{"id":12104,"date":"2021-12-07T11:52:39","date_gmt":"2021-12-07T06:22:39","guid":{"rendered":"https:\/\/scholarsclasses.com\/blog\/?p=12104"},"modified":"2024-12-24T17:23:33","modified_gmt":"2024-12-24T11:53:33","slug":"12th-economics-chapter-9-solutions","status":"publish","type":"post","link":"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/","title":{"rendered":"12th Economics Chapter 9 Solutions (Money Market and Capital Market in India) Maharashtra Board &#8211; Free Solution"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69deab9fa4e02\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69deab9fa4e02\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/#12th_Economics_Chapter_9_Solutions\" >12th Economics Chapter 9 Solutions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/#Chapter_9_%E2%80%93_Money_Market_and_Capital_Market_in_India\" >Chapter 9 &#8211; Money Market and Capital Market in India<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/#Q_1_Complete_the_following_statements\" >Q. 1. Complete the following statements<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/#Q_2_Complete_the_correlation\" >Q. 2. Complete the correlation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/#Q_3_Find_the_odd_word\" >Q. 3. Find the odd word<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/#Q_4_Assertion_and_Reasoning\" >Q. 4. Assertion and Reasoning<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/#Q_5_Identify_and_explain_the_concepts_from_the_given_illustrations\" >Q. 5. Identify and explain the concepts from the given illustrations<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/#Q6_Distinguish_between\" >Q.6. Distinguish between<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/#Q7_Answer_the_following\" >Q.7. Answer the following<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/#Q8_Answer_in_detail\" >Q.8. Answer in detail<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/#Extra_Questions\" >Extra Questions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/#Solution_of_all_Chapters_of_Economics\" >Solution of all Chapters of Economics<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/#Check_out_other_posts_related_to_the_12th_Commerce\" >Check out other posts related to the 12th Commerce<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading has-text-align-center\"><span class=\"ez-toc-section\" id=\"12th_Economics_Chapter_9_Solutions\"><\/span>12th Economics Chapter 9 Solutions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img decoding=\"async\" width=\"1024\" height=\"576\" data-src=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/12\/12th-Economics-Chapter-9-Solutions-1-1024x576.jpg\" alt=\"12th Economics Chapter 9 Solutions\" class=\"wp-image-12204 lazyload\" style=\"--smush-placeholder-width: 1024px; --smush-placeholder-aspect-ratio: 1024\/576;width:768px;height:432px\" title=\"\" data-srcset=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/12\/12th-Economics-Chapter-9-Solutions-1-1024x576.jpg 1024w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/12\/12th-Economics-Chapter-9-Solutions-1-300x169.jpg 300w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/12\/12th-Economics-Chapter-9-Solutions-1-768x432.jpg 768w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/12\/12th-Economics-Chapter-9-Solutions-1-1536x864.jpg 1536w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/12\/12th-Economics-Chapter-9-Solutions-1-640x360.jpg 640w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/12\/12th-Economics-Chapter-9-Solutions-1.jpg 1920w\" data-sizes=\"(max-width: 1024px) 100vw, 1024px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" \/><figcaption class=\"wp-element-caption\">12th Economics Chapter 9 Solutions<\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading has-text-align-center has-black-color has-vivid-green-cyan-background-color has-text-color has-background has-medium-font-size\"><span class=\"ez-toc-section\" id=\"Chapter_9_%E2%80%93_Money_Market_and_Capital_Market_in_India\"><\/span><strong>Chapter 9 &#8211; <\/strong>Money Market and Capital Market in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center has-cyan-bluish-gray-background-color has-background\"><span class=\"ez-toc-section\" id=\"Q_1_Complete_the_following_statements\"><\/span>Q. 1. Complete the following statements<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>1) Development financial institutions were established to \u2026\u2026\u2026\u2026.<br><\/strong>a) provide short term funds.<br><strong><span class=\"has-inline-color has-vivid-purple-color\">b) develop industry, agriculture and other key sectors.<br><\/span><\/strong>c) regulate the money market.<br>d) regulate the capital market.<\/p>\n\n\n\n<p><strong>2) Money market faces shortage of funds due to \u2026\u2026\u2026..<br><span class=\"has-inline-color has-vivid-purple-color\">a) inadequate savings.<br><\/span><\/strong>b) growing demand for cash.<br>c) presence of unorganized sector.<br>d) financial mismanagement.<\/p>\n\n\n\n<p><strong>3) Individual investors have lost confidence in the capital market due to \u2026\u2026\u2026..<br><\/strong>a) lack of financial instruments.<br>b) high transaction costs.<br>c) low returns.<br><strong><span class=\"has-inline-color has-vivid-purple-color\">d) financial scams.<\/span><\/strong><\/p>\n\n\n\n<p><strong>4) Commercial banks act as intermediaries in the financial system to \u2026\u2026\u2026..<br><span class=\"has-inline-color has-vivid-purple-color\">a) make profits<br><\/span><\/strong>b) accelerate the country&#8217;s economic growth.<br>c) mobilize the savings and allocating them to various sectors of the economy.<br>d) control the credit.