Money and Banking (Economic Development) Part-II

Total Questions: 268

241. 'Smart Money' is a term used for : [U.P. Lower Sub. (Pre) 2008]

Correct Answer: (b) Credit Card
Solution:
  • Credit cards are sometimes referred to as "smart money" because they allow for cashless transactions and offer convenience in various settings, including online purchases and in-store payments.
  • They are a form of electronic payment that can be used at millions of locations worldwide.
  • Credit cards are a form of borrowing, allowing users to make purchases even without immediate funds, with the understanding that the borrowed amount will be repaid later, often with interest.
  • In the broader financial sense, "smart money" refers to investments made by individuals or institutions with deep knowledge and experience in financial markets.
  • This includes institutional investors, hedge funds, and other sophisticated market participants who are believed to have a better understanding of market trends and investment strategies than retail investors.
  • They are often seen as having access to better information and resources, allowing them to make more informed investment decisions and potentially generate higher returns.

242. What is called 'Plastic Money'? [Uttarakhand U.D.A./L.D.A. (Pre) 2007]

Correct Answer: (b) Credit Card
Solution:Plastic money refers to payment methods executed through cards that are predominantly made of plastic with metal components. Credit cards and debit cards are the best examples of plastic money, which allow people to make electronic transactions with the availability of their financial information saved securely.
The manufacturing or invention of these cards has been a fair replacement for physical money, which is cash. Plastic money also helps you with hassle-free transactions, unlike physical money. With plastic money, there is no constant need to visit your banks for your transactions or every time you want money and are cashless.
Advantages of plastic money.
Convenience
One of the most important and foremost advantages of having plastic money is that it reduces the use of traditional payment modes and allows hassle-free payments. One can easily pay without having cash, simply with one swipe or tap.
Security
Another major advantage of plastic money is that it provides security. With the use of plastic money, there is no threat of money being stolen or lost. Unlike old-fashioned traditional money formats, using plastic money like debit card and credit card can save you from loss. If your card is lost or stolen, you can report it and block it. It also comes with a specific EVM number and chip, with double authentication for better security.
Record Keeping
You don't need to keep a written record like you do with traditional money and expenditures. With plastic money, the issuing entity does the hard work for you. It keeps a detailed record of all your transactions, which can be easily available online using a specific password ID. You can allocate expenses and budget accordingly, ensuring efficient financial planning and management.
Global Acceptance
Using plastic money, including a Forex card, there is no geographical limitation. Unlike traditional cash, plastic money allows you to spend money anywhere in the world due to its global acceptance factor without worrying about currency exchange.
Emergency Access to Funds
Using plastic money, there is no worry about emergency access to funds, as you can make payments with simple swipes, not depending on your banks and withdrawals. In addition, the limit of online transactions is comparatively high and can easily be accessed with a specific pin.

Rewards and Benefits
With plastic payments, there are several benefits, given by credit card providers like Kotak Mahindra Bank. With swipe, returns, discounts, and other benefits are common, especially when you are doing online shopping.

243. The term 'Plastic money' applies to : [U.P.P.C.S. (Mains) 2006]

Correct Answer: (d) Credit Cards mainly issued by the banks
Solution:Plastic money refers to payment methods executed through cards that are predominantly made of plastic with metal components. Credit cards and debit cards are the best examples of plastic money, which allow people to make electronic transactions with the availability of their financial information saved securely.
The manufacturing or invention of these cards has been a fair replacement for physical money, which is cash. Plastic money also helps you with hassle-free transactions, unlike physical money. With plastic money, there is no constant need to visit your banks for your transactions or every time you want money and are cashless.
Advantages of plastic money.
Convenience
One of the most important and foremost advantages of having plastic money is that it reduces the use of traditional payment modes and allows hassle-free payments. One can easily pay without having cash, simply with one swipe or tap.
Security
Another major advantage of plastic money is that it provides security. With the use of plastic money, there is no threat of money being stolen or lost. Unlike old-fashioned traditional money formats, using plastic money like debit card and credit card can save you from loss. If your card is lost or stolen, you can report it and block it. It also comes with a specific EVM number and chip, with double authentication for better security.
Record Keeping
You don't need to keep a written record like you do with traditional money and expenditures. With plastic money, the issuing entity does the hard work for you. It keeps a detailed record of all your transactions, which can be easily available online using a specific password ID. You can allocate expenses and budget accordingly, ensuring efficient financial planning and management.
Global Acceptance
Using plastic money, including a Forex card, there is no geographical limitation. Unlike traditional cash, plastic money allows you to spend money anywhere in the world due to its global acceptance factor without worrying about currency exchange.
Emergency Access to Funds
Using plastic money, there is no worry about emergency access to funds, as you can make payments with simple swipes, not depending on your banks and withdrawals. In addition, the limit of online transactions is comparatively high and can easily be accessed with a specific pin.

Rewards and Benefits
With plastic payments, there are several benefits, given by credit card providers like Kotak Mahindra Bank. With swipe, returns, discounts, and other benefits are common, especially when you are doing online shopping.

244. PIN in banking transaction is known as : [U.P.R.O./A.R.O. (Pre) 2023]

Correct Answer: (c) Personal Identification Number
Solution:In banking transactions, personal identification number (PIN) is numerical code issued with a payment card that is required to be entered to complete various financial transactions. The core purpose of a personal identification number (PIN) is to provide and additional layer of security to the electronic transaction process.
  • Debit cards are the most common instance in which individuals will need to use a personal identification number (PIN), primarily when they withdraw money from their bank account.
  • As PINs are used to verify an individual's identity, they are also used in many other instances, such as home security and mobile phones.
  • It is recommended to choose a personal identification number (PIN) that is longer than shorter, hard to guess, and not related to personal information, such as a birthday or Social Security Number.
  • As merchant transactions are easy to complete with a card, the use of a personal identification number (PIN) guards against any fraudulent behavior.

