Money and Credit Test - 13

In economics, Gresham's law is a monetary principle stating that "bad money drives out good". For example, if there are two forms of commodity money in circulation, which are accepted by law as having similar face value, the more valuable commodity will disappear from circulation.

Investing is an essential part of wealth-creation, which helps you beat inflation to fulfil your financial goals and also stabilise your financial future. Instead of letting money lie idle in your bank accounts, you can invest in different avenues like stocks, equities, mutual funds, fixed deposit, or more. The money spent to buy assets such as land is an example of investment.

Money lenders are the main informal source of credit for rural household in India. Because in rural areas people do not have access to banks and other financial institutions.

• 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.

Money serves four basic functions:

1.       It is a unit of account,

2.      It is a store of value,

3.      It is a medium of exchange and

4.      It is a standard of deferred payment.

Current account convertibility implies that the Indian rupee can be converted to any foreign currency at existing market rates for trade purposes for any amount. 

It allows easy financial transactions for the export and import of goods and services.

A self-help group is an economic intermediary group of 10 to 20 local women or men between 18 to 40 years. Most self-help groups are situated in India, though SHGs can be established in other countries, particularly in South Asia and Southeast Asia. 

SHG is not whatever thing but a group of people who are on daily wages, they form a group and from that group, one person collects the money and gives the wealth to the person who is in need. Members also make modest measure savings contributions over a few months until there is adequate money in the group to begin lending. 

Thus, the correct option is C.

Money acts as a medium of exchange as everyone accepts it and it is backed by an legalized institution such as the central bank and the government.