Tag: liquidity preference and profit

Quizzes (0) Questions (296)

Questions Related to liquidity preference and profit

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. 

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

Which one of the following is the most important determinant of speculative demand for money?

  1. Income

  2. Interest rate

  3. Profits

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

The demand for money for speculative purposes in order to undertake investments for future returns is based upon the rate of interest prevailing in the economy. It is algebraically expressed in the form of a function as:  $S _{m}=f(r)$.

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

Who proposed a model to apply economic order quantity concept of inventory management to determine the optimum cash holding in a firm?

  1. Keith V. Smith

  2. Miller and Orr

  3. William J. Baumol

  4. J.M. Keynes
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

William J. Baumol applied the Economic Order Quantity (EOQ) model to cash management in 1952, treating cash as an inventory item to minimize total costs.

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

Many a time we read in newspaper about the benefits of National Electronic Funds Transfer (NEFT), a delivery service launched by the bank. Why do banks advocate for such delivery channels?
A. It is a system in which no physical transfer takes place, hence risk is very low.
B. In this system banks are not required to transfer any money actually to the account of the customer. Only book adjustment is done. Hence actual fund is not needed.
C. This facility is available to anybody at any place. Even having a bank account is not at all necessary.

  1. Only (A) is correct

  2. Only (B) is correct

  3. Only (C) is correct

  4. Both (A) and (B) are correct
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

National Electronic Funds Transfer (NEFT) is a nation-wide payment system facilitating one-to-one funds transfer.

Under this Scheme, individuals can electronically transfer funds from any bank branch to any individual having an account with any other bank branch in the country participating in the Scheme.

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

Various banks in the country have installed machines which disburse money to general public. These machines are called _______.

  1. coin dispensing machines

  2. ATMs

  3. debit card machines

  4. ledger machines
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

An ATM, which stands for automated teller machine, is a specialized computer that makes it convenient to manage a bank account holder's funds.
It allows a person to check account balances, withdraw or deposit money, print a statement of account activities or transactions, and even purchase stamps