PRINCIPLES OF MACROECONOMICS

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MONEY &
BANKING Presented By:
Aditya Singh
Akash Pamnani
Archit Goyal
Bhavishya Agarwal
Manjot Singh
Parkhi Gupta
Saiyam Ahuja
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Money
An economic unit that functions as a

Money & generally recognized medium of exchange for

transactional purposes in an economy.

Monetary
System
The Monetary System
a system in which government provides money
to the people of the country. It
includes all the money that government consists
in treasuries, mint, central
bank and commercial banks.
PRINCIPLES OF
MACROECONOMICS
 /03 QUANTITATIVE MEASURES

How the Open Market Operations

Bank Rate
RBI Cash Reserve Ratio

Controls
QUALITATIVE MEASURES
it?
MACROECONOMICS

Credit Rationing
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Lending Margin
Moral Suasion
Medium of exchange PRINCIPLES OF
MACROECONOMICS
to promote transactions as a
means of exchange

Unit of Account
provides a common measure of the
value of the exchanged goods and
Functions Of
Money
services.

Store of Value
maintains its value over time in
order to become a medium of
exchange

Standard of Payments
Money as a deferral standard
means money acts as a 'standard' for
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payments to be made in the future.
 MACROECONOMICS
PRINCIPLES OF
/05 Full bodied money
to promote transactions as a
means of exchange

Representative Full-Bodied

Classification of It refers to money which is made of

paper and its value is much higher than
its value as a commodity.

Money Credit Money

the money whose real value (as a
Classification of money is based on the commodity) is much lower than its
relationship between the value of money as face value
money and the value of money as a commodity.
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Money Supply
The money supply is all the currency and other liquid instruments
MACROECONOMICS

in a country's economy on the date measured. The money supply

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roughly includes both cash and deposits that can be used almost as
easily as cash.
 /07 M1

MEASURING M2
MONEY SUPPLY
M3
MACROECONOMICS
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M4
Functions Of /08
Banks
BANKING
PRIMARY FUNCTIONS Banking can be referred as a practice of
accepting money from individuals and
Accepting Deposits then lending it out to others at an
interest rate to earn a profit in the
Lending Funds
process. The banks are institutions that

MACROECONOMICS
PRINCIPLES OF
carry out the process.

SECONDARY FUNCTIONS
Bank as an Agent
General Utility Services
 PRINCIPLES OF
MACROECONOMICS

Issue of Currency
CENTRAL BANK
Banker, Fiscal Agent and Adviser to the A central bank is an independent national
Government authority that conducts monetary policy,
regulates banks, and provides financial
Custody and Management of Foreign Exchange services including economic research
Reserves

Lender of Last Resort

Functions of
RBI
Clearing House for Transfer and
settlement

Controller of Money Supply and

Credit
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/10 Credit Creation
Power of the banks to
expand or contract demand
deposits through the process
of more loans, advances and
investments.

Money Multiplier

MACROECONOMICS
The formula to calculate the

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final amount that will be
created with credit creation.
Is the Reciprocal of CRR.
 BANK RBI

/11 Depositor 1 1000 0

COMMERCIAL BANK 800 200

Borrower 1's Bank 640 160

How it Borrower 2's Bank 512 128

Works Borrower 3's Bank 384 76.8

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NET TOTAL 5000 1000