CBSE Class 12 Economics Money And Banking VBQs

CBSE Class 12 Economics Money And Banking VBQs read and download in pdf. Value Based Questions come in exams for Economics in Standard 12 and are easy to learn and helpful in scoring good marks. You can refer to more chapter wise VBQs for Class 12 Economics and also get latest topic wise very useful study material as per latest 2021 NCERT book for Class 12 Economics and all other subjects for free on Studiestoday designed as per latest Grade 12 CBSE, NCERT and KVS syllabus and examination pattern

MONEY & BANKING

1) Out of the Bank rate policy and open market operations, which will you prefer in India?

Ans: The bank rate policy should be preferred by the RBI because the policy of open market operations cannot be used effectively in our country.

2) Why should be the top most role of the Central Bank in a developing economy like India?

Ans: It should be to adopt measures like expansion, promotion and strengthen the banking and financial structures.

3) Suppose all the customers of a commercial bank demand for their deposits at the same time then how does Central bank help the Commercial bank in this situation?

Ans:Central Bank helps as ―Lender of last resort‖. It gives financial accommodation to the commercial bank

a) By rediscounting its bills of exchange and promissory notes b) By providing loans against its securities. Thus it saves commercial banks from financial crisis.

4) When barter system was in use, a merchant had to incur cost in the absence of money. What were those costs?

a) Search cost, which is the cost of searching a person, to exchange goods and b) Disutility of waiting, which means cost of equivalent to wastage of time period spent on finding out required person.

5) Although increase in money supply is an effective measure to control economic depression, yet it creates burden of borrowing in an economy. Explain two measures to control economic depression in such a situation.

Ans: Decrease in Bank rate, Decrease in SLR and purchase of Government securities by RBI.

6) RBI has reduced CRR from 4.25% to 4%. Will this help in controlling inflation in India?

It increases the lending capacity of commercial banks. This adds to inflationary pressure in the economy.

7) Why is Central Bank sole authority for the issue of currency in the country?

♦ It ensures uniformity in note circulation

♦ It builds up public faith in the currency system

♦ It enables government to control money supply through RBI

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