Money and Banking online Test - 44

Time deposits are less liquid in nature, so they are not a part of M₁ measure of money supply.

CRR is the amount of total reserve that each commercial bank must reserve with the central bank.

Money is universally accepted as a medium of exchange. It can be used to buy anything worldwide.

Repo rate is the rate at which commercial bank can from central bank for a period of 1-14 days.

Due to the financial crisis and failure of large banks, to keep a close watch, supervision was required to avoid recurrence of any financial crisis. Hence, the Board for Financial Supervision was set up by the RBI. The object was to pay most attention to the supervision of the institution in the financial sector.

Supply of money is a stock variable. Any money must circulate  (used for transactions )to be called money .

In the new monetary aggregate M, is the 'broad money' (like the old one). Bankers' deposit is part of the 'reserve money'. Post Offices' saving deposits (excluding National Saving Certificates) are part of M4M4. 

Exchange of Commodity for Commodity is known as Barter System of Exchange which was followed before the evolution of money.

In the barter system, the exchange of goods was a means of buying and selling things.

Money multiplier is inversely related to the Legal Reserve Ratio which is the sum total of CRR and SLR.

Consumer credit refers to a personal debt taken by a consumer on the purchase of goods and services for the satisfaction of wants. Regulation of consumer credit act as a qualitative credit control measure of the central bank as in the time of inflation or deflation, they regulate the consumer credit on a certain relative products in order to regulate uncertain market conditions.