Tag: money

Questions Related to money

Which of the following is not a problem of barter system of exchange?

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. Store of Value

  2. Double Coincidence of Wants

  3. Unit of Account

  4. Unemployment

Show answer
Correct Option: D
Explanation:

Barter system was a system of exchange where goods were exchanged for goods and there was no common medium of exchange in the economy. Barter system had many drawbacks like lack of double coincidence of wants, lack of a common unit of value, difficulty of future payments or contractual payments and difficulty of storage of value and transfer of value. Therefore, unemployment is not a problem related to barter system. 

Lack of double coincidence of wants exists under barter system because of difficulty in simultaneous fulfillment of mutual wants of buyers and sellers. 

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

Lack of double coincidence exists in barter exchange. It  refers to the situation where the mutual wants of the buyer and seller are less likely to be fulfilled simultaneously.  If the buyer's wants can be fulfilled by exchange but cannot provide what the seller wants, the exchange is unlikely to happen.

Which of the following is not a formal source of credit?

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. Banks

  2. Cooperative

  3. Employer

  4. All of the above

Show answer
Correct Option: C
Explanation:
  • Formal sources of credit are:
  • Banks and Co-operative societies.
  • Reserve bank of India will supervise the activities of the banks and co-operative societies in India.
  • Employers do not fall under formal sources of credit lenders in our country.

Banks charge a higher interest rate on loans than what they offer on __________.

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. withdrawals

  2. deposits

  3. loans

  4. demand drafts

Show answer
Correct Option: B
Explanation:
  • The interest charged by the bank from its borrowers is higher than the interest it pays to its depositors.
  • The difference between the interest paid by the bank to its depositors and interest paid by the borrowers to the bank is the income of the bank.

In an SHG, most of the decisions regarding savings and loan activities are taken by ___________.

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. Bank

  2. Members

  3. Non-government Organisation

  4. None of the above

Show answer
Correct Option: B
Explanation:
  • In a SHG (Self Help Group) important decisions in regard to loan and savings are taken by group members.
  • Self Help Groups issue loans at reasonable rate of interest.
  • SHG is a mutual help group who provide support among themselves.
  • They come together to solve their economic issues and earn income.

Find the rate of interest if the amount owed after $6$ months is $Rs. 1,050$. The borrowed amount is $Rs. 1,000$.

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. $7$%

  2. $8$%

  3. $9$%

  4. $10$%

Show answer
Correct Option: D
Explanation:

We know $A = P + P.i.t$
i.e. $1050 = 1000 + 1000 \times i\times 6/12$
$50 = 500i$
$i = 1/10 = 10$%.

Informal sector loans include _________.

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. NABARD

  2. State Bank of India

  3. Money lenders

  4. Both (A) and (B)

Show answer
Correct Option: C

In India, the Chit funds are governed / regulated by ___________.

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. RBI

  2. Central Government

  3. State Governments

  4. Local Bodies

Show answer
Correct Option: C
Explanation:

Chit funds in India are governed by the Chit Funds Act, 1982. Under this Act, the chit fund business can be register and regulated only by the individual State Governments. Regulator of chit funds is the Registrar of Chits selected by the individual state government under Section 61 of Chit Funds Act. 

Powers of negotiation vest in the Registrar and the state government disturbed is the Appellate authority. In case of failure of a chit fund business, the task for windy up such a business also vests with the individual State Governments. 

Moreover, the Prize chits and money exchange schemes are illegal and are disqualified under the Prize Chits and Money movement Schemes (Banning) Act, 1978. Powers of investigation under this Act are vested with the disturbed state police authorities.

Thus, the correct option is C.

Select the correct statement/statements regarding 'numeraire' from the given list using the code given below:
1. It is a monetary unit for denominating international exchanges on a common basis.
2. Today the Special Drawing Rights (SDRs) of the IMF is accepted as the standard numeraire in the world.

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. Only $1$

  2. Only $2$

  3. Both $1$ and $2$

  4. Neither $1$ nor $2$

Show answer
Correct Option: A
Explanation:

The US dollar is presently being used as the numeraire for all international transactions and calculating the foreign reserves of the economies (it means that an economy may be maintaining its foreign currency. Reserves in many world currencies as per its use show its total volume in the US dollars). Similarly, all transactions of the IMF are also shown in it (including its SDRs).

 Which one of the following statement is incorrect about Reverse Mortgage? 

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. It is a kind of loan through which one can get cash flow serially in return for pledging a property to a bank.

  2. It is the conveyance of an asset by a borrower to a lender as security for a loan.

  3. This scheme originated in the USA.

  4. The eligibility criteria set by the RBI states that the person should be above $60$ years of age and own a home to avail this mortgage.

Show answer
Correct Option: B
Explanation:

The policy was implemented in India in 20072007 with the objective of providing financial security to the senior citizens who own a house. This functions just opposite to the case of 'mortgage' while borrowing money from bank to buy a housei.e., the beneficiary borrows a lump-sum loan by mortgaging his/her house and the loan is repaid in equal monthly installments (EMIs). In case the beneficiary dies before clearing the dues. his/her kins may repay the rest amount of the loan and own the house.