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 necessary characteristic of money?

  1. It is a unit of account

  2. It is a store of value

  3. It is of intrinsic value

  4. It is generally acceptable
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Money does not require intrinsic value (like gold or silver) to function; its value is derived from general acceptability and its role as a medium of exchange (fiat money).

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

A vital function of money is its ability to provide a standard for __________.

  1. difference in consumer's goods

  2. marginal utility

  3. deferred payments

  4. consumer's preference
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The ability to express future debts and contracts in a common unit is the definition of money serving as a standard for deferred payments.

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

Money is said to be neutral when ______________.

  1. changes in money supply do not have any effect on real sector

  2. changes in money supply leads to increase in national income

  3. changes in money supply lead to decrease in national income

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

The neutrality of money theory suggests that changes in the money supply only affect nominal variables like prices, not real variables like output or employment.

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

Which of the following is the important function of money?

  1. Money must be legal lender

  2. Money must facilitate exchange if it is to fulfill its purpose

  3. A government must exist for money to exist

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The most important function of money is to facilitate exchange - it acts as a medium of exchange, eliminating the need for barter and allowing transactions to occur efficiently. Option A is incorrect (typo for 'legal tender'). Option C is incorrect - money can exist without government (historically, private banks issued money). Money's core purpose is enabling exchange, which is what option B correctly states.