<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center has-cyan-bluish-gray-background-color has-background\"><span class=\"ez-toc-section\" id=\"Q_2_Complete_the_correlation\"><\/span>Q. 2. Complete the correlation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>1) Money market : <mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-black-color\">Short term funds<\/mark><kbd> <\/kbd>: : <span style=\"text-decoration: underline;\"><strong>Capital Market<\/strong><\/span> : Long term funds<br>2) <strong><span style=\"text-decoration: underline;\">RBI<\/span><\/strong> : <mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-black-color\">Central Bank<\/mark> : : SBI : Commercial Bank<br>3) Co-operative banks : <mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-black-color\">Organized sector<\/mark> : : Indigenous bankers : <strong><span style=\"text-decoration: underline;\">Unorganised sector<\/span><\/strong><br>4) Primary market : <strong><span style=\"text-decoration: underline;\">New issues<\/span><\/strong> : : Secondary market : Old issues<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center has-cyan-bluish-gray-background-color has-background\"><span class=\"ez-toc-section\" id=\"Q_3_Find_the_odd_word\"><\/span>Q. 3. Find the odd word<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>1) <strong>Types of Bank Accounts:<\/strong> Saving a\/c, <strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\">D-mat a\/c<\/mark><\/strong>, Recurring a\/c, Current a\/c<br>2) <strong>Unregulated Financial intermediates:<\/strong> <strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\">Mutual fund<\/mark><\/strong>, Nidhi, Chit fund, Loan Companies<br>3) <strong>Financial Assets:<\/strong> Bonds, <strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\">Land<\/mark><\/strong>, Govt. Securities, Derivatives<br>4) <strong>Quantitative Tools:<\/strong> Bank rate, Open market operations, <mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\"><strong>Foreign Exchange rate<\/strong><\/mark>, Variable reserve ratios<\/p>\n\n\n\n<p class=\"has-text-align-center\"><strong><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-notes\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-notes\/\" target=\"_blank\" rel=\"noreferrer noopener\">Solution of other subjects<\/a><br><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-textbook-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-textbook-solutions\/\">Solution of all Chapters of Economics<br><\/a> <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-economics-chapter-1\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-economics-chapter-1\/\" target=\"_blank\" rel=\"noreferrer noopener\">1<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-2\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-2\/\">2<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3a\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3a\/\" target=\"_blank\" rel=\"noreferrer noopener\">3A<\/a> &#8211; <strong><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/\">3B<\/a> &#8211;<\/strong> <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-4-exercise\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-4-exercise\/\" target=\"_blank\" rel=\"noreferrer noopener\">4<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-5-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-5-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">5<\/a><\/strong> <strong>&#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-6-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-6-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">6<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-7-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-7-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">7<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-8-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-8-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">8<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">9<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-10-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-10-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">10<\/a><\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center has-cyan-bluish-gray-background-color has-background\"><span class=\"ez-toc-section\" id=\"Q_4_Assertion_and_Reasoning\"><\/span>Q. 4. Assertion and Reasoning<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>1) Assertion (A):<\/strong> Money market economizes use of cash<br><strong>Reasoning (R):<\/strong> Money market deals with financial instruments that are close substitutes of money.<br><strong>Options: <br><\/strong>1) (A) is True, but (R) is False<br>2) (A) is False, but (R) is True<br><strong><span class=\"has-inline-color has-vivid-purple-color\">3) Both (A) and (R) are True and (R) is the correct explanation of (A)<br><\/span><\/strong>4) Both (A) and (R) are True and (R) is not the correct explanation of (A)<\/p>\n\n\n\n<p><strong>2) Assertion (A):<\/strong> Regional stock exchanges have witnessed a sharp decline in the volume of trade. <br><strong>Reasoning (R):<\/strong> Investors prefer to trade in securities listed in premier stock exchanges like BSE, NSE etc.<br><strong>Options: <br><\/strong>1) (A) is True, but (R) is False<br>2) (A) is False, but (R) is True<br><strong><span class=\"has-inline-color has-vivid-purple-color\">3) Both (A) and (R) are True and (R) is the correct explanation of (A)<br><\/span><\/strong>4) Both (A) and (R) are True and (R) is not the correct explanation of (A)<\/p>\n\n\n\n<p><strong>3) Assertion (A):<\/strong> The unorganized sector of the money market lacks transparency.<br><strong>Reasoning (R):<\/strong> Activities of the unorganized sector are largely confined to rural areas.<br><strong>Options: <br><\/strong>1) (A) is True, but (R) is False<br>2) (A) is False, but (R) is True<br><strong><span class=\"has-inline-color has-vivid-purple-color\">3) Both (A) and (R) are True and (R) is the correct explanation of (A)<br><\/span><\/strong>4) Both (A) and (R) are True and (R) is not the correct explanation of (A)<\/p>\n\n\n\n<p><strong>4) Assertion (A):<\/strong> Foreign exchange management and control is undertaken by commercial banks.