1 What is cash balance 2 What were some of the problems faced while using grain and cattle - Social Science - Money and Credit

Question

1 What is cash balance ?
2 What were some of the problems faced while using grain and
cattle as a medium of exchange?Illustrate by giving an example
3 Taking credit or loans can have positive or negative effects
justify by giving examples
4 What is Cash balance?
5 Discuss ways in which poor people can be dicouraged from
taking loans from informal sources?

Shvetika Sharma · Accepted Answer

Ans 1) Cash balance with reference to commercial bank refers to
the total amount of cash left with the bank after giving out
loans
Ans 2) The basic problem while using cattle and grain as medium
of exchange would be the "double coincidence of wants" In such a
situation suppose a person who owns a cattle wishes to purchase
shoes For this he would ave to find another person who is willing
to exchange shoes for cattle This can prove to be quite a tedious
task
Ans 3) Credit can have positive effects if it is taken to
increase the income earning capacity On the other hand, it can have
negative effect if it results in a debt trap where new loan are
taken just to pay off the earlier ones
Ans 5) One of the methods to reduce the role of informal sector
credit is to work towards increasing the lending activities of
commercial banks and cooperatives such that cheap and affordable
credit available in rural areas