VIII T1 SS Money, Savings and Investments - Textbook Solutions


Money, Savings and Investments

I. Choose the correct answer

1. Which metals were used for metallic money? 

Ans: d) all the above -Gold, Silver, Bronze

2. Who designed the symbol (`) of Indian rupee?

Ans:a) Udayakumar

3. The value of money is ___________.

Ans: c)Both a & b -Internal value of money & external value of money

4. Which is the Bank Money? 

Ans: a)Cheque

5. Pick out the incorrect one:

Investment can be made in different vehicles. 

Ans: d)Pay tax

6. Among the following who are responsible for Black Money?

a) Tax evaders

b) Hoaders

c) Smugglers

d) All of the above

Ans:d) All of the above

II. Fill in the Blanks

1. Online Banking is also known as Net Banking.

2. Money is what money does.

3. Electronic banking is also known as National Electronic Funds Transfer (NEFT).

4. Credit cards and Debit cards are plastic Money.

5. In the year 1935  Reserve Bank of India was established.

III. Match the following

1. Barter system - Exchanged goods for goods

2. Reserve Bank act - 1935

3. E – Money - Electronic Money

4. Savings - Consumers disposable income

5. Black money - Tax evaders

IV. Write the one word answer

1. The word Money is derived from?

Roman word “Moneta Juno”

2. Who Prints and issues paper currencies in India?


V. Choose the correct statement

1. Barter system had many deficiency like –

I. Lack of double coincidence of wants

II. No difficulties of storing wealth

III. Common measure of value

IV. Indivisibility of commodities

Ans: I, III and IV is correct

VI. Find out the odd one

1. Recent forms of money transactions are

Ans: b) Barter system

2. Effects of black money on economy is

Ans:a) Dual economy

VII. Write short answer

1. What is the Barter System?

A barter system is an old method of exchange. Barter system is exchanging

goods for goods without the use of money in the primitive stage.

2. What are the recent forms of money?

Plastic Money and E – Money

3. Short note on E – Banking and E – Money.

  • E – Banking:

Electronic banking, also known as National Electronic Funds Transfer (NEFT), is simply the use of electronic means to transfer funds directly from one account to another rather than by cheque or cash.

  • E – Money:

Electronic Money is money which exists in banking computer systems and is

available for transactions through electronic systems.

4. What are the essentials of Money in your life?

Money is used as the source to fulfill basic needs as well as comforts in life. It

gets people accommodation, clothes, food and other things which add to luxury in

life. It is an important source to live a healthy life too.

5. What is the Value of Money?

Value of money is the purchasing power of money over goods and services in a country.

6. What is Savings and Investment?

i. Savings represents that part of the person’s income which is not used for consumption

ii. Investment refers to the process of investing funds in capital asset, with a view to generate returns

7. What is meant by Black Money?

 Black Money is money earned through any illegal activity controlled by country regulations.

9. What are the effects of black money on economy?

  • Dual economy (Dual economy in terms of developed sector on one side under developed sector on the other side.)

  • Tax evasion, thereby loss of revenue to government.

  • Undermining equity

  • Widening gap between the rich and poor.

  • Lavish consumption spending

VIII. Write Brief answer

1. What are the disadvantages of barter system?

  • Lack of double coincidence of wants,

  • Common measure of value

  • Indivisibility of commodities

  • Difficulties of storing wealth

2. Write about the evolution of Money.

Money has evolved through different stages according to the time, place and


Commodity Money:

In the earliest period of human civilization, any commodity that was generally

demanded and chosen by common consent was used as money. 

Metallic Money:

With progress of human civilization, commodity money changed into metallic money. Metals like gold, silver, copper, etc. were used as they could be easily handled. It was the main form of money throughout the major portion of recorded  history.

Paper Money:

(a) It was found inconvenient as well as dangerous to carry gold and silver coins

from place to place. So, invention of paper money marked a very important stage

in the development of money.

(b) Paper money is regulated and controlled by Central bank of the country

(Reserve Bank of India). 

Credit Money or Bank Money:

(a) Emergence of credit money took place almost side by side with that of paper

money. Example Cheque.

(b) The cheque (known as credit money or bank money), itself, is not money, but it

performs the same as functions of money.

Near Money:

The final stage in the evolution of money has been the use of bills of exchange,

treasury bills, bonds, debentures, savings certificates etc.

3. What are the functions of Money? and explain it.

Functions of money are classified into Primary or Main functions, Secondary functions and Contingent functions.

Primary or main functions

The important functions of money performed in every economy are classified

under main functions:

i) Medium of exchange or means of payment

ii) Measure of value

Secondary functions

The three important secondary functions are

i) Standard of deferred payment

ii) Store of value or store of purchasing power 

iii) Transfer of value or transfer of purchasing power

Contingent functions

  • Basis of credit

  • Increase productivity of capital

  • Measurement and Distribution of National Income

4. Explain the types of bank Deposits.

Savings Deposits

Savings deposits are opened by customers to save the part of their current income. The customers can withdraw their money from their accounts when they require it. The bank also gives a small amount of interest to the money in the saving deposits.

Current Account Deposit

Current accounts are generally opened by business firms, traders and public authorities. The current accounts help in frequent banking transactions as they are repayable on demand.

Fixed Deposits

Fixed deposits accounts are meant for investors who want their principle to be safe

and yield them fixed yields. The fixed deposits are also called Term deposit as, normally, they are fixed for a specified period.

5. What is the difference between savings and investment?



Savings are defined as the part of consumer’s disposable income which is not used for current consumption, rather kept aside for future use. 

The process of investing in something is known as an investment. It could be anything, i.e. money, time efforts or other resources that you exchange to earn returns in future.

There are several ways through which a person can save money

Student Savings Account,Savings Deposits,Current Account Deposit,. Fixed Deposits  

Investment can be made in different investment vehicles like, 1. Stock 2. Bonds 3. Mutual funds 4. Insurance 5. Annuities 6. Deposit account or any other securities or assets

6. What are the effects of black money on economy?

Effects of Black Money on economy

  • Dual economy

  • Tax evasion, thereby loss of revenue to the government.

  • Undermining equity

  • Widening gap between the rich and poor

  • Lavish consumption spending

  • Distortion of production pattern

  • Distribution of scarce resource

  • Effects on production.

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