<br><strong>Reasoning (R):<\/strong> RBI has to maintain the official rate of exchange of rupee and ensure its stability.<br><strong>Options: <br><\/strong>1) (A) is True, but (R) is False<br><strong><span class=\"has-inline-color has-vivid-purple-color\">2) (A) is False, but (R) is True<br><\/span><\/strong>3) Both (A) and (R) are True and (R) is the correct explanation of (A)<br>4) Both (A) and (R) are True and (R) is not the correct explanation of (A)<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center has-cyan-bluish-gray-background-color has-background\"><span class=\"ez-toc-section\" id=\"Q_5_Identify_and_explain_the_concepts_from_the_given_illustrations\"><\/span>Q. 5. Identify and explain the concepts from the given illustrations<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong><span class=\"has-inline-color has-vivid-purple-color\">1) Raghu\u2019s father regularly invests his money in stocks and bonds.<\/span><\/strong><br><strong>Identified Concept:<\/strong> Investment in Stock Market.<br><strong>Explanation:<\/strong> Stock exchange is an important constituent of the capital market. It is an association or organization in which stocks, bonds, commodities, etc are traded.<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\"><strong>2) Sara makes a monthly contribution to a fund jointly created by her friends. The collected fund is then given to a chosen member through a lucky draw.<br><\/strong><\/mark><strong>Identified Concept:<\/strong> Chit funds.<br><strong>Explanation:<\/strong> Under Chit funds, members make a regular contribution to the fund. Bids or draws are made on the basis of criteria mutually agreed upon by the members. Accordingly, the collected fund is given to the chosen member.<\/p>\n\n\n\n<p><strong><span class=\"has-inline-color has-vivid-purple-color\">3) Tina deposited a lump sum amount of Rs 50,000 in the bank for a period of one year.<\/span><\/strong><br><strong>Identified Concept:<\/strong> Fixed Deposit.<br><strong>Explanation:<\/strong> Fixed deposits refer to a lumpsum amount deposited by a customer for a specified period of time. Compared to all other deposits, fixed deposits carry a high rate of interest.<\/p>\n\n\n\n<p><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\">4) ABC bank provides d-mat facility, safe deposit lockers, internet banking facilities to its customers.<br><\/mark>Identified Concept:<\/strong> Ancillary functions of Commercial banks.<br><strong>Explanation:<\/strong> Commercial banks also provide a range of ancillary services such as transfer of funds, collection of money, making periodical payments on behalf of the customer, merchant banking, foreign exchange, safe deposit lockers, D-mat facility, internet banking, mobile banking, etc.<\/p>\n\n\n\n<p class=\"has-text-align-center\"><strong><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-notes\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-notes\/\" target=\"_blank\" rel=\"noreferrer noopener\">Solution of other subjects<\/a><br><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-textbook-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-textbook-solutions\/\">Solution of all Chapters of Economics<br><\/a> <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-economics-chapter-1\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-economics-chapter-1\/\" target=\"_blank\" rel=\"noreferrer noopener\">1<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-2\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-2\/\">2<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3a\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3a\/\" target=\"_blank\" rel=\"noreferrer noopener\">3A<\/a> &#8211; <strong><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/\">3B<\/a> &#8211;<\/strong> <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-4-exercise\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-4-exercise\/\" target=\"_blank\" rel=\"noreferrer noopener\">4<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-5-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-5-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">5<\/a><\/strong> <strong>&#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-6-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-6-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">6<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-7-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-7-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">7<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-8-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-8-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">8<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">9<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-10-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-10-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">10<\/a><\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center has-cyan-bluish-gray-background-color has-background\"><span class=\"ez-toc-section\" id=\"Q6_Distinguish_between\"><\/span>Q.6. Distinguish between<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong><span class=\"has-inline-color has-vivid-purple-color\">1) Money market and Capital market.<\/span><\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\">Points<\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>Money Market<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong><strong><strong>Capital Market<\/strong><\/strong><\/strong><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">1)Meaning<\/td><td class=\"has-text-align-center\" data-align=\"center\">Money market is a market for lending and borrowing of short-term funds.<\/td><td class=\"has-text-align-center\" data-align=\"center\">Capital market is a market for long-term funds both equity and debt raised within and outside the<br>country.