MONEY AND BANKING Answer the Jelowim qyuuslios in 12 4enitences gach ( Each question Kannies Ht moths y ery, os a Aonventent unit { account. Explain aenlene with the example . > The wal 4 all goods ond sosnstcen ton Je wpends in rrerelany wumili,. Fol example, E awhin 41 Jay ahak th value . vasitaim, ystistwatdr BR Soo wk mean that the Yusistwatch com be exchanged fe oo until money , whew ene unit 4 rootey == One suypte dm jhis xoue Af she pata 4 dix fencl 4 R2 and dhol qa on lb Py. Then Ave eon Abs valetive prive ef a pen with suped to a pendl as lozg = ‘Spenil. Which rreans ase Spends at the cost of ene ‘pen. Thus, m subee uy véith 15.92 0.5 penal 1 e0 Ol ‘ben. She some motion com’ be wird te voleulati he oven rroney’ cbtsel] wth spect 45 otha commodities . 4 ! t Thus, 4 spaices of olf Aommoditin imouou » don Aare ef tronty &, uh genvral proud din fhe pate Aue te Wola monty Jim fort { any .csmmadtily rust have “leenoued ~ ° Jim the et Veense shat a wumit money dam «mow funchau wot 4 an commodity. Jt Kalled, oles) ation De Morey also Aalps Jim Soling Ahs problems in | legal exchanges oly aching A a corwenient unit quounl-Fy Boally ax plain Mos imcbiora 4 Ror if She “Preserve Bank of Indio. di the combed ea k Ba om impatant imiletution im a ‘modem Vie . India ge Ub ceribral bank dim the yror 1935. | Ror perfgtres “the following iroport ant functions. | AE tasues the cunen the counkty = he most Jepatont fron of ROT Are Jauarce of cterenuyy notes and coins, except Ahe one suber molt “and fein” which ovis issued Ay ths mrininbiy | a femance | At Controls none! supply | RET conbrals re a 4 Lhe courtiny | ffiough msestous 'rrethods «Lil Soke, ben. market | operatolh and aatiattons 4m sesenve natios . 3 Stack 0. 0, bombur fo Ae gorenment + i Another chi funetion of REE that Lt ales case) the deambirey mts. of Lt governor ch drvolad maintaining“ and operatin Sn debe Ateounls the crt nmeE collectin “te saccpls ¢ fords an ret a4 rent on bh “of the FPreinmment, as & member of Drtianational Monckoruy Fund and sweild sonk. ko dk ath.) cutodian of, the féuign exchange a Aww of Ahe Lconemy, \ _ & St alo ack ova bank fe the Lamdeiong system: Rar ab offer sugarded as che brarnkisn of P banks, Jt acl or “a pout Jo all commercial Lamha dion Sndiq. hes, tt decors the Jimdin the foal eset i Ol hemks acum thy arina crisis « — RET Atl them by! Uendin im din frrondal “pa. Gureoadeay Oye #3) Abate weno on Sigal clfinttions of oney | => She “Reeave “Bank of Sndia huldishes iquaies 4a ‘oun alternative Measunes of. mor Aubply » M1, Mg,M3 and Mir. Sous ar defined as follows = B M1 = -CU+ OD" E Savings deposits vith fost offzc 3) Ma = M)4Savings ae post office Bain B)M3 = M+ Nel time: depos ef commercial » Avernks ” a Muy = M3 + total dleposils with post te Aavin siganizations Corclucling Inadtonal ” | saint onbificates f g | where CU sou 1 savuny potes plus cote | Fuld oy st public. DD i ha “set demand “gaat Wald by SS ea Shei rl ek! tm blées ben epost sth a ie eign alias Gealeten rmonay sep The, intebonk depostls , eohtch a commercial bank Arolds im othin tommucial lanfx | t de he, aegondel oso pant ; qi axe ‘mo 2 74 b of tone Jubly. M1 and MQ an Anown as nawiow money , M3 and M4 ane Anowin’ as Anoad morey. These measures one im Ahe dlecteasin diden f Arquidity,” Mi i most fig and 2asiet 4A ransadtions de. aheeos My iy Aeoat Aqui of all. hy tthe | most Commonly sued measune money, supply Sts alse Anown “os aggregate monelaony MSOUN CEA? Ay Wbite a lie, note on Trorsactioneny and Apeualedive inctives of deman £ money .