIUON –Class 12th Chapter 1 Introduction of Macroeconomics And Microeconomics