<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">2) Financial Instruments<\/td><td class=\"has-text-align-center\" data-align=\"center\">Short term instruments such<br>as trade bills, government securities, promissory notes, etc.<\/td><td class=\"has-text-align-center\" data-align=\"center\">Shares, Debentures, Bonds, Retained Earnings, etc.<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">3) Liquidity<\/td><td class=\"has-text-align-center\" data-align=\"center\">Such instruments are highly liquid, less risky, and easily marketable with a maturity<br>period of one year or less than one year.<\/td><td class=\"has-text-align-center\" data-align=\"center\">Such instruments are less liquid, more risky as compared to money market with a Maturity period of more than one year.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong><span class=\"has-inline-color has-vivid-purple-color\"><b>2) <\/b>Demand deposit and Time deposit.<\/span><\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\">Points<\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong><strong><strong>Demand Deposit<\/strong><\/strong><\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong><strong><strong><strong>Time Deposit<\/strong><\/strong><\/strong><\/strong><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">1) Meaning<\/td><td class=\"has-text-align-center\" data-align=\"center\">Deposits that are withdrawable on demand are known as demand deposits.<\/td><td class=\"has-text-align-center\" data-align=\"center\">Deposits that are repayable<br>after a certain period of time are known as time deposits.<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">2) Types<\/td><td class=\"has-text-align-center\" data-align=\"center\">Saving accounts and Current accounts are the types of demand deposits.<\/td><td class=\"has-text-align-center\" data-align=\"center\">Recurring deposits and Fixed deposits are the types of time deposits.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\"><strong><b>3) <\/b>Organized sector and Unorganized sector of money market. <\/strong><\/mark><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\">Points<\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong><strong><strong>Organized Sector<\/strong><\/strong><\/strong> <strong>of Money Market<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong><strong><strong><strong>Unorganized Sector<\/strong><\/strong> <strong>of Money Market<\/strong><\/strong><\/strong><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">1)Meaning<\/td><td class=\"has-text-align-center\" data-align=\"center\">The sector formed by the components of money market that comes under the direct control and supervision of the RBI is the organized sector of the money market.<\/td><td class=\"has-text-align-center\" data-align=\"center\">The sector formed by the components of money market that are not under the direct control and supervision of the RBI is the unorganized sector of the money market.<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">2) Rate of Interest<\/td><td class=\"has-text-align-center\" data-align=\"center\">In this sector, financing is available to borrowers at a relatively low rate of interest.<\/td><td class=\"has-text-align-center\" data-align=\"center\">In this sector, financing is available to borrowers at a relatively high rate of interest.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center has-cyan-bluish-gray-background-color has-background\"><span class=\"ez-toc-section\" id=\"Q7_Answer_the_following\"><\/span>Q.7. Answer the following<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\"><strong>1) Explain the problems faced by the money market in India. <\/strong><\/mark><\/p>\n\n\n\n<p><strong>Answer:<\/strong> Compared to advanced countries, the Indian money market is less developed in terms of volume and liquidity. The following points explain the problems of the Indian Money Market :<\/p>\n\n\n\n<p><strong>1) Dual Structure of the Money Market:<\/strong><\/p>\n\n\n\n<p>The presence of both, the organized and unorganized sectors in the money market leads to disintegration, lack of transparency and increased volatility. The unorganized markets lack co-ordination and do not come under the direct control and supervision of the RBI.<\/p>\n\n\n\n<p><strong>2) Lack of uniformity in the rates of interest:<\/strong><\/p>\n\n\n\n<p>The money market comprises of various entities such as commercial banks, co-operative banks, non-bank finance companies, development finance institutions, investment companies etc. The category of borrowers is also different.<\/p>\n\n\n\n<p><strong>3) Shortage of funds:<\/strong><\/p>\n\n\n\n<p>Money market faces shortage of funds due to inadequate savings. Low per capita income, poor banking habits among the people, indulgence in wasteful consumption, inadequate banking facilities in the rural areas etc. have also been responsible for the paucity of funds in the money market.<\/p>\n\n\n\n<p><strong>4) Seasonal fluctuations:<\/strong><\/p>\n\n\n\n<p>Demand for funds varies as per the seasons. During the peak season, from October to June, finance is required on a large scale for various purposes such as trading in agricultural produce, investment in business activities<br>etc. This results in wide fluctuations in the money market.<\/p>\n\n\n\n<p><strong>5) Lack of financial inclusion:<\/strong><\/p>\n\n\n\n<p>Banking facilities in the country are still inadequate and inaccessible to vulnerable groups such as the weaker sections and the low income groups. This shows a lack of financial inclusion.<\/p>\n\n\n\n<p><strong>6) Delays in technological degradation:<\/strong><\/p>\n\n\n\n<p>The use of advanced technology is a prerequisite for the development and smooth functioning of financial markets. Delays in upgradation of technology hamper the working of the money market.<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\"><strong>2) Explain the functions of commercial bank.