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SAI International School
                                                 Session- 2025-2026

                                                     Lesson notes
                                     Subject- Economics Ch- 3- MONEY AND CREDIT





                 NOTES
                      Evolution of Money:
                        Before the advent of coins, various objects like grains and cattle served as money.
                        The use of metallic coins (gold, silver, copper) prevailed until recent centuries.
                        Modern currency, in the form of paper notes and coins, replaced precious metal-
                        based money.
                      Authority of Currency:
                        Modern currency is authorized by the government of the country.
                        In India, the Reserve Bank of India issues currency notes on behalf of the central
                        government.
                        Legal frameworks mandate the acceptance of currency as a medium of payment,
                        ensuring its
                        widespread acceptance.
                      Deposits with Banks:
                        People also hold money in the form of deposits with banks.
                        Surplus cash is deposited in bank accounts, which offer safety and an interest
                        facility.
                        Demand deposits, which can be withdrawn on demand, serve as an essential
                        component of
                        modern money.
                      Cheques and Payments:
                        Demand deposits offer the convenience of making payments through cheques.
                        Cheques instruct banks to pay a specific amount from the payer's account to the
                        payee.
                        This facility allows for direct settlement of payments without the need for physical
                        cash.
                      Role of Banks:
                        Banks play a crucial role in facilitating demand deposits and cheque payments.
                        Without banks, demand deposits and cheque-based transactions would not exist.

                      Modern money, comprising currency and demand deposits, is intricately linked to
                        the functioning of the banking system.
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