Economics · Class 12 Commerce
Ch 5Monetary Economics — Class 12 Economics, concept-first.
Money is anything that is generally accepted by people as a medium of exchange and in the settlement of debts. Notice that acceptability, not any physical property, is what makes an object money.
Key concepts
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Functions of Money
Functions of Money
Most relevant Q&A
- Explain the primary, secondary and contingent functions of money.Free
- What is meant by barter and what are its main difficulties? How does money overcome them?Free
- Which one is Primary Function of Money ? (a) Basis of the Credit System (b) Medium of Exchange (c) Store of Value (d) Standard of Deferred P…Preview
- What is Plastic Money ? Give example.Preview
- Define Money.Preview
In previous exams
How often this chapter’s concepts have been examined — real appearance data, never estimated.
Chapter contents
The NCERT structure, section by section. Open a section to see its questions, then read the concept-first solution.
Meaning and Functions of Money
Money is anything that is generally accepted by people as a medium of exchange and in the settlement of debts. Notice that acceptability, not any physical property, is what makes an object money.
Evolution of Money
Money did not appear in its present form overnight; it evolved through stages as societies searched for a more convenient medium of exchange.
Value of Money and the Price Level
The value of money means its purchasing power — the quantity of goods and services that one unit of money can buy.
The Quantity Theory of Money
The Quantity Theory of Money (QTM) explains what determines the value of money and the price level. In its simplest form it states that, other things remaining equal, the general price level varies di…
Inflation
Inflation is a sustained rise in the general price level of goods and services over a period of time, accompanied by a fall in the value of money.
Money Supply and Its Components
The money supply is the total stock of money held by the public at a given point of time. It is a stock concept (measured on a date), not a flow, and it deliberately excludes money held by the governm…
Exercises
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- Q5Explain the primary, secondary and contingent functions of money.Free
- Q6What is meant by barter and what are its main difficulties? How does money overcome them?Free
- Q7Explain the relationship between the value of money and the general price level.Free
- Q8State Fisher's equation of exchange and explain each term. What does it conclude about the price level?Preview
- Q9Distinguish between Fisher's transactions approach and the Cambridge cash-balance approach to the Quantity Theory of Money.Preview
- Q10Distinguish between demand-pull inflation and cost-push inflation.Preview
- Q11Discuss the effects of inflation on different sections of society.Preview
- Q12What is money supply? Briefly explain its components M1 and M3.Preview
Sample & Board Papers
Sample papers and previous-year board questions for this subject.
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- Q1Which one is Primary Function of Money ? (a) Basis of the Credit System (b) Medium of Exchange (c) Store of Value (d) Standard of Deferred P…Preview
- Q2Define the term 'Inflation'.Preview
- Q3What is Plastic Money ? Give example.Preview
- Q4What are the determinants of Money Supply ?Preview
- Q5(a) What are the causes of Inflation in India ? OR (b) What are the objectives of Monetary Policy ? Explain it.Preview
- Q6Mild Inflation is also known as ________. (a) Creeping Inflation (b) Walking Inflation (c) Galloping Inflation (d) Running InflationPreview
- Q7What are the determinants of money supply ?Preview
- Q8In 2016, Demonetization of currency includes denominations of ________. (a) ₹ 1000 and ₹ 2000 (b) ₹ 200 and ₹ 500 (c) ₹ 500 and ₹ 1000 (d) A…Preview
- Q9MV Stands for : (a) Supply of Bank money (b) Demand for money (c) Total Supply of money (d) Supply of Legal Tender moneyPreview
- Q10Define Money.Preview
- Q11Explain Demand-Pull and Cost-push inflation.Preview
- Q12(a) Explain the functions of Money. OR (b) Discuss the differences between Internal Trade and International Trade.Preview
- Q13Inflation means : (a) Value of money is increasing (b) Prices are rising (c) Prices are remaining the same (d) Prices are fallingPreview
- Q14Irving Fisher's Quantity Theory of Money was popularized in : (a) 1911 (b) 1908 (c) 1914 (d) 1910Preview
- Q15What is Plastic Money ? Give example.Preview
- Q16When the prices rise slowly, we call it as : (a) deflation (b) galloping inflation (c) mild inflation (d) hyper inflationPreview
- Q172016 Demonetization of currency includes denominations of : (a) ₹ 500 and ₹ 1000 (b) ₹ 200 and ₹ 500 (c) ₹ 1000 and ₹ 2000 (d) Both (a) and…Preview
- Q18Define the term ‘Inflation’.Preview
- Q19What is Deflation ?Preview
- Q20Explain Demand-Pull and Cost Push Inflation.Preview
- Q21Irving Fisher's Quantity Theory of Money was popularized in ______. (a) 1911 (b) 1908 (c) 1914 (d) 1910Preview
- Q22What is Stagflation ?Preview
- Q23What is Money Supply ?Preview
More questions
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- Example 1In an economy the money supply is ₹1,000 crore, the velocity of circulation is 8, and the total volume of transactions is 4,000 crore units…Free
- Example 2The price level in a country is 4, the velocity of circulation of money is 10, and the total volume of transactions is 5,000 crore units. Us…Free
- Example 3In an economy, the quantity of money is ₹5,000 crore, the general price level is 3, and the total volume of transactions is 20,000 crore uni…Preview
- Example 4In the Cambridge cash-balance approach, the money supply is ₹800 crore, the community wishes to hold one-fourth (k = 0.25) of its real incom…Preview