<\/strong><\/mark><\/p>\n\n\n\n<p><strong><span class=\"has-inline-color has-vivid-purple-color\">.<\/span>Answer:<\/strong> Prof. Cairncross: \u201cA bank is a financial intermediary, a dealer in loans and debts.\u201d<\/p>\n\n\n\n<p><strong>1) Acceptance of deposits:<\/strong><\/p>\n\n\n\n<p>Deposits constitute the main source of funds for commercial banks. Savings lead to the creation of deposits. Deposits are categorized as (i) Demand deposits and (ii) Time deposits.<br><strong>i) Demand Deposits: <\/strong>Deposits that are withdrawable on demand are known as demand deposits. They are in the form of Current account and Savings account deposits.<br>\u2022 <strong>Current account<\/strong> is usually opened by businessmen, corporations, industrial houses, trusts etc. <br>\u2022 <strong>Savings account<\/strong> are operated by a large number of people, particularly the salaried class, small traders etc.<\/p>\n\n\n\n<p><strong>ii) Time deposits:<\/strong> Deposits that are repayable after a certain period of time are known as time deposits. They are in the form of recurring deposits and time deposits<br>\u2022 <strong>Recurring deposit<\/strong> refers to a deposit wherein a customer deposits a fixed amount at regular intervals for a specified period of time.<br>\u2022 <strong>Fixed deposits<\/strong> refer to a lumpsum amount deposited by a customer for a specified period of time.<\/p>\n\n\n\n<p><strong>2) Providing loans and advances:<\/strong><\/p>\n\n\n\n<p>Commercial banks mobilize savings and lend these funds to institutions and individuals for various purposes. Based on the tenure, loans include call loans, short term, medium-term, and long term loans. Besides this, banks also provide cash credit, overdraft facilities as well as discount bills of exchange.<\/p>\n\n\n\n<p><strong>3) Ancillary functions:<\/strong><\/p>\n\n\n\n<p>Commercial banks also provide a range of ancillary services such as transfer of funds, collection of money, making periodical payments on behalf of the customer, merchant banking, foreign exchange, safe deposit lockers, D-mat facility, internet banking, mobile banking etc.<\/p>\n\n\n\n<p><strong>4) Credit Creation: <\/strong><\/p>\n\n\n\n<p>Credit creation is an important function of commercial banks. Commercial banks are creators of credit. Demand and time deposits constitute the primary deposits of banks. After meeting the reserve requirements out of the net demand and time liabilities, the balance amount is used for giving loans. Thus, secondary<br>deposits or \u2018derivative deposits\u2019 are created out of the loans given by the banks.<\/p>\n\n\n\n<p><strong><span class=\"has-inline-color has-vivid-purple-color\">3) Explain the role of capital market in India.<\/span><\/strong><\/p>\n\n\n\n<p><strong><strong>Answer:<\/strong><\/strong> The following are the roles of capital market in India.<\/p>\n\n\n\n<p><strong>1) Mobilizes long term savings:<\/strong><\/p>\n\n\n\n<p>There is an increasing demand for investment funds by industrial organizations and the government. But the availability of financial resources is insufficient to meet this growing demand. The capital market helps to mobilize long term savings from various sections of the population through the sale of securities.<\/p>\n\n\n\n<p><strong>2) Provides equity capital: <\/strong><\/p>\n\n\n\n<p>Capital market provides equity capital or share capital to entrepreneurs which could be used to purchase assets as well as fund business operations.<\/p>\n\n\n\n<p><strong>3) Operational efficiency: <\/strong><\/p>\n\n\n\n<p>The capital market helps to achieve operational efficiency by lowering transaction costs, simplifying transaction procedures, lowering settlement timings in purchase and sale of stocks.<\/p>\n\n\n\n<p><strong>4) Quick valuation: <\/strong><\/p>\n\n\n\n<p>The capital market helps to determine a fair and quick value of both equity (shares) and debt (bonds, debentures) instruments.<\/p>\n\n\n\n<p><strong>5) Integration: <\/strong><\/p>\n\n\n\n<p>Capital market leads to integration among real and financial sectors, equity and debt instruments, government and private sector, domestic and external funds etc.<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\"><strong>4) Explain the problems of capital market in India.<\/strong><\/mark><\/p>\n\n\n\n<p><strong><strong>Answer: <\/strong><\/strong>The following points explain the problems faced by the Indian Capital Market<\/p>\n\n\n\n<p><strong>1) Financial Scams:<\/strong><\/p>\n\n\n\n<p>An increasing number of financial frauds have resulted in an irreparable loss for the capital market. Besides this, it has also led to public distrust and loss of confidence among the individual investors.<\/p>\n\n\n\n<p><strong>2) Insider trading and price manipulation:<\/strong><\/p>\n\n\n\n<p>Insider trading means buying or selling of a security by someone who has access to non-public information or \u2018unpublished information\u2019 for personal benefit. Price manipulation or price rigging on the other hand means to simply raise the prices of shares through buying and selling of shares within certain individuals themselves for personal gains.<\/p>\n\n\n\n<p><strong>3) Inadequate debt instruments:<\/strong><\/p>\n\n\n\n<p>Debt instruments include bonds, debentures etc. There is not much trading in the debt securities due to narrow investor base, high cost of issuance, lack of accessibility to small and medium enterprises.<\/p>\n\n\n\n<p><strong>4) Decline in the volume of trade: <\/strong><\/p>\n\n\n\n<p>Regional stock exchanges have witnessed a sharp decline in the volume of trade because investors prefer to trade in securities listed in premier stock exchanges like BSE, NSE etc.<\/p>\n\n\n\n<p><strong>5) Lack of informational efficiency: <\/strong><\/p>\n\n\n\n<p>A market is said to be informationally efficient if a company\u2019s stock prices incorporate all the available information into the current prices. However, the stock market in India lacks informational efficiency compared to advanced countries.