Tag: liquidity preference and profit

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

What is the value of money multiplier when initial deposits are $Rs. 500$ crores and LRR is $10%$?

  1. $0.1$

  2. $0.2$

  3. $10$

  4. $20$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

$MONEY\space MULTIPLIER = \dfrac{1}{LRR}$

$MONEY\space MULTIPLIER = \dfrac{1}{10} = 0.1$
                                                     

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

All of the following is function of money except __________.

  1. to provide durability

  2. to be portable

  3. to be divisible

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

The primary functions of money are medium of exchange, measure of value, store of value, and standard of deferred payment. Durability is a characteristic or property of money, not a function itself.

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

Liquidity of asset is dependent on __________.

  1. the term of amatively of the asset

  2. existence of organized secondary Markets

  3. both a & b

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

Liquidity refers to how easily an asset can be converted into cash. This depends on both the maturity of the asset (time) and the existence of secondary markets where the asset can be traded.

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

Value of money is dependent on holding power of money .It is

  1. Transaction approach

  2. Cash balance approach

  3. Debit balance approach

  4. Asset approach
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The cash balance approach (often associated with the Cambridge equation) focuses on the demand for money based on the desire to hold money for transactions and as a store of value.

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

The main functions performed by money are called ___________.

  1. contingent functions

  2. secondary functions

  3. primary or original function

  4. important functions
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The primary or original functions of money are those that define its basic purpose: serving as a medium of exchange and a measure of value.

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

The liquidity approach emphasizes the function of money as a ________.

  1. standard of deferred payment of money

  2. store of money

  3. income from money

  4. (A) and (C)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The liquidity approach to money emphasizes that money is held because it is the most liquid asset, serving as a store of value that can be used immediately.

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

Measure of value of all goods and services refers __________ from following function of money.

  1. medium of exchange

  2. unit of account

  3. standard of deferred payments

  4. store of value
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The unit of account function allows money to serve as a common measure for the value of goods and services. This enables prices to be set and accounting to be performed.