Tag: loans from banks and financial institutions

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Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

The open market Operations occur when the government:

  1. reduces spending

  2. buys and sells bonds and securities

  3. increases taxation

  4. increases the exchange rate
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Open market operation (OMO) is a monetary policy by the central bank in which the bank through government deals in the sale and purchase of securities and bonds in the open market to control the supply of money in the economy. By selling the securities and bonds, the government soaks liquidity from the economy which controls the inflation in the economy by decreasing the purchasing power of the people and by buying the securities and bonds, the government releases liquidity which controls deflation in the economy by increasing the purchasing power of the people.

Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

Credit creation is

  1. Process where money is given by banks through loan

  2. Process where the money is taken by lenders

  3. Process by which the money is taken by depositors

  4. All of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Credit creation is the process by which banks expand the money supply through lending, as deposits are used to create new loans.

Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

Because money serves as a medium of exchange, it eliminates

  1. the need to write checks.

  2. The need for specialization.

  3. The use of commodities as money

  4. The need for a double coincidence of wants
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In a barter system, you need a double coincidence of wants. Money acts as a medium of exchange, allowing people to trade without needing the other person to want exactly what they have.

Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

Money's function as a medium of exchange means that

  1. money is a common denominators for expressing the value of goods and services.

  2. money can be sued to store wealth.

  3. money serves as an acceptable means of payment.

  4. money is a standard f deferred payment on exchange contracts extending into the future.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

As a medium of exchange, money is universally accepted as a means of payment for goods and services, facilitating trade.

Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

Limitations for the demand of credit are

  1. Demand should exist in the market

  2. Amount of loan granted should increase the paying capacity of borrower

  3. Bad debts should be avoided

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Effective credit management requires market demand, the borrower's ability to repay, and the mitigation of bad debts to ensure the sustainability of the lending process.

Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

Banks lend money mainly for ___________.

  1. industrial purposes

  2. commercial Purpose

  3. Both (a) and (b)

  4. None of the above.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Banks act as financial intermediaries that mobilize savings from the public to lend to various sectors. They provide credit for both industrial and commercial activities to facilitate economic growth.

Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

At the time of independence India had ___________________.

  1. no banking system

  2. had very few banks

  3. well developed banking system

  4. fairly developed banking system
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

At the time of independence in 1947, India possessed a banking system that was already established, though it was largely concentrated in urban areas and served specific interests. It was not non-existent, but it was not fully developed or inclusive of the rural population.

Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

Which of these is a Quantitative Method of Credit Control?

  1. Bank Rate

  2. Moral Suasion

  3. Margin Requirements

  4. All of the above.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Quantitative methods of credit control regulate the total volume of credit in the economy. The Bank Rate is a classic quantitative tool, whereas Moral Suasion is a qualitative or selective method.

Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

An asset owned by borrowers and pledged as a guarantee to obtain loan is known as _____ .

  1. rate of interest

  2. term of credit

  3. collateral

  4. document
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

An asset owned by borrowers and pledged as a guarantee to obtain loan is known as collateral.
Collateral is a form of security taken from the borrowers of loan by the banks or co-operative societies to lend loans.
Collateral is a part of terms of credit of the formal sources of credit.

Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

In Self Help Groups, _____ decide the savings and loan activity option.

  1. RBI

  2. Co-operatives

  3. Banks

  4. Members
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In Self Help Groups, group members decide the savings and loan activity options.
SHG is a mutual help group.
They come together to solve their economic issues and earn income.