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Karnataka Class 12 Commerce Economics Chapter 9 Money And Banking Complete Information

Karnataka Class 12 Commerce Economics Chapter 9 Money And Banking Complete Information

Karnataka Class 12 Commerce Economics Chapter 9 Money And Banking :  Karnataka University (Kannada: ಕರ್ನಾಟಕ ವಿಶ್ವವಿದ್ಯಾಲಯ) is a state university located in the city of Dharwad in the state of Karnataka in India. It was established in October 1949, and officially inaugurated in March 1950. The campus spans 750 acres (3 km²). D. C. Pavate was the first official vice-chancellor from 1954 to 1967. The rapid development of the institution is credited to him.

The university was recognized with the “Potential for Excellence” by the University Grants Commission. The university is the second oldest university in the state of Karnataka after the University of Mysore. The Karnatak university once used to serve most of the Karnataka region including Dharwad, Belagavi, Uttara Kannada, Bijapur, Gulbarga, Raichur, Bidar and Bellary. until the 1980s (Manipal Institute of Technology and the Kasturba Medical College of Manipal were affiliated with Karnatak University at Dharwad and all degrees were awarded by Karnatak University in between the years from 1953 to 1965)

Karnataka Class 12 Commerce Economics Chapter 9 Money And Banking Complete Information

Karnataka Class 12 Commerce Economics Chapter 9 Money And Banking :  Money can be thought of as any good that is widely used or accepted in the transfer of goods and services. Today, there are three common forms of money in use. Commodity money is a good whose inherent value serves as the value of money – gold or silver being one good example. Fiat money is a good whose value is less than the value of money it represents – paper money, for instance. Bank money consists of accounting credits that can be drawn on by the depositor – checking accounts, for instance.

Money serves multiple functions in an economy. Money is first and foremost a medium of exchange. When all parties in an economy will accept money, it eliminates the need for a double coincidence of wants that goes with barter – that is, both parties have to want what the other is offering. Accordingly, money as a medium of exchange is much faster and more convenient in commerce.

Money also is supposed to hold value over time. A dollar bill or gold coin will still be valuable tomorrow or a year from now, but a fish has very little value after a couple of days because of decomposition.

Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts in a particular country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, sometimes, a standard of deferred payment. Any item or verifiable record that fulfills these functions can be considered as money.

Karnataka Class 12 Commerce Economics Chapter 9 Money And Banking Complete Information

Karnataka Class 12 Commerce Economics Chapter 9 Money And Banking : We provides here Karnataka Class 12 Commerce Economics Chapter 9 Money And Banking Complete Information Topic Wise in PDF Format and here we gave direct download links for Karnataka Class 12 Commerce Economics Chapter 9 Money And Banking Topic Wise Complete Information in pdf format. Download  Karnataka Class 12 Commerce Economics Chapter 9 Money And Banking Complete Information here and read well.

Karnataka Class 12 Commerce Economics Definition And Functions Of Money Complete Notes

Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts in a particular country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, sometimes, a standard of deferred payment. Any item or verifiable record that fulfills these functions can be considered as money.

Money is historically an emergent market phenomenon establishing a commodity money, but nearly all contemporary money systems are based on fiat money.[4] Fiat money, like any check or note of debt, is without use value as a physical commodity. It derives its value by being declared by a government to be legal tender; that is, it must be accepted as a form of payment within the boundaries of the country, for “all debts, public and private”.

The money supply of a country consists of currency (banknotes and coins) and, depending on the particular definition used, one or more types of bank money (the balances held in checking accounts, savings accounts, and other types of bank accounts). Bank money, which consists only of records (mostly computerized in modern banking), forms by far the largest part of broad money in developed countries.

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Karnataka Class 12 Commerce Economics Demand For Money Complete Notes

In economics, demand for money is the desired holding of financial assets in the form of money: that is, cash or bank deposits rather than investments. It can refer to the demand for money narrowly defined as M1 (non-interest-bearing holdings), or for money in the broader sense of M2 or M3.

Money in the sense of M1 is dominated as a store of value by interest-bearing assets. However, money is necessary to carry out transactions; in other words, it provides liquidity. This creates a trade-off between the liquidity advantage of holding money and the interest advantage of holding other assets. The demand for money is a result of this trade-off regarding the form in which a person’s wealth should be held. In macroeconomics motivations for holding one’s wealth in the form of money can roughly be divided into the transaction motive and the asset motive. These can be further subdivided into more micro economically founded motivations for holding money.

Generally, the nominal demand for money increases with the level of nominal output (price level times real output) and decreases with the nominal interest rate. The real demand for money is defined as the nominal amount of money demanded divided by the price level. For a given money supply the locus of income-interest rate pairs at which money demand equals money supply is known as the LM curve.

