JKSSB Paid Notes Class 4 – Economics | JKSSB Mock Test

💰 Functions of Money

1. Medium of Exchange: Money is accepted by everyone to buy or sell goods and services. It removes the problem of Barter System.
2. Store of Value: You can save money now and use it in future. It does not lose its value easily (unless there is inflation).
3. Unit of Account: Prices of all products are quoted in money terms, making value comparison easy.
4. Standard of Deferred Payment: Money helps in future payments like EMI, loans, credit transactions.

📌 SSC MTS: "Main function of money?" — Medium of Exchange

🏦 Reserve Bank of India (RBI) – Functions

1. Currency Issuer: RBI prints all notes except ₹1 (that is printed by Ministry of Finance).
2. Banker to Banks: RBI controls the entire banking system. It provides loans to banks during emergencies.
3. Monetary Policy Maker: RBI controls inflation and liquidity in market using rates like Repo, Reverse Repo.
4. Forex Manager: RBI manages India’s foreign exchange reserves and controls Rupee value in the market.
5. Govt's Banker: RBI handles accounts of central and state governments, including public debt.

💡 SSC CGL: "Who is called the Banker's Bank?" — RBI

📈 Tools of Monetary Policy (RBI)

1. Repo Rate: Interest rate at which banks borrow money from RBI. Higher repo = expensive loans = control inflation.
2. Reverse Repo Rate: Banks park excess funds with RBI. It helps suck liquidity from the market.
3. CRR: Cash Reserve Ratio. Banks must keep a certain % of deposits as cash with RBI (no interest).
4. SLR: Statutory Liquidity Ratio. Banks need to invest a % of their deposits in government securities.
5. Open Market Operations: RBI buys or sells government bonds to control money supply in market.

🧠 JKSSB NT: "Which rate controls inflation directly?" — Repo Rate

🏦 Commercial Banks – Role & Functions

1. Accept Deposits: Banks take deposits from public and pay interest on savings, FDs, etc.
2. Provide Loans: Banks lend money as personal loans, business loans, home loans, etc.
3. Credit Creation: Banks lend more than actual deposits, creating money in the economy.
4. Digital Banking Services: UPI, RTGS, NEFT, Internet Banking, Debit/Credit Cards.
5. Customer Services: Locker facility, ATM services, Cheque clearing, etc.

📢 SSC CHSL: "Which banks create credit in economy?" — Commercial Banks

💻 Digital Banking – UPI, NEFT, RTGS

1. UPI: Unified Payments Interface. Allows instant money transfer using mobile apps like PhonePe, GPay. Works 24x7.
2. NEFT: National Electronic Funds Transfer. Transfers money in batches. Settles in few hours (earlier only in working hours, now 24x7).
3. RTGS: Real Time Gross Settlement. Used for big transactions (above ₹2 lakh). Transfers happen instantly without waiting.

✅ JKSSB MTS: "Which system allows instant small payments?" — UPI

📊 Inflation & Deflation Explained

1. Inflation: Rise in prices of goods and services continuously over time. Reduces the purchasing power of money.
2. Deflation: Continuous fall in prices. It discourages production and may lead to unemployment.
3. Stagflation: Situation where inflation and unemployment both rise. (Worst case scenario)
4. Disinflation: When inflation rate is positive but gradually decreasing.

📌 SSC GD: "Stagflation means?" — Inflation + Unemployment rise

🔍 Types of Inflation

1. Demand-Pull Inflation: Demand increases faster than supply. Example: Festival season rush.
2. Cost-Push Inflation: Cost of production increases due to raw material or wage hikes.
3. Hyperinflation: Prices rise uncontrollably. Example: Zimbabwe in 2008.
4. Core Inflation: Inflation excluding food and fuel prices (because they are too volatile).

💡 SSC CGL: "Cost-Push Inflation is due to?" — Production Cost Rise

🧾 How is Inflation Measured?

1. CPI: Consumer Price Index. Measures retail inflation. Used for DA, pensions, etc.
2. WPI: Wholesale Price Index. Measures wholesale inflation. Less impact on common man directly.

📢 SSC CHSL: "Retail inflation is measured by?" — CPI

📖 Quick Recap & MCQ Points

1. Money = Medium of Exchange, Store of Value, etc.
2. RBI = Controls currency, monetary policy, Forex
3. Repo Rate controls liquidity & inflation
4. UPI = Fastest digital transfer system in India
5. Inflation = Price rise; Deflation = Price fall
6. CPI = Retail inflation, WPI = Wholesale inflation

🔗 Useful Links & Next Topic

1. RBI Official Website
2. JKSSB Official Website
3. Next Topic: Public Finance & Indian Budget