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

It is uncommon for an item to be liquid if

  1. It is not acceptable in the market

  2. Can not be sold in the market

  3. Not accepted by creditors

  4. Both a & b
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Liquidity requires that an asset be easily accepted in the market for exchange. If an item cannot be sold or is not accepted by creditors, it lacks liquidity.

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

Money is a matter of functions of four, ___________.

  1. medium, income, standard and store

  2. medium, measure, standard and store

  3. medium, measure, profit and store

  4. medium, quantity, standard and store
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The four classic functions of money are medium of exchange, measure of value, 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

Which of the following are the seven parts of the financial system?

  1. Financial instruments, credit cards, financial instruments, regulatory agencies, central banks, Federal reserve System, money

  2. Financial instruments, money, financial instruments, the Security and Exchange Commission, central banks, Federal Reserve System, credit cards

  3. Money, financial instruments, financial markets, financial institutions, regulatory agencies, central banks, Federal Reserve System

  4. Money, financial instruments, financial markets, banks, regulatory agencies, central banks, Federal Reserve System, credit cards
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The financial system is typically categorized into these seven components: money, financial instruments, financial markets, financial institutions, regulatory agencies, central banks, and the Federal Reserve System.

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

The relatively less important functions of money are called __________.

  1. secondary function

  2. derived functions

  3. both (A) and (B)

  4. derivative function
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Functions of money are often categorized as primary and secondary (or derived). The less important functions are generally referred to as secondary or derived functions.

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

As per Irving Fisher principle, if the quantity of money is reduced by one half  ________.

  1. the price level will also be reduced by one half

  2. value of money will be twice

  3. the price level will be double and the value of money will be one half

  4. the price level will also be reduced by one half and value of money will be double.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

According to the Fisher equation of exchange (MV=PT), if velocity (V) and transactions (T) are constant, the price level (P) is directly proportional to the money supply (M). If M is halved, P is halved, and since the value of money is the reciprocal of the price level (1/P), it doubles.