Short answer
why the demand deposits are considered as money
2. Explain with an example how the terms of credit can
be unfavourable for the Small farmers.
3 why is modem currency accepted as a medium of
exchange without any use of its own ? Find out the
season
4 credit has its own unique role in development; Justify
the statements with argument.
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Answers
Answer:
Explanation:
1..since money can be withdrawn on demand, these deposits are known as demand deposits.The facility of cheques against demand deposits makes it possible to make payments, without using cash. Since demand deposits are accepted widely as a means of payment along with currency, they constitute money in the modem economy.
3.Modern currency is accepted as a medium of exchange because it is authorized by the central government of a country. 2. In India, RBI issues the currency notes and it is illegal for any other organization or individual to issue the currency.
4.."Credit has its own unique role for development”(a) Credit helps to increase earning and therefore a person is better off than before. (b) Credit helps to earn money as well as the capital for the future. (c) Credit helps in the development of infrastructure of the society that leads to the overall development.
2..) An example of unfavourable terms of credit for the small farmer is Shiva is a small farmer. He borrows money at the rate of 4 % per month (i.e., 48 % per annum) from a local moneylender to qrow his crop. But the crop fails due to severe drought. As a result Shiva has to sell a part of his land to repay the loan.