<\/p>\n\n\n\n<p class=\"has-text-align-center\"><strong><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-notes\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-notes\/\" target=\"_blank\" rel=\"noreferrer noopener\">Solution of other subjects<\/a><br><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-textbook-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-textbook-solutions\/\">Solution of all Chapters of Economics<br><\/a> <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-economics-chapter-1\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-economics-chapter-1\/\" target=\"_blank\" rel=\"noreferrer noopener\">1<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-2\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-2\/\">2<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3a\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3a\/\" target=\"_blank\" rel=\"noreferrer noopener\">3A<\/a> &#8211; <strong><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/\">3B<\/a> &#8211;<\/strong> <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-4-exercise\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-4-exercise\/\" target=\"_blank\" rel=\"noreferrer noopener\">4<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-5-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-5-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">5<\/a><\/strong> <strong>&#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-6-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-6-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">6<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-7-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-7-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">7<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-8-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-8-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">8<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">9<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-10-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-10-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">10<\/a><\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center has-cyan-bluish-gray-background-color has-background\"><span class=\"ez-toc-section\" id=\"Q8_Answer_in_detail\"><\/span>Q.8. Answer in detail<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\"><strong>1) Explain the role of money market in India.<\/strong><\/mark><\/p>\n\n\n\n<p><strong>Answer:<\/strong> A money market is a market for lending and borrowing short-term funds. It is a market for \u201cnear money\u201d i.e. short-term instruments such as trade bills, government securities, promissory notes, etc.<\/p>\n\n\n\n<p><strong>The following points outline the role of the money market in India:<\/strong><\/p>\n\n\n\n<p><strong>1) Short-term requirements of borrowers:<\/strong><\/p>\n\n\n\n<p>The money market provides reasonable access for meeting the short-term financial needs of the borrowers at realistic prices.<\/p>\n\n\n\n<p><strong>2) Liquidity Management:<\/strong><\/p>\n\n\n\n<p>The money market is a dynamic market. It facilitates better management of liquidity and money in the economy by the monetary authorities. This, in turn, leads to economic stability and the development of the country.<\/p>\n\n\n\n<p><strong>3) Portfolio Management:<\/strong><\/p>\n\n\n\n<p>The money market deals with different types of financial instruments that are designed to suit the risk and return preferences of the investors. This enables the investors to hold a portfolio of different financial assets which in turn, helps in minimizing risk and maximizing returns.<\/p>\n\n\n\n<p><strong>4) Equilibrating mechanism: <\/strong><\/p>\n\n\n\n<p>Through the rational allocation of resources and mobilization of savings into investment channels, the money market helps to establish equilibrium between the demand for and supply of short-term funds.<\/p>\n\n\n\n<p><strong>5) Financial requirements of the Government: <\/strong><\/p>\n\n\n\n<p>The money market helps the Government to fulfill its short-term financial requirements based on Treasury Bills.<\/p>\n\n\n\n<p><strong>6) Implementation of Monetary policy:<\/strong><\/p>\n\n\n\n<p>Monetary policy is implemented by the central bank. It aims at managing the quantity of money in order to meet the requirements of different sectors of the economy and to increase the pace of economic growth. A well-developed money market ensures successful implementation of the monetary policy. It guides the central<br>bank in developing an appropriate interest policy.<\/p>\n\n\n\n<p><strong>7) Economizes the use of cash: <\/strong><\/p>\n\n\n\n<p>The money market deals with various financial instruments that are close substitutes of money and not actual money. Thus, it economizes the use of cash.<\/p>\n\n\n\n<p><strong>8) Growth of Commerce, Industry and Trade:<\/strong><\/p>\n\n\n\n<p>The money market facilitates discounting bills of exchange to local and international traders who are in urgent need of short-term funds. It also provides working capital for agriculture and small-scale industries.<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\"><strong>2) Explain the functions of RBI.<\/strong><\/mark><\/p>\n\n\n\n<p><strong>Answer:<\/strong> Every country in the world has a Central Bank which is at the apex of the banking system. It is entrusted with the responsibility of regulating the money market in the country. The Reserve Bank of India is the central bank of our country.<\/p>\n\n\n\n<p>.<strong>Functions of the Reserve Bank of India are as follows.<\/strong><\/p>\n\n\n\n<p><strong>1) Issue of Currency Notes:<\/strong><\/p>\n\n\n\n<p>RBI has the sole right to issue currency notes of all denominations, except one rupee note and coins. As per the \u2018Minimum Reserve System\u2019 of 1957, RBI is required to maintain minimum gold and foreign exchange reserves of Rs 200 crores, out of which at least Rs 115 crores should be in gold and the remaining Rs 85 crores should be in terms of foreign currency and government securities.