245. Which one of the following is not a prepaid payment instrument ? [U.P.P.C.S. (Mains) 2014]

Correct Answer: (c) Credit Card of a Nationalized Bank
Solution:Credit card of a nationalized bank is not a prepaid payment instrument, and rest of the options are prepaid payment instrument .

About Prepaid Payment Instruments:

  • These are instruments that facilitate the purchase of goods and services, conduct of financial services and enable remittance facilities, among others, against the money stored in them. PPIs can be issued as cards or wallets.
  • There are two types of PPIs - small PPIs and full-KYC (know your customer) PPIs.
  • Further, small PPIs are categorized as - PPIs up to Rs 10,000 (with cash loading facility) and PPIs up to Rs 10,000 (with no cash loading facility).
  • PPIs can be loaded/reloaded by cash, debit to a bank account, or credit and debit cards.
  • The cash loading of PPIs is limited to Rs 50,000 per month subject to the overall limit of the PPI.

246. For the existence of a market which is indispensable ? [M.P.P.C.S. (Pre) 1997]

Correct Answer: (c) Prices
Solution:Market is the place, where commodities and services are purchased and sold. The buying selling of commodities and service are occured on the basis of production costs, which is called commodities or service price. So, for the existence of a market, prices are indispensable.
  • Prices enable the exchange of goods and services by establishing a value for them. They allow buyers and sellers to interact and agree on terms of trade.
  • Prices act as signals to both consumers and producers. Rising prices can indicate shortages, prompting producers to increase supply and signaling to consumers to potentially reduce demand. Conversely, falling prices can indicate surpluses, encouraging producers to decrease supply and signaling to consumers to potentially increase demand.
  • Prices play a vital role in allocating resources efficiently. In a market system, prices help determine how resources are used, directing them towards the production of goods and services that are most valued by consumers.
  • Prices are a key element in driving competition between businesses, as companies compete to offer the best prices to attract customers.

247. Market is an economic tendency, which leads to which of the following trends ? [U.P. Lower Sub. (Pre) 2013]

Correct Answer: (b) Consumerism
Solution:Market is an economic tendency, which leads to consumerism.
  • Consumerism refers to a societal and economic system where the act of buying and consuming goods and services is emphasized and encouraged. It's deeply intertwined with capitalism, as consumer spending is a key driver of economic growth in this system. Consumerism is often associated with a focus on material possessions and the belief that acquiring them contributes to happiness or well-being.
  • Individualism emphasizes individual rights, freedoms, and self-reliance. While consumerism can sometimes align with individualistic values (such as the freedom to choose what to buy), it's not synonymous with the concept itself.
  • Individualism encompasses a broader range of personal choices and values.
    Holism focuses on the interconnectedness of parts within a system and how the whole is greater than the sum of its parts. Consumerism, in contrast, often promotes individualistic consumption and the acquisition of material goods, which contradicts a holistic perspective.
  • Capitalism is an economic system characterized by private ownership of the means of production and profit motive. While consumerism is closely linked to capitalism, it's not synonymous with it. Capitalism is a broader economic system that encompasses various aspects beyond consumption. Consumerism represents a specific societal and cultural phenomenon that
    leverages the mechanisms of capitalism.

248. The buyer's market is known where : [U.P.P.C.S. (Mains) 2010]

Correct Answer: (a) Supply is more than the demand
Solution:A buyer's market refers to a situation where supply exceeds demand, and purchasers have an advantage over sellers in price negotiations.

The term buyer's market is commonly used to describe real estate conditions, but it can apply to any type of market where conditions favor buyers. The opposite of a buyer's market is a seller's market, a situation in which conditions favor sellers.
Factors that can increase supply include:

  • Entry of new sellers into a market
  • Decrease in demand for alternative uses for the good
  • Technological improvements that lower the costs of production

Factors that can decrease demand, meanwhile, include:

  • Exit of buyers from the market
  • Change in consumer preferences
  • Increased availability of substitute goods

249. Given below are two statements. One is labelled as Assertion (A) and the other as Reason (R) : [U.P.R.O./A.R.O. (Pre) 2023]

Assertion (A) : Accounting is the language of business.

Reason (R) : Accounting provides all information needed by a businessman.

Select the correct answer using the codes given below :

Correct Answer: (a) Both (A) and (A) are true and (R) is the correct explanation of (A).
Solution:Accounting is often referred to as the 'language of business' because it serves to communicate financial information about a company or organization. This vital function enables stakeholders, such as investors, creditors, and management, to understand a company's financial performance and position.

Accounting plays a vital role in running a business as it provides all information needed by a businessman. It helps to track income and expenditure, ensure statutory compliance and provide investors, management, and government with quantitative financial information which can be used in making business decisions. Hence, both (A) and (R) are true and (R) is the correct explanation of (A).

250. Given below are two statements, in which one is labelled as Assertion (A) and the other as Reason (R) : [U.P.R.O./A.R.O. (Pre) 2023]

Assertion (A): A condition is a stipulation which is essential to the main purpose of the contract.

Reason (R) : A breach of condition gives a right to claim damages and not a right to repudiate the contract.

Select the correct answer using the code given below :

Code :

Correct Answer: (d) (A) is true but (R) is false.
Solution:A stipulation in a contract of sale with reference to goods which are the subject thereof may be a condition or a warranty. A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated.

A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated. Hence, (A) is true but (R) is false.