MONEY, SAVINGS AND INVESTMENT

I. Choose the best answer

1. Money is what it does is defined by

a) Crowther b) walker c) Robertson

2. The purchasing power of money depends upon the

a) Price level b) demand level c) supply level

3. _________ is used as a standard for future payment

a) cheque b) Money c) Credit card

II. Fill in the blanks:

1. ___________ is one of the greatest inversions of money.

2. The word “money” is derived from the Latin word___________.

3. The most important function of money is that it acts as ___________.

4. Money is a convenient from of storing one’s ________ .

5. ____________ is inevitable for capital formation and economic growth.

6. ____________ is the medium of exchange.

7. The direct exchange of goods for goods is known as _________ system.

8. Moneta is the surname of Roman Goddess_____________.

9. Moneta is a __________ word.

10. The purchasing power of money depends upon the __________.

11. The rupee is a blend of the Devangiri ___________ and Roman ____________.

12. ___________ is nothing but value expressed in terms of money.

13. The portion of income not spent on consumption is called__________.

14. The addition made to the existing production and capacities is called __________.

III. Match the following

1. Moneta – old system of exchange of goods

2. Store of value – fundamental invention

3. Savings – Money

4. Money – function of money

5. Barter system – contributes to economic growth

IV. Brief answer

1. Money serves as a store of wealth explain.

i) Money is a convenient form of storing one’s wealth.

ii) Money can be easily converted into other marketable assets and machinery, industries and gold.

2. Write briefly about the importance of money

i) Money plays an important role in the economic development of a country.

ii) Modern economy cannot function smoothly without money.

iii) The importance of money can be realized only in its absence.

iv) Money is only a means and not an end in itself.

3. Explain the barter system

i) The barter system is exchange of goods for goods.

ii) It is the system of trading without the use of money.

iii) But it had many difficulties and in convenience. These difficulties led to the invention of money.

4. Explain the standard and deferred payment.

i) Money is used for standard and deferred payment.

ii) Business in modern times is based on “Credit” to a large extent.

iii) In credit, payments are made at a future date, money is the standard.

iv) If the credit transactions were to be carried on the basis of commodities, it would lead to difficulties. It will affect trade.

5. Define savings and Investments:

Savings

The portions of income not spent on consumption is called investment.

Investments

Investment include fixed equipments, machinery, building, raw material, replacement due to depreciation etc.,

V. Answer in detail

1) Describe the functions of money

Money performs many function in the modern economy.

The most important functions of money etc.,

a) medium of exchange

b) measure of value

c) store of value

d) standarred of deferred payments

Medium of exchange

i) The most important function of money is that it acts as medium of exchange.

ii) Money is accepted freely in exchange for all other goods.

Measure of value

i) It is a unit of account and a standard of common measurement

ii) is nothing but value expressed in terms of money.

iii) We use money for measuring value of goods. It makes economic calculation easy.

Store of value

i) Money is a convenient form of storing one’s wealth.

ii) Money also serves an excellent store of wealth as it can be easily converted into other marketable assets such as land, machinery, industries and gold.

Standard of deferred payments

i) Money is used for standard for future payments.

ii) Business in modern lines is based on credit to a large extent.

iii) In credit, payments are made at a future date, money is the standard.

iv) if credit transactions were to be carried on the basis of commodities, it would lead to difficulties. It will affect trade.

2. Discuss significance of money?

i) Every branch of economic activity in a money economy is different from what it was in baster economy.

ii) Money has influenced and facilitated from what it was in the buster economy.

iii) Money plays an important role in the field of consumption, production, exchange, distribution and public finance.

iv) Money plays an important role in the economic government of a country.

v) Modern economy cannot function smoothly without money.

vi) The importance of money can be realized only in its absence.

3. Write in detail about savings and investment savings?

The portion of income not spent on consumption is called savings.

Investment

i) The addition made to the existing production capacities is called investment.

ii) Investment include equipments, machinery, building, raw material, replacement due to depreciation etc.,

Savings and Investment are related to another

i) Savings is inevitable for capital formation and economic growth.

ii) Savings is directly connected with investment.

iii) Savings and investment are basic economic activities in an economy.

iv) Saving and investment increase the amount on capital, which contributes the economic growth.

Savings and investments differ from one another

i) Savings and investment are in the hands of two distinct groups of people

ii) Savings is done by the consumer

iii) Investment is the functions of entrepreneurial class.

iv) The motives for saving and investment are also different from each other.

Leave a Reply