<\/p>\n\n\n\n<p><strong>2) Banker to the Government:<\/strong><\/p>\n\n\n\n<p>RBI acts as a banker, agent, and advisor to the Government. It transacts the business of both, the Central and State Governments. It accepts money as well as makes payments on behalf these Governments. It also undertakes the management of public debt. It advises the Government on a wide range of economic issues.<\/p>\n\n\n\n<p><strong>3) Banker\u2019s Bank:<\/strong><\/p>\n\n\n\n<p>RBI exercises statutory control over commercial banks. All scheduled banks are compulsorily required to maintain a certain minimum of cash reserves with the RBI against their demand and time liabilities. RBI provides financial assistance to banks in the form of discounting of eligible bills. Loans and advances are<br>also provided against approved securities.<\/p>\n\n\n\n<p><strong>4) Custodian of Foreign Exchange Reserves: <\/strong><\/p>\n\n\n\n<p>RBI acts as a custodian of the country\u2019s foreign exchange reserves. It has to maintain the official rate of exchange of rupee as well as ensure its stability. RBI also undertakes to buy and sell the currencies of all the members of the International Monetary Fund (IMF).<\/p>\n\n\n\n<p><strong>5) Controller of Credit:<\/strong><\/p>\n\n\n\n<p>As a supreme banking authority of the country, RBI has the power to influence the volume of credit created<br>by commercial banks. It also monitors the purpose or use of credit. Quantitative methods such as bank rate, open market operations, variable reserve ratios such as Cash Reserve Ratio (CRR), Statutory Liquid Ratio (SLR), etc. control the volume of credit created. Qualitative methods such as fixing margin requirements, credit rationing, moral suasion, etc. regulate the purpose or use of credit.<\/p>\n\n\n\n<p><strong>6) Collection and Publication of Data:<\/strong><\/p>\n\n\n\n<p>RBI collects and compiles statistical information related to banking and other financial sectors of the economy.<\/p>\n\n\n\n<p><strong>7) Promotional and Developmental Functions:<\/strong><\/p>\n\n\n\n<p>RBI also performs certain promotional and developmental functions such as extending banking services to semi-urban and rural areas, providing security to depositors, developing specialized institutions for agricultural credit, industrial finance, etc.<\/p>\n\n\n\n<p><strong>8) Other Functions:<\/strong><\/p>\n\n\n\n<p>RBI acts as a clearinghouse for settling the accounts between its member banks. As a lender of last resort, it also provides liquidity to banks experiencing financial difficulty.<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center has-cyan-bluish-gray-background-color has-background\"><span class=\"ez-toc-section\" id=\"Extra_Questions\"><\/span>Extra Questions<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Answer the following questions.<\/strong><\/p>\n\n\n\n<p class=\"has-text-align-center\"><strong><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-notes\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-notes\/\" target=\"_blank\" rel=\"noreferrer noopener\">Solution of other subjects<\/a><br><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-textbook-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-textbook-solutions\/\">Solution of all Chapters of Economics<br><\/a> <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-economics-chapter-1\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-economics-chapter-1\/\" target=\"_blank\" rel=\"noreferrer noopener\">1<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-2\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-2\/\">2<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3a\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3a\/\" target=\"_blank\" rel=\"noreferrer noopener\">3A<\/a> &#8211; <strong><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/\">3B<\/a> &#8211;<\/strong> <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-4-exercise\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-4-exercise\/\" target=\"_blank\" rel=\"noreferrer noopener\">4<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-5-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-5-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">5<\/a><\/strong> <strong>&#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-6-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-6-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">6<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-7-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-7-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">7<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-8-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-8-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">8<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">9<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-10-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-10-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">10<\/a><\/strong><\/p>\n\n\n\n<div class=\"wp-block-columns is-layout-flex wp-container-core-columns-is-layout-9d6595d7 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\" style=\"flex-basis:100%\">\n<div class=\"wp-block-columns is-layout-flex wp-container-core-columns-is-layout-9d6595d7 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\" style=\"flex-basis:100%\">\n<h3 class=\"wp-block-heading has-text-align-center\"><span class=\"ez-toc-section\" id=\"Solution_of_all_Chapters_of_Economics\"><\/span>Solution of all Chapters of Economics<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Chapter Name <\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>Solution Link<\/strong><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">1) Introduction to Micro and Macro