FYJC Commerce 11th Exam-
Maharashtra State Board Textbook Solutions
Chapter 2: Money
1.Primary function of money : Medium
of exchange :: _____________ : Transfer of value.
SOLUTION
Primary function of money : Medium of
exchange :: Secondary
function of money : Transfer of value.
2._________ : Basis of Credit ::
Secondary function of money : Standard of deferred payments.
SOLUTION
Contingent function of money : Basis of Credit
:: Secondary function of money : Standard of deferred payments.
3.Commodity money : Shells
::__________ : Credit card.
SOLUTION
Commodity money : Shells :: Plastic money : Credit card.
4.Divisibility : Smaller
denominations :: __________ Easy to carry from one place to another
SOLUTION
Divisibility : Smaller denominations
:: Portability : Easy to carry
from one place to another.
5.Barter system : Goods :: Modern
economy :________
SOLUTION
Barter system : Goods :: Modern
economy : Money
Suggest an economic
term for the given statement
1.The act of exchanging goods for
goods – _________
SOLUTION
The act of exchanging goods for goods
– Barter
exchange
2.Provision of making payments in
future- ________
SOLUTION
Provision of making payments in the
future-Deferred
payment
3.A system that makes use of currency
for facilitating payments – _________
SOLUTION
A system that makes use of currency
for facilitating payments – Monetary system
4.Credit instrument through which
bank deposits are transferable – _________
SOLUTION
Credit instrument through which bank
deposits are transferable – Cheque
5.Monetary value stored and
transferred electronically by means of computer hard drive or servers – _________
SOLUTION
The monetary value stored and
transferred electronically by means of computer hard drive or servers – Electronic Money
6.Money not accounted for in the bank
and not disclosed to the government -________
SOLUTION
Money not accounted for in the bank
and not disclosed to the government –Black money
Choose the correct
option:
1.Arrange in the order of evolution
of money
Metallic money
Animal money
Metallic coins
Commodity money
a, b, c, d
b, d, a, c
d, c, a, b
c, a, b, d.
2.Arrange in the order of evolution
of money
Plastic money
Paper money
Electronic money
Credit money
b, d, a, c
a, b, c, d
d, c, b, a
c, b, a, d.
Identify and explain
the concept from the given illustration:
1.Vasantsheth provides coal from his
shop to farmers in exchange of food grains.
SOLUTION
(A) Identified concept: Barter exchange.
(B) Explanation of concept: Barter exchange is
a type of exchange in Which goods and services are exchanged for goods and
services.
2.Babanrao deposits his money in a nationalized
bank.
SOLUTION
(A) Identified concept: Bank money.
(B) Explanation of concept: Bank money refers
to deposits Which are in the form of cash saved by people in banks.
3.Charu used her debit card to
purchase a shirt for her younger brother.
SOLUTION
(A) Identified concept: Plastic money.
(B) Explanation of concept: Plastic money is a
money in the form of credit cards and debit cards that is used in transaction
due to advanced technology.
4.Malathi purchased a house through
an agent. The agent accepted the commission in cash but did not issue a receipt
to her.
SOLUTION
(A) Identified concept: Black money.
(B) Explanation of concept: Black money is a
type of money which is received in cash but not accounted for and on which tax
is not paid to the government.
5.To prevent misuse/fraudulent use of
the national currency, a note ban is imposed on its use at certain times.
SOLUTION
(A) Identified concept: Demonetization.
(B) Explanation of concept: Demonetization is
a tool of a Withdrawal of metal coins, paper notes from use as legal tender.
State with reason
whether you Agree or Disagree with the following statement:
1.There are no difficulties in the
barter system.
Options
Agree
Disagree
SOLUTION
No, I do not agree with this statement.
Reasons:
Lack of common measure of value : While exchanging
goods for goods, there was no standard unit of account to determine the value
of a commodity. e.g., it was difficult to compare two liters of milk with two
kilograms of rice.
Problem of double coincidence of wants : Lack of double
co-incidence of wants was one of the major limitations of barter system. For
instance, person ‘A’ has cloth and he wants rice in exchange and person ‘B’ has
rice but he does not want cloth in exchange. In this case exchange between ‘A’
and ‘B’ would not take place as their wants do not coincide with each other.
