Business Studies Terms

What do you mean by bank?

An organization that provides various financial services, for example, keeping or lending money is called bank.

What is bank note?

The note issued by a bank is called bank note.

What is cheque? 

The written orders to bank by depositor.

What is letter of credit (L/C)?

It is an important document for international trade. Promissory letter issued by a bank mentioning the statement that the due money for the dispatched goods will be paid from the importers ate the right time is called letter of credit.

What is crossed cheque ?

When two parallel lines are drawn across the top left corner of a cheque and the words ‘A/C payee’’ are written between the line then it is called crossed cheque.A  cheque is crossed for more security.

What is Hot money?

The money which movies from one place to another for higher protection or higher rate of interest are called Hot money.

What is Bank Draft?

A written order to a bank by any bank to pay money to someone is called Bank Draft.

What is inflation and deflation?

A general rise in the prices of services and goods in a particular country, resulting in a fall in the value of money is called inflation. In this situation the fewer amounts of things require more amount of money.

A reduction in the amount of money in a country‘s economy so that the prices fall or remain the same called defilation. In this situation the more amounts of goods can require the less amount money

What do you mean by legal tender?

Money that can be legally used to pay for things or services in a particular country is called legal tender.

What is the difference between cheque & money?

Cheque is not the legal tender .it is not obligatory to all to receive it.it is handed over only once. But money is the legal tender .it is legally obligatory to all to receive it. Money is handed over many times.

What is bank rate?

The attributed interest rate by the central bank on the amount of money borrowed by commercial bank from central bank is called bank rate.

What is clearing house?

The inter-bank central officer for exchanging cheques & bills is called clearing house.

What is the main functional of commercial bank?

Receiving deposits.

What is soft currency?

Currency that cannot be exchanged with gold or more demanding currency in international money market is called soft currency. The reason behind is its fluctuating gold backing. On the other hand hard currency has different meaning.

What is Bankrupt?

A debater who has no ability to paying back the debt is called Bankrupt.

Traveler’s cheque?

A cheque for fixed amount of money, sold by a bank that can be exchanged for cash in foreign countries.

What is the meaning of E-Banking?

E-banking means that kind of banking in which the bank uses electronic or satellite based computerized devices for ensuring promptness and accuracy in banking transactions.

Hard money & Soft money?

When the less amount of native money is received by exchanging foreign currency because of changing the value of foreign currency is called hard money, On the other hand opposite situation of the foreign currency is soft money.

Hard currency?

Money that is easy to exchange for money from another country because it is not likely to lose its value. Also metallic currency.

Devaluation?

The deliberate reduction of the value of money of one country when it is exchanged for the money of another country in order to reduce imports and increase exports is called devaluation.

What is the meaning of Reflation & Recession ?

Reflation: Increasing the amount of money that is used in a country usually in order to increase the demand for goods.

Recession: A difficult situation for the economy of a country, when there is less trade and industrial activities than usual and more people are unemployed.  

Gold Standard?

An economic system in which the value of reserved gold.

Credit card?

A small plastic card that one can use to buy goods and services and play for them later.

Credit Amount?

An arrangement with a shop or business to pay bills for goods or services at a later time for example in regular amount every month.

Open Credit?

When a banker gives the credit to customer without any guarantee or security then it is called open credit.

Which bank control the money market and economy stability?

Central bank

What is the meaning of  Currency Policy?

The central Bank reserves a certain amount of gold equivalent to the value of the money that will be printed. This is called currency policy.

What is main purpose of lending money?

To gain profit.

What is the function of clearing house?

To perform the inter-bank exchange.

Which banks lend short-terms & long term loan?

The commercial banks lend short-term & the development bank or specialized bank lend long-term loan.

How do the commercial banks solve the liquidity problem?

By re-discounting the first class bills.

What is the effective way to control the inflation?

By increasing tax.

Which bank issue the travelers cheque?

Commercial bank

To prevent inflation, what does the central bank do the reserved deposit?

Increasing the reserved capital.