Tag: simple monopoly and commodity market

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Multiple choice economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

$M _1$ is also known as transaction money because it can be directly used for making transactions. 

  1. True

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

$M _1$ consists of  currency notes and coins that are in circulaation with public as well as the demand deposits with commercial banks. These can be used by the public directly for any transactions. Hence, $M _1$ is also known as 'Transaction Money'.

Multiple choice economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

Demand deposits include __________________.

  1. Saving account deposits and fixed deposits

  2. Saving account deposits and current account deposits

  3. Current account deposits and fixed deposits

  4. All types of deposits
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Demand deposit refers to the deposit wherein the amount which you have deposited with the bank can be withdrawn by you any time. It includes saving account deposit and currency account deposit in which currency account is mainly meant for businessmen, and saving account is meant for general public.

Multiple choice economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

M1 includes net demand deposits and not gross demand deposits, as net demand deposits do not include inter-banking claims.

  1. True

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

True.

Money supply refers to the total stock of money of all types ( currency as well as demand deposits) held by the people of a country at a given point of time. 

Money supply is measured in several ways among which M1 is a type of measurement that measures the money as a medium of exchange function. 

M1= C+ DD+ OD 

where, 

C: It refers to currency held by public in terms of coins and paper notes.

DD: It refers demand deposits of the people with the commercial bank.

OD: These includes other deposits with public financial institution, foreign central banks and international financial institution. 

Multiple choice economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

Money Supply in India can be increased if 

    1. RBI puts more paper money for circulation
    2. The commercial banks expand their credit operations
    3. The central Govt. gives more grants to the states
    4. The Govt. of

    1. 1, 2 and 3

    2. 2, 3 and 4

    3. 1, 3 and 4

    4. 1, 2 and 4
    Reveal answer Fill a bubble to check yourself
    D Correct answer
    Explanation

    Money supply increases when the RBI prints more money, banks expand credit, or the government spends more (often financed by borrowing). The fourth point is incomplete in the prompt, but based on standard economic theory, 1, 2, and 4 are the primary drivers of money supply expansion.

    Multiple choice economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

    Markets which deals with high liquid and short term debt securities are classified as _____________.

    1. capital markets

    2. money markets

    3. liquid markets

    4. short-term markets
    Reveal answer Fill a bubble to check yourself
    B Correct answer
    Explanation

    The money market is the segment of the financial market where high-liquidity, short-term debt securities are traded.

    Multiple choice economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

    Many banks have adopted/launched a "Core Banking Solution" (CBS). Which of the following is a Core Banking Solution?

    1. A marketing strategy adopted by the banks

    2. A new type of ATM useful for rural population

    3. A delivery channel for quick and fast delivery

    4. A new product launched to help senior citizens only as they are not able to visit branches/ATMs frequently
    Reveal answer Fill a bubble to check yourself
    C Correct answer
    Explanation

    Core Banking Solution (CBS) is a centralized banking system that allows customers to access their accounts and perform transactions from any branch of the bank, serving as a key delivery channel.

    Multiple choice economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

    A money deposited in a bank that cannot be withdrawn for a preset fixed period of time is known as a ____________________.

    1. term deposit

    2. checking account

    3. savings bank deposit

    4. no frills account
    Reveal answer Fill a bubble to check yourself
    A Correct answer
    Explanation

    A term deposit (or fixed deposit) is a deposit held at a financial institution that has a fixed term and cannot be withdrawn before the maturity date without penalty.

    Multiple choice economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

    Which of these is/are not a function of money?

    1. Hedges against inflation.

    2. Unit of measurement.

    3. Medium of exchanges.

    4. Measurement of value.
    Reveal answer Fill a bubble to check yourself
    A Correct answer
    Explanation

    The primary functions of money are medium of exchange, unit of account, and store of value. Hedging against inflation is a strategy for managing assets, not a function of money itself.

    Multiple choice economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

    Which of these statements is true?

    1. Precautionary demand for money is due to uncertainty of income and expenditure

    2. Uncertainty of future leads to precautionary demand for money

    3. Precautionary demand for money is related to income level

    4. All the three
    Reveal answer Fill a bubble to check yourself
    D Correct answer
    Explanation

    Precautionary motive of money refers to the demand for money to store it for future uncertainties. In other words, if money is demanded so that it can be kept for bad days then the demand of such money is known as precautionary money. In such cases, money functions as the store of value. Precautionary money balance in needed in a company so that it can be used if there is any uncertainty of receipt in the income and expenditure statement which means the company can make use of this money if the expenditure exceeds the income in a particular year.