Indivisibility of certain goods : In barter system
it was inconvenient to divide animals, house etc. into small parts, so it was
difficult to fix proportion of one commodity in exchange for another commodity,
e.g. Individual ‘A’ has a sack of wheat and he wants a goat in exchange.
Individual ‘B’ has a goat and he wants only half a sack of wheat. In this situation
exchange between the two commodities is impossible due to indivisible nature of
goat, for it being a live stock.
Difficulties in storage of goods : It is necessary to
store goods for future consumption. Sometimes due to perishable nature of
certain goods it was difficult to store them for future. Perishable commodities
like milk, eggs, fish, vegetable etc. were difficult to store. Difficulties
were also experienced due to lack of space required to store heavy and bulky
goods.
Problem of making deferred payments : Deferred payment
means payments to be made in future. Repayment of loan was difficult due to
exchange of commodities,
E.g. it was difficult to repay the
perishable goods in the same condition in future.
2.There are many good qualities
founds in modern currency.
Options
Agree
Disagree
SOLUTION
Yes, I agree with this statement.
Reasons:
Definitions of Money:
Prof Crowther ” Money is anything
that is generally acceptable as a means of exchange and at the same time gets
as a measure and a store of value”.
Prof Walker: “Money is what
money does”.
The qualities of money are as
follows:
General Acceptability: Anything which is
used as money must be easily accepted by all for exchange purpose.
Divisibility: Money should be
easily divisible into smaller denominations to facilitate small transactions.
Durability : Money should also
possess the characteristic of durability. Currency notes and coins are being
used repeatedly and shall continue to do so for years together on account of
durability. ‘
Cognizability : Money must be
easily recognised. It should have certain distinct marks so as to avoid
confusion by the receiving person.
Portability : It should be easy
to carry from one place to another without any difficulty, expense and
inconvenience, e.g. currency notes are easily portable.
Homogeneity : Money of a
particular denomination must be homogeneous or identical in its features.
Stability : Money should have
(1 stable monetary value. It serves as a measure of value to exchange goods and
services. These goods can be sold and purchased in future as per requirements.
3.Many tasks are accomplished by
money.
Options
Agree
Disagree
SOLUTION
Yes, I agree with this statement.
Reasons:
Primary Functions of money : Money performs
primary functions as a medium of exchange and a measure of value.
Secondary functions of money : It performs
secondary functions of standard of deferred payments, store of value and
transfer of value.
Contingent functions of money : It also performs
contingent functions of estimating and dividing national income, providing
basis of credit, imparting liquidity to wealth and estimating macroeconomic
variables.
4.Money can be sent anywhere through
electric means.
Options
Agree
Disagree
SOLUTION
Yes, I agree with this statement.
Reasons:
Plastic Money: Plastic Money is
easy to use in transactions due to advanced technology. Debit cards and credit
cards are used as plastic money. Further innovation in smart transactions led
to the introduction of electronic money.
Electronic Money: E-money or
Electronic money is a monetary value that is stored and transferred
electronically through a variety of means i.e. mobile phone, tablet. Smart card
computer etc. It is backed by Central Bank.
Digital wallets: Electronic money
used for purchases and transactions globally. Digital wallets are also a form
of stored electronic money.
Answer the following
question on the basis of the following information:
Ganesh travelled to the mall by bus.
He gave the conductor ₹ 10 coin for the ticket. He purchased many commodities
from the mall.
At the billing counter, he gave his
credit card for payment but the billing clerk informed him that only debit
cards were accepted. Since Ganesh had forgotten his debit card at home, he
offered to make payment by cash.
1) Identify the types of money used
in the information
2) Explain any two of them.
SOLUTION
1. The types of money used in the
information are metallic money, plastic money, paper money
2. The two types of money are :
Metallic money: Money made out of
metals such as gold, silver, copper, aluminum, nickel, etc. is called metallic
money. It is comparatively less portable and more durable.
Paper money: Money made out of
paper is called paper money. It is comparatively more portable and less
durable.
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