Defining Near Money Assets
Near money refers to assets that are easily convertible into cash (the medium of exchange) without significant loss of value. It represents a balance between holding value and accessibility.
Core Characteristics of Near Money
The correct definition highlights two key aspects:
- Store of Value: The asset must hold its value over time.
- High Liquidity/Convertibility: It must be readily and quickly convertible into cash (a medium of exchange) with minimal delay or loss of principal value.
Evaluating the Options
Option 4 accurately captures these characteristics:
- An asset that fulfills the store of value function.
- An asset that can be converted into a medium of exchange at a short notice.
This definition distinguishes near money from cash (which is already a medium of exchange) and other less liquid assets.
Conclusion
Therefore, 'Near money' is correctly defined as an asset which fulfils the store of value function and can be converted into a medium of exchange at a short notice.
Important Questions from Money and Banking
Dr. Urjit Patel, who has been appointed recently as Governor of Reserve Bank of India, was holding which position immediately prior to this appointment?
As per the RBI guidelines, which one of the following is the minimum tenure of Masala Bonds that an Indian company can issue offshore?
______ is a tax system that collects a greater share of income from those with high incomes than from those with lower incomes.
In which year had India's ratio of public debt to GDP gone up to a record 84.2%?
______ is an economic scenario where a peculiar combination of low growth and rising inflation leads to high unemployment.
