41. The money supply refers to the total amount of money in circulation in an economy at a particular time. It includes all the currency (notes and coins) and demand deposits (savings and current account balances) that non-bank public holds.

42. The 'medium of exchange' function of money refers to its use in transactions. It is used to buy and sell goods and services. This function of money eliminates the need for a coincidence of wants that is required in a barter system, making trade more efficient.

43. The 'Government's Bank' function of the Central Bank refers to its role as the banker, agent, and advisor to the government. It manages the government's accounts, provides short-term loans, and advises on economic and financial policies.

44. The 'marginal requirement of loan' is a tool used by central banks to control the amount of credit that banks can extend to their customers. By increasing the marginal requirement, the central bank can reduce the amount of loans that banks can give out, thereby controlling the money supply in the economy.

45. The 'store of value' function of money refers to the ability of money to hold value over time. It allows individuals to save and defer consumption to the future. This function of money provides certainty and predictability, which are essential for economic stability.

46. The Central Bank controls the money supply or credit using the Bank rate, which is the interest rate at which it lends to commercial banks. By raising the Bank rate, it makes borrowing more expensive for commercial banks, thereby reducing the amount of credit they can extend to their customers.

47. The Central Bank controls the availability of credit by open market operations, which involve the buying and selling of government securities. By selling securities, it reduces the amount of money in the economy, thereby reducing the availability of credit.

48. The Legal Reserve Ratio is the minimum fraction of customer deposits that banks are required to hold as reserves. It consists of two components: cash reserve ratio (the portion that must be held as cash) and statutory liquidity ratio (the portion that must be held in liquid assets).

49. In a situation where all customers of a commercial bank demand their deposits at the same time, the Central Bank can act as a lender of last resort. It can provide the necessary funds to the commercial bank to meet its obligations.

50. Money acts as a standard measure of value, which means it provides a common benchmark against which the value of all goods and services can be compared. This makes it easier to compare prices and make economic decisions.

Question

41. The money supply refers to the total amount of money in circulation in an economy at a particular time. It includes all the currency (notes and coins) and demand deposits (savings and current account balances) that non-bank public holds.

42. The 'medium of exchange' function of money refers to its use in transactions. It is used to buy and sell goods and services. This function of money eliminates the need for a coincidence of wants that is required in a barter system, making trade more efficient.

43. The 'Government's Bank' function of the Central Bank refers to its role as the banker, agent, and advisor to the government. It manages the government's accounts, provides short-term loans, and advises on economic and financial policies.

44. The 'marginal requirement of loan' is a tool used by central banks to control the amount of credit that banks can extend to their customers. By increasing the marginal requirement, the central bank can reduce the amount of loans that banks can give out, thereby controlling the money supply in the economy.

45. The 'store of value' function of money refers to the ability of money to hold value over time. It allows individuals to save and defer consumption to the future. This function of money provides certainty and predictability, which are essential for economic stability.

46. The Central Bank controls the money supply or credit using the Bank rate, which is the interest rate at which it lends to commercial banks. By raising the Bank rate, it makes borrowing more expensive for commercial banks, thereby reducing the amount of credit they can extend to their customers.

47. The Central Bank controls the availability of credit by open market operations, which involve the buying and selling of government securities. By selling securities, it reduces the amount of money in the economy, thereby reducing the availability of credit.

48. The Legal Reserve Ratio is the minimum fraction of customer deposits that banks are required to hold as reserves. It consists of two components: cash reserve ratio (the portion that must be held as cash) and statutory liquidity ratio (the portion that must be held in liquid assets).

49. In a situation where all customers of a commercial bank demand their deposits at the same time, the Central Bank can act as a lender of last resort. It can provide the necessary funds to the commercial bank to meet its obligations.

50. Money acts as a standard measure of value, which means it provides a common benchmark against which the value of all goods and services can be compared. This makes it easier to compare prices and make economic decisions.

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