Money and Credit — Practice Quiz

Current Account

Step 1: Different types of accounts serve different purposes and customer segments. Step 2: Current accounts are specifically designed for business firms, traders, and public authorities. Step 3: These accounts are opened for the convenience of making frequent payments by cheques rather than earning interest. Step 4: Savings accounts are for individuals to save money, while fixed deposits are for investment purposes. Step 5: Therefore, current account is the correct answer for business firms and traders.

Cattle in Greece

Step 1: Commodity money refers to commodities that were used as money in different economies. Step 2: The chapter mentions specific examples: cattle in Greece, sheep in Rome, and teeth in China. Step 3: Paper notes represent paper money, which came later in evolution. Step 4: Credit cards and cheques are examples of bank money or near money assets. Step 5: Therefore, 'cattle in Greece' is the correct example of commodity money from the given options.

Finding someone who has what you want and wants what you have

Step 1: Double coincidence of wants was a major problem in the barter system. Step 2: It means you need to find a person who not only has the commodity you want but also wants the commodity you have to offer. Step 3: For example, if person A has a cow and wants sheep, A must find someone who has sheep and specifically wants a cow in exchange. Step 4: This mutual need requirement made trading extremely difficult and time-consuming. Step 5: Therefore, the correct definition is finding someone who has what you want and wants what you have.

Land Mortgage Banks

Step 1: Different types of banks specialize in different kinds of business. Step 2: Land Mortgage Banks are cooperative banks that specifically provide long-term loans to agriculturists. Step 3: These loans are used for permanent improvements on land such as drainage, irrigation, and farm buildings. Step 4: They are also called Land Development Banks. Step 5: Commercial banks provide general banking services, exchange banks deal with foreign trade, and industrial banks serve industries. Therefore, Land Mortgage Banks is the correct answer.