Economics<\/td><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-economics-chapter-1\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-economics-chapter-1\/\" rel=\"noreferrer noopener\">Click Here<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">2) Utility Analysis<\/td><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-2\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-2\/\" rel=\"noreferrer noopener\">Click Here<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">3A) Demand Analysis<\/td><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3a\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3a\/\" rel=\"noreferrer noopener\">Click Here<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">3B) Elasticity of Demand<\/td><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/\" rel=\"noreferrer noopener\">Click Here<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">4) Supply Analysis<\/td><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-4-exercise\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-4-exercise\/\" rel=\"noreferrer noopener\">Click Here<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">5) Forms of Market<\/td><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-5-solutions\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-5-solutions\/\" rel=\"noreferrer noopener\">Click Here<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">6) Index Numbers<\/td><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-6-solutions\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-6-solutions\/\" rel=\"noreferrer noopener\">Click Here<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">7) National Income<\/td><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-7-solutions\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-7-solutions\/\" rel=\"noreferrer noopener\">Click Here<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">8) Public Finance in India<\/td><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-8-solutions\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-8-solutions\/\" rel=\"noreferrer noopener\">Click Here<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">9) Money Market and Capital Market in India<\/td><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/\" rel=\"noreferrer noopener\">Click Here<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">10) Foreign Trade of India<\/td><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-10-solutions\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-10-solutions\/\" rel=\"noreferrer noopener\">Click Here<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center\"><span class=\"ez-toc-section\" id=\"Check_out_other_posts_related_to_the_12th_Commerce\"><\/span>Check out other posts related to the 12th Commerce<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Textbook Solutions of 12th Commerce (All Subjects)<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-notes\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-notes\/\" rel=\"noreferrer noopener\">Click Here<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong> Free pdf of 12th Commerce Textbooks <\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/ebalbharti-12th-books-pdf\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/ebalbharti-12th-books-pdf\/\" rel=\"noreferrer noopener\">Click Here<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>12th Commerce IT MCQ Preparation (Online Test)<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/hsc-it-online-exam\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/online-mcq-test-of-it-for-class-12-commerce\/\" rel=\"noreferrer noopener\">Click Here<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>12th Commerce Paper Pattern and Chapter Wise Marks Distribution<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/new-paper-pattern-of-12th-commerce\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/new-paper-pattern-of-12th-commerce\/\" rel=\"noreferrer noopener\">Click Here<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Sample Paper of 12th Commerce for Practice<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/sample-question-paper-for-12th-commerce\/\" target=\"_blank\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/sample-question-paper-for-12th-commerce\/\" rel=\"noreferrer noopener\">Click Here<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Solved Sample papers of 12th Commerce to improve Paper Presentation<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-navneet-practice-papers-pdf\/\" target=\"_blank\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-navneet-practice-papers-pdf\/\" rel=\"noreferrer noopener\">Click Here<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Old Question Papers of 12th Commerce with solution (All Subjects)<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/hsc-previous-year-question-paper\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/hsc-previous-year-question-paper\/\">Click Here<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":12204,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[5],"tags":[4044],"class_list":["post-12104","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-hsc-maharashtra-board","tag-12th-economics-chapter-9-solutions"],"_links":{"self":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/12104","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/comments?post=12104"}],"version-history":[{"count":8,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/12104\/revisions"}],"predecessor-version":[{"id":35744,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/12104\/revisions\/35744"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media\/12204"}],"wp:attachment":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media?parent=12104"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/categories?post=12104"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/tags?post=12104"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}