The magnitude of the volatility of money demand has crucial implications for the optimal way in which a central bank should carry out monetary policy and its choice of a nominal anchor.

Conditions under which the LM curve is flat, so that increases in the money supply have no stimulatory effect (a liquidity trap), play an important role in Keynesian theory. This situation occurs when the demand for money is infinitely elastic with respect to the interest rate.

A typical money-demand function may be written as

{\displaystyle M^{d}=P*L(R,Y)\,}M^{d}=P*L(R,Y)\,

where {\dis play style M^{d}}M^{d} is the nominal amount of money demanded, P is the price level, R is the nominal interest rate, Y is real output, and L(.) is real money demand. An alternate name for {\dis play style L(R,Y)}L(R,Y) is the liquidity preference function.

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Karnataka Class 12 Commerce Economics Supply Of Money Complete Notes

Is it a hard science used by bankers to make money? Like alchemists who conjure gold? Is it about politics and accounting? Though its ancient etymology defines it as “the science of wealth” its meaning has expanded over time, and it is now a social science of the factors influencing “well-being” as formally described by the Quality Assurance Agency For Higher Education.

Download here Karnataka Class 12 Commerce Economics Supply Of Money Complete Notes In PDF Format 

The total supply of money in circulation in a given country’s economyat a given time. There are several measures for the money supply, such as M1, M2, and M3. The money supply is considered an important instrument for controlling inflation by those economists who say that growth in money supply will only lead to inflation if money demand is stable. In order to control the money supply, regulators have to decide which particular measure of the money supply to target. The broader the targeted measure, the more difficult it will be to control that particular target. However, targeting an unsuitable narrow money supply measure may lead to a situation where the total money supply in the country is not adequately controlled.

Use money supply in a sentence

“ The money supply was controlled by the federal reserve as they had the ability to print money at any time. ”

Definition: The total stock of money circulating in an economy is the money supply. The circulating money involves the currency, printed notes, money in the deposit accounts and in the form of other liquid assets.

Description: Valuation and analysis of the money supply help the economist and policy makers to frame the policy or to alter the existing policy of increasing or reducing the supply of money. The valuation is important as it ultimately affects the business cycle and thereby affects the economy.

Periodically, every country’s central bank publishes the money supply data based on the monetary aggregates set by them. In India, the Reserve Bank of India follows M0, M1, M2, M3 and M4 monetary aggregates

Karnataka Class 12 Commerce Economics Commercial Banks Complete Notes

A commercial bank is a type of financial institution that provides services such as accepting deposits, making business loans, and offering basic investment products. Commercial bank can also refer to a bank, or a division of a large bank, which more specifically deals with deposit and loan services provided to corporations or large/middle-sized business – as opposed to individual members of the public/small business – retail banking, or merchant banks.

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Chamber’s Twentieth Century Dictionary defines a bank as an “institution of the keeping, lending and exchanging, etc. of money.” Economists have also defined a bank highlighting its various functions. According to Crowther, “The banker’s business is to take the debts of other people to offer his own in exchange, and thereby create money.”  A similar definition has been given by Kent who defines a bank as “an organisation whose principal operations are concerned with the accumulation of the temporarily idle money of the general public for the purpose of advancing to others for expenditure.

Sayers, on the other hand, gives a still more detailed definition of a bank thus: “Ordinary banking business consists of changing cash for bank deposits and bank deposits for cash; transferring bank deposits from one person or corporation (one ‘depositor’) to another; giving bank deposits in exchange for bills of exchange, government bonds, the secured or unsecured promises of businessmen to repay, etc.” Thus a bank is an institution which accepts deposits from the public and in turn advances loans by creating credit. It is different from other financial institutions in that they cannot create credit though they may be accepting deposits and making advances.

Karnataka Class 12 Commerce Economics Central Bank Complete Notes

A central bank, reserve bank, or monetary authority is an institution that manages a state’s currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the monetary base in the state, and usually also prints the national currency,which usually serves as the state’s legal tender.

The main function of a central bank is to control the nation’s money supply (monetary policy), through active duties such as managing interest rates, setting the reserve requirement, and acting as a lender of last resort to the banking sector during times of bank insolvency or financial crisis. Central banks usually also have supervisory powers, intended to prevent bank runs and to reduce the risk that commercial banks and other financial institutions engage in reckless or fraudulent behavior. Central banks in most developed nations are institutionally designed to be independent from political interference. Still, limited control by the executive and legislative bodies usually exists.

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Karnataka Class 12 Commerce Economics Chapter 9 Money And Banking Complete Information

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