Tag: functions of money

Questions Related to functions of money

Functions of money are _______________.

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

  1. stock of value

  2. medium of exchange

  3. measure of value

  4. all of the above

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Correct Option: D

The transaction motive relates to the desire of the people to hold cash for the future transactions.

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

  1. True

  2. False

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Correct Option: B
Explanation:

False. 

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. 

The amount saved under transaction motive depends on the level of ____________. 

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

  1. savings

  2. income

  3. interest

  4. rent

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Correct Option: B
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. 

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.

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

  1. speculative motive

  2. precautionary motive

  3. demand motive

  4. transaction motive

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Correct Option: A
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.

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.

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

  1. True

  2. False

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Correct Option: A
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. 

The financial market for short term funds is known as ___________.

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

  1. capital market

  2. money market

  3. bullion market

  4. share market

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Correct Option: B

The portion of income not spent on ________ is saving.

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

  1. consumption

  2. production

  3. distribution

  4. none of the above

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Correct Option: A
Explanation:

Saving is that part of income which is not spent on consumption. It is also called deferred consumption.

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

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

  1. Income

  2. Interest rate

  3. Profits

  4. Prices

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Correct Option: B
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:  $S _{m}=f(r)$.

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

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

  1. Keith V. Smith

  2. Miller and Orr

  3. William J. Baumol

  4. J.M. Keynes

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Correct Option: C

Technique of 'Transaction Analysis' was developed by __________.

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

  1. Elton Mayo

  2. Peter Drucker

  3. Eric Berne

  4. Adam Smith

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Correct Option: C