Chapter 2: Money:
Q1. Complete the correlation:
1. Primary function of money : Medium of exchange : :
Secondary function of money : Transfer of value.
2. Contingent function of money : Basis of credit : : Secondary
function of money : Standard of deferred payments.
3. Commodity money : Shells : : Plastic money : Credit card.
4. Divisibility : Smaller denominations : : Portability : Easy to
carry from one place to another.
5. Barter systems : Goods : : Modern economy : Money.
Q2. Give economic term:
1. The art of exchanging goods for goods - Barter exchange.
2. Provision for making payments in future - Deferred payment.
3. A system that makes use of currency for facilitating
payments - Monetary system.
4. Credit instrument through which bank deposits are
transferable - Cheque.
5. Monetary value stored and transferred electronically by
means of computer hard drive or servers - Electronic Money.
6. Money not accounted for in the bank and not disclosed to
the government - Black Money.
Q3. Choose the correct option:
1. Arrange in the order of evolution of money - b,d,a,c.
2. Arrange in the order of evolution of money - b,d,a,c.
Q4. Identify and explain the concept from the given
illustrations:
1. Vasantseth provides coal from his shop to farmers in
exchange for foodgrains.
Concept: Barter System.
Explanation of Concept: It refers to the exchange of goods for
goods. A barter exchange is a type of exchange in which goods
and services are exchanged for goods and services. Vasantseth
exchanges coal (one good) for food grains (another good) from
farmers. Hence, the given illustration relates to the barter
system.
2. Babanrao deposits his money in a nationalized bank.
Concept: Bank Money
Explanation of Concept: Bank money refers to deposits which
are in the form of cash saved by people in banks.
3. Charu used her debit card to purchase a shirt for her younger
brother.
Concept: Plastic Money
Explanation of Concept: Plastic money is a money in the form
of credit cards and debit cards that is used in transaction due to
advanced technology.
4. Malathi purchased a house through an agent. The agent
accepted the commission amount in cash but did not issue a
receipt her.
Concept: Black Money
Explanation of Concept: Black Money is a type of money which
is received in cash but not accounted for and on which tax is
not paid to the government.
5. To prevent misuse/fraudulent use of national currency, a
note ban is imposed on its use at certain times.
Concept: Demonetization
Explanation of Concept: Demonetization is a tool of a
withdrawn of metal coins, paper notes from use as legal tender.
Q5. State with reasons whether you agree or disagree with
the following statements:
1. There are no difficulties in barter system.
Page No 9
2. There are many good qualities found in modern currency.
Page No 11 & 12.
3. Many tasks are accomplished by money.
Yes I agree with statement.
i. Primary Functions of money: Money performs primary
functions as a medium of exchange and a measure of value.
ii. Secondary Functions of money: It performs secondary
functions of standard of deferred payments, store of value and
transfer of value.
iii. Contingent Functions of money: It also performs contingent
functions of estimating and dividing national income, providing
basis of credit, imparting liquidity to wealth and estimating
macroeconomic variables.
4. Money can be sent anywhere through electronic means.
Yes I agree with this statement.
i. Plastic Money: Due to advanced technology, plastic money is
easy to use in transactions. Debit cards and credit cards are
used as plastic money. Further innovation in smart transactions
led to the introduction of electronic money.
ii. Electronic Money: E-money or Electronic Money is a
monetary value that is stored and transferred electronically
through various means, i.e., mobile phone, tablet. Smart card
computer, etc. It is backed by Central Bank.
iii. Digital Wallets: Electronic money used for purchases and
transactions globally. Digital wallets are also a form of stored
electronic money.
Q6. Answer the following questions on the basis of the
following information:
1. Identify the types of money used in the information.
The types of money used in the information are Metallic coins,
Plastic money, and Paper money.
2. Explain any two of them.
Page no 10 & 11.