Paper title: Money, Banking & Global Business
War 15
Duration: 2h
Answer all the questions 10 x2 marks 20 marks)
1 Define Banking?
2 What are the classifications of banks?
3. What are the types of financing?
Define inflation & deflation?
5. Give a short note on: credit creation & credit control
6. Define stagflation
7. What is capital market?
8. What is devaluation of money?
9. Define exchange control?
10. What are the two lessons you have learnt from your visit to village markets?
Answers
Answer:
your questions is interesting
1)Banking is an industry that handles cash, credit, and other financial transactions. Banks provide a safe place to store extra cash and credit. They offer savings accounts, certificates of deposit, and checking accounts. Banks use these deposits to make loans.
2)There are two broad categories under which banks are classified in India- SCHEDULED AND NON-SCHEDULED BANKS. The scheduled banks include COMMERCIAL BANKS AND COOPERATIVE BANKS. The commercial banks include REGIONAL RURAL BANKS, SMALL FINANCE BANK, FOREIGN BANKS, PRIVATE SECTOR BANKS, and PUBLIC SECTOR BANKS.
3)Two of the main types of finance include:
Debt finance – money borrowed from external lenders, such as a bank.
Equity finance – investing your own money, or funds from other stakeholders, in exchange for partial ownership.
4)Inflation occurs when the prices of goods and services rise, while deflation occurs when those prices decrease. The balance between these two economic conditions, opposite sides of the same coin, is delicate and an economy can quickly swing from one condition to the other.
5)Credit Creation is a situation in which banks make more loans to consumers and businesses, with the result that the amount of money in circulation(being passed from one person to another) increases. In other words it refers to the unique power of the banks to multiply loans and advances, and hence deposits.
Credit control is the system used by businesses and central banks to make sure that credit is given only to borrowers who are likely to be able to repay it. As such matters are rarely certain, credit controllers control lending by calculating and managing risk
6)Stagflation occurs when the government or central banks expand the money supply at the same time they constrain. supply. 1. It can also occur when a central bank's monetary policies create credit.
7)A capital market is a financial market in which long-term debt or equity-backed securities are bought and sold. Capital markets channel the wealth of savers to those who can put it to long-term productive use, such as companies or governments making long-term investments
8)Devaluation is the deliberate downward adjustment of the value of a country's money relative to another currency, group of currencies, or currency standard. Countries that have a fixed exchange rate or semi-fixed exchange rate use this monetary policy tool.
9)Exchange control. A government policy of regulating access to foreign currency. Typically, countries resort to exchange control because of chronic shortages of foreign currency, particularly the so-called hard (freely convertible) currency. The are several ways governments implement exchange control.