The following points highlight the eight main advantages of the circular flow of money in an economy. The advantages are: 1. Link between Producers and Consumers 2. Creates a Network of Markets 3. Inflationary and Deflationary Tendencies 4. Basis of the Multiplier 5. Importance of Monetary Policy 6. Importance of Fiscal Policy 7. Importance of […]
The Circular Flow of Money in an Economy: 8 Advantages
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6 Main Systems of Banking (With Merits and Demerits)
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The following points highlight the six main systems of banking. The systems are: 1. Unit Banking 2. Branch Banking 3. Group Banking 4. Chain Banking 5. Mixed Banking 6. Correspondent Banking. System # 1. Unit Banking: Unit banks are independent, one-office banks. Their operations are confined in general to a single office. The existence of unit banking […]
Limitations on the Power of Banks to Create Credit
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The following points highlight the ten major limitations on the power of banks to create credit. The limitations are: 1. Amount of Cash 2. Proper Securities 3. Banking Habits of the People 4. Minimum Legal Reserve Ratio 5. Excess Reserves 6. Leakages 7. Cheque Clearances 8. Behaviour of Other Banks 9. Economic Climate10. Credit Control […]