=> The eee motive : ee oe ae rh tn Ben be Lio Ha en catll Blas ay e), Seggorg ef zach rnonth te! Dhara rmoney palace of R8O. On the Ast day he ronth \) Mu en Ao gathoud a Joalancs Rs Joo OP sib ales L6 the aodtker . The average mony f the firm os sorlleas the weaken? v3 aquel Le So each. “Sthus, Ah total Gnobiton ase a i money dry Ais kconomy is eqnual to “Rs Jeo. The total volurne ef monthly “transactions im dh 2vonomy 4 Re 20 ~ the fam hos soll UG output ivath. PH loo Jf Aha “ustlhen and the ein Aros Sold. Ais Aeriter acetth Rs [00 fe ee erie demand f tone aan fe asthe tn fhe fillowing Me = KT thee 'T = total vals cf horninal: Laansachons dn fe ear k = a Spaitive fraction . (9) Sppewlertve_motives* Individuals hold then ueolthsin the im Jandid properly ; bullion; bonds; money ate in adents Jake .advanta imoahaet re : anding He fut changes Jin the po polers of Aoddsand tsuaitis tin tie cobital. monk , Dilleunt ‘people have dileent expectations regard the jie rah an al eae Soul Aased on their halal Jofiimation suganding themeoriornd Uohen the infousl’ sates onds db Oey | high. “people cconvent athetn money “mle bonds. Jus, > | Ieusative dernaind fa money 3 Yous. Wohen The | a Jatoust: stailes Come down people Cxpectil 5° size in by, we and thus Convent thelr mony Jnl bonds Bing at ‘ 4g be a high 3] euulalive ckmand “fen. money. Hence f ke demaed $ money» a3 pins eed be te ae ee he Apeulative deman fa menay cam dg apitten 0s | ea A Ae ee MT Fe nae Arwwen the follousing quution im #0 dentences Catach uuhon Zooks - 6 mana) . : 1] Exblatn the undtors of money and evs dees money Phas The a leomings rontin agate : => Morey & Lhe ommonly accepted meclfurn a, exchange « Individuals im aly “action exchange Eats cr fi money . Facilitate of exchanges B considered te be the batinetpah stole of money. ' The following eve ynoin fundions of money, 7) Mone ach os a convenient unit of account = ‘Fhe avalie f goods and senices cam, be eewed im monetary unt = When swe say that a wsclueof a acdistusateh 48 S00: sucperr, ine fnegp thal ue .atistuwateh com An exchanged 261 500 eh fe honey, avhure one unit of “money © sh. Ue dnt ase «St the Oe a fal ee ded Ata ae pen BOR 10... The- nelaitive cr @ pen with “supet Leo pencih B taleulated os Jor 2= RS Pendls. “fhe. Aames.rodtion- ram Je sud. to «aleulate money Lol] with rushed fe other Cormmodtitit, D) Money ach ox a stée of walu fa tndrviduals: Aoney + 4s mot perishable and Ab stageVv . 4 ) Money acti ox a slde gf woalus fa individual: Money sis vot. perishable and AG Aktage , ‘over Lending’ Tha is a he wixerment at Jeiendlion oh. ite Lomas. ths Ss etd cB + Reagul Raowe Patio? © the Ruewe natio st Gsh Resowe “Ratio can). I Cash Reserwe Ratio Ccan) = ‘Parentage 4 deposi le tehich va Aoombk must Arp as .cash stesoive, vith |e Apart fom the CRR , honbs) ane alto siquinct Jo asp Some seserves dn Htqpstel slim im the anak wwe. Thi sotto & called Stalutay Lgwolity alo a SAR - i Fa gamble, iL a soomk shox ib total deposit os “R100. And, CRR. fs G0"). . Shen. Ake fore sels ds Rup Pe 20C.4& looxao%). as cosh eases. Only the —semeintng amount ri ckbosibs ir CRs-100'~90)- 80 ~ Rs “aed HE eve Loans . She statute Seqyubterment of fhe stuuerve vatio adi ava dtm “te “ity amount of eudit that bombs com couals. Assuring, that a bom stort with a epost FR 1 from o depositer ‘A’. The rene ratio» 6 “go/. Thus! the bomk has to Aub 20 Rras “weve and fends Ahe Hemaining Paso te ‘B’. uvhich — xhouss uf dm she Asamk’s deposil, im the ext stound as Aabrltes , making a total 4, 180 as debesits . Now Af bank i Jugyurud do erp 80}. of 180 i PR 3 as -cosh serves , tt com Aend ? Rs 64 again (v0 -36 = 64). The Aomkwhich shoust up dm Ahe Asank!s dlebosil, im he ext suound as Aabslrties , making a totol 4 180 as deposits . Nowo AR benk Sug y lire d de Reep 80}. of 190 te RS 3% as Kosh setenves , it com demd "Pe 64 again (ive -36 = 64). The Aomk Aunds out RB 6H to Ma C This dm tom thous Up im Ane bank at oleposib . The prowess Asshs Ste beatin Meelf AUL al the som “reawvyes _ become Joo. She. nequiel reaver auill oe Rs 100 onl, when the total cleposils — decorme Ry Seo’ The iB Aecawe fn dle posi ls of, Ts S00, cosh sieenver would have do te RP joo Geo x 26]. = 100) Now, given, te CHR of 04). the amount Hermaining Susth fhe tomk te tind os loans will A” Pr hoo ( 500-100) + Showa, the Lamnke “annot give loan begond Rs 400. Hence , dhe Puguirement of preserves ack ‘asa Lintt “& mo — weation. “Shes Aesrves of Ps eo Oak olehosili of " &s S00. f