Money and Banking online Test - 48

In credit money, the money value is more than the commodity value.

The money market is a market for short term funds which deals in monetary assets whose period of maturity is upto one year. These assets are close substitutes for money. It is a market where low risk, unsecured and short term debt instruments that are highly liquid are issued and actively traded.

Legal acceptability was not a limitation of barter exchange. Hence, option B is correct answer.

Value of money multiplier and CRR are inversely proportional.

Money Created = Primary Deposits × Money Multiplier = 1,000 × (1/0.20) = 1,000 × 5 = Rs. 5,000

RBI has the sole authority of issuing the currency (regulating the money supply) in the economy.

The LRR (Legal reserve ratio) allows commercial banks to keep a certain fraction of their deposits as reserve and use the rest for giving credit. The cycle of transactions that happen in this process helps create money.

Two individuals involved in the exchange under barter system must possess the good that each other wanted is known as double coincidence of wants.

A zero-coupon bond, also known as an "accrual bond," is a debt security that doesn't pay interest (a coupon) but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value.

Loans offered leads to increase in the ability of commercial banks to create more currency in the economy.