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Money and Banking

CBSE · Class 12 · Economics

Complete topic list for Money and Banking in CBSE Class 12 Economics. Key concepts, sub-topics, and what to focus on for board exams.

92 questions84 flashcards5 concepts

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A comparison showing the difficulties of a barter system (double coincidence of wants, storage issues) versus the ease of transactions with money as a medium of exchange, unit of account, and store of
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4 Topics · CBSE Class 12 Economics

Topics in Money and Banking

1

1. Meaning and Functions of Money

  • Money removes the difficulty of barter exchange, where goods are exchanged directly without money.
  • Barter exchange suffers from lack of double coincidence of wants.
  • Money acts as a common medium accepted by both sides in a transaction.
2

2. Demand for Money

  • People hold money mainly for transaction motive and speculative motive.
  • Transaction demand depends on the value of transactions in the economy.
  • Higher income or higher price level raises transaction demand for money.
3

3. Money Supply and Measures of Money

  • In a modern economy, money consists mainly of currency notes and coins and bank deposits.
  • RBI is the central bank of India and was established in 1935.
  • RBI issues currency notes and controls money supply.
4

4. Money Creation by Commercial Banks

  • Banks can create deposits through lending.
  • The fictional goldsmith Lala shows how credit creation works.
  • When Lala lends gold, the borrower can spend it, and the receiver may deposit it back, expanding money.

Key Concepts

Central concept: Money and Banking in Introductory Macroeconomics

MoneySupply of MoneyReserve Bank of IndiaCommercial BanksMoney CreationPolicy ToolsDemand for MoneyBond Market and Interest Rate

Frequently Asked Questions

What are the important topics in Money and Banking for CBSE Class 12 Economics?
Money and Banking covers several key topics that are frequently asked in CBSE Class 12 board exams. Focus on the core concepts listed on this page and practise related questions to build confidence.
How to score full marks in Money and Banking — CBSE Class 12 Economics?
Understand the core concepts first, then work through the 92 practice questions available for this chapter. Revise formulas and definitions regularly, and use flashcards for quick recall before the exam.

Sources & Official References

Content is aligned to the official syllabus. Refer to the board website for the latest curriculum.

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All 12 chapters — CBSE Class 12 Economics Syllabus

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