Social Science : Economics
MONEY AND CREDIT
V. Answer in detail
1. Explain how money is transacted in the digital world.
Electronic Transactions (Money Transactions in the Digital World :
• Instead of visiting the bank and fill in a challan or produce a cheque to withdraw money, necessary amount can be withdrawn from an Automated Teller Machine (ATM) with the help of debit card. without visiting the branch one can easily deposit money in his / her account.
• Things are bought on credit and the amount can be paid later through credit cards.
• Online net banking is carried set instead of using cheques or DDs, to transact money to anyone, anywhere across the globe.
• Thanks to technology Mobile banking is widely used now a days.
2. Explain in detail about the role of RBI in the country.
The Role of the Reserve Bank of India (RBI)
• The Reserve bank of India started its operations of 1st April 1935. It was permanently moved to Mumbai from 1937 and it was nationalized in 1949.
• In India all the major banks were nationalized (1969). The RBI regulates the circulation of currency in the country.
• The regulate money supply and oversea the monetary Policy is the responsibility of a government. The savings in banks are used for the developement of industries, economic growth and the welfare schemes of the poor.
• In a country's economic stability price control plays an important role. This role is played by the RBI.
• The RBI has the authority to decide the value of currency and how the amount should reach the destination safely. On contract basis the RBI prints the currencies for Srilanka, Bhutan, Iraq and Africa. To print bank notes and documents the RBI started the following processes.
• 85% of the printed currency is lot for circulation. Currency worth of 19 lakh crore are in circulation as per the statistic available as on August 2018.
3. Write in detail about the various functions of money.
Functions of money:
• A lot of practical issues in the barter system were solved by the invention of money.
Money - Medium of Exchange :
• Money should be accepted liberally in exchange of goods and services in a country.
Money - Unit of Account:
• Money should be the common, Standard unit of calculating a country's total consumer goods, products service.
• Money is used to measure and record financial transactions.
Money - A Store value and a standard of defered payments :
• Money is used as a store of purchasing power and to finance future payments.