Tag: theories of distribution

Quizzes (5) Questions (164)

Questions Related to theories of distribution

Multiple choice economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

Which of the following is not a function of money?

  1. It is a medium of exchange

  2. It has general acceptability

  3. It is a standard measure of value

  4. It is hedge against inflation
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The primary functions of money are medium of exchange, unit of account, and store of value. While money can be used to hedge against inflation, this is not a fundamental definition or function of money itself.

Multiple choice economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

The chief function of money is that of __________.

  1. a medium of exchange

  2. a reserve base for credit creation

  3. providing liquidity

  4. none of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The most fundamental and primary function of money is to serve as a medium of exchange, which solves the double coincidence of wants problem inherent in barter systems.

Multiple choice economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

Which of the following is not a function of money?

  1. Medium of exchange

  2. Unit of account

  3. Standard of deferred payment

  4. Store of metal
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Store of METAL is not a function of money. 'Store of VALUE' is a function - money preserves purchasing power. 'Store of metal' suggests hoarding physical metal, which is not a monetary function. The actual functions are medium of exchange, unit of account, standard of deferred payment, and store of VALUE.

Multiple choice economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

Money is most liquid of all the assets because ___________.

  1. it is readily convertible into other assets

  2. it can be easily stored

  3. it gives income to the holder

  4. it has no carrying cost
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Liquidity refers to the ease with which an asset can be converted into a medium of exchange without loss of value. Money is the most liquid asset because it is already the medium of exchange.

Multiple choice economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

Which of the following are the functions of money?
(i) Medium of exchange
(ii) Unit of account
(iii) Store of value
(iv) Standard of deferred payments.

  1. (i) and (ii) only

  2. (i), (ii) and (iii) only

  3. (ii) and (iv) only

  4. (i), (ii), (iii) and (iv)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Medium of exchange, unit of account, store of value, and standard of deferred payments are all widely recognized primary and secondary functions of money.

Multiple choice economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

The transaction motive relates to the desire of the people to hold cash for the future transactions.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

False. 

Transaction motive basically relates to the desire of the public to let the cash move freely in the economy through depositing it into the banks and initiating the process of credit creation in the economy. Transaction motive even relates to the motive of not influencing the price changes in the capital market. 

Multiple choice economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

The amount saved under transaction motive depends on the level of ____________. 

  1. savings

  2. income

  3. interest

  4. rent
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
Transaction motive basically relates to the desire of the public to let the cash move freely in the economy through depositing it into the banks and initiating the process of credit creation in the economy. Transaction motive even relates to the motive of not influencing the price changes in the capital market. Therefore, the amount of money saved under transaction motive depends upon the level of income in the economy. 
Multiple choice economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

The _________________ relates to the desire of the people to hold cash in order to take advantage of market movements regarding the future changes in the price of bonds and securities in the capital market.

  1. speculative motive

  2. precautionary motive

  3. demand motive

  4. transaction motive
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The speculative motive relates to the motive of the public to hold cash in their hand in order to take advantages of the market actions and movement in the future where they can influence the future change in the price of bonds and securities in the capital market.

Multiple choice economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

The speculative motive relates to the desire of the people to hold cash in order to take advantage of market movements regarding the future changes in the price of bonds and securities in the capital market.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The speculative motive relates to the motive of the public to hold cash in their hand in order to take advantages of the market actions and movement in the future where they can influence the future change in the price of bonds and securities in the capital market.