New terms

Hot money: The money which moves from one place to another for higher protection or higher
rate of interest is called hot money.
Legal Tender: Money that can be legally used to pay for things or services in a particular
country is called Legal Tender.
Soft currency: Currency that cannot be exchanged with gold or more demanding currency is
called soft currency.
Traveler’s cheque: A cheque for a fixed amount of money, sold by a bank that can be
exchanged for cash in foreign countries.
Hard money:

Soft Money:

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.
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.
Open credit: When a banker gives the credit to a customer without any guarantee or security
then it is called open credit.
How do the commercial banks solve the liquidity problem? - By rediscounting the first class -
bills.