Class 12 Economics: Macroeconomics – Money and Banking – Get here the Notes for Class 12 Economics : Macroeconomics – Money and Banking. Candidates who are ambitious to qualify the Class 12 with good score can check this article for Notes. This is possible only when you have the best CBSE Class 12 Economics Notes,study material, and a smart preparation plan. CBSE 2019 Class 12th Exam is approaching and candidates will have to make the best use of the time available towards the last stage of your CBSE Class 12th Economics Preparation. To help you with that, below we have provided the Notes of 12 Economics for topic Macroeconomics – Money and Banking.
- Class: 12th
- Subject: Economics
- Topic: Macroeconomics – Money and Banking
- Resource: Notes
CBSE Class 12 Economics Notes: Macroeconomics – Money and Banking
Candidates who are pursuing in Class 12 are advised to revise the notes from this post. With the help of Notes, candidates can plan their Strategy for particular weaker section of the subject and study hard. So, go ahead and check the Important Notes for Class 12 Economics : Macroeconomics – Money and Banking.
Money and Banking
1. Barter System Barter system means the direct exchange of one commodity to another.
2. Barter Economy can be termed as C-C economy i.e., Commodity for Commodity economy.
3. Difficulties of Barter System
(i) Lack of double coincidence
(ii) Lack of divisibility
(iii) Lack of common measure
(iv) Difficulty of storage and transfer of wealth
(v) Difficulty in deferred payment
4. Money Money is anything that is generally acceptable as a means of exchange and at the same time, act as a measure and as a store of value.
According to Walker, “Money is what money does”,
5. Functions of Money
(i) Primary Function
(a) Medium of exchange
(b) Measure of value
(ii) Secondary Function of Money
(a) Standard of deferred payments
(b) Store of value
(c) Transfer of value
(iii) Contingent Functions
(a) Distribution of national income
(b) Maximum satisfaction to the consurncrs
(c) Maximum profit to the producers
(d) Basis ofcredit
6. Fiat Money It refers to money by order/authority of the government. It includes notes and coins.
7. Fiduciary Money it refers to money backed up by trust between the payer and the payee.
8. Money Supplier In the modern times.the sources of supply of money are government, central bunk of the country and commercial banks.
9. High powered Money It includes currency (R) with the public and cash (c) reserves with banks. High powered money =R+ C
10 Banking Banking implies accepting deposits of money from the public for the purpose of lending or investment which is repayable on demand and can be withdrawn by means of cheques, draft order etc.
11. Commercial Bank A commercial bank is a financial institution engaged in the business of accepting deposits and making loans to the people.
12. Central Bank A central bank is an apex institution of a country that controls and regulates the monetary and financial system of the country.
13. Functions of commercial Banks
(i) Acceptance of deposits from the public
(ii) Advancing of loans
(iii) Investment of funds
(a) Remittance of funds
(b) Collection and payment of fund
(c) Sale and purchase of security
(d) Representation and correspondence
(v) General utility functions
(vi) Credit creation
14. Factors Affecting Credit Creation
(i) Primary cash deposits
(ii) Cash reserve ratio
(iii) Banking habits of the people
(iv) Policy of the central
15. Functions of Central Banks (RBI)
(i) Bank of issue
(ii) Banker, agent and advisor to the government
(iii) Custodian of the cash reserves of commercial banks
(iv) Custodian of nation’s reserves of international currency
(v) Lender ‘ofthe last resort
(vi) Bank of central clearance
(vii) Controller ofmoney supply and credit
16. Instruments of Monetary Policy or Credit Control Measures
(j) Quantitative Instruments
(a) Bank rate
(b) Open market operation
(c) Cash Reserve Ratio (CRR)
(d) Statutory Liquidity Ratio (SLR)
(ii) Qualitative Instruments
(a) Margin requirement
(b) Rationing of credit
(c) Direct action
(d) Moral suasion
17. Cash Reserve Ratio (CRR) It refers to the minimum percentage of a bank’s total deposits required to be kept with the central bank.
18. Statutory Liquidity Ratio (SLR) Every bank is required to maintain a fixed percentage of its assets in the form of cash 0r other liquid assets.
Hope these notes helped you in your schools exam preparation. Candidates can also check out the Key Points, Important Questions & Practice Papers for various Subjects for Class 12 in both Hindi and English language form the link below.
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