Tag: functions of money

Questions Related to functions of money

Out of the following which assets is most liquid?

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

  1. shares of stock

  2. government securities

  3. land

  4. currency

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Correct Option: D
Explanation:

Liquid asset refers to the assets which are either in the form of cash or can easily be converted in to cash. Since currency of any country is already in the form of cash. Therefore, currency is considered the most liquid asset among all the assets in the economy. 

When the liquidity trap occurs the demand for money ________________.

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

  1. becomes perfectly interest elastic

  2. becomes perfectly interest inelastic

  3. means that an increase in money supply leads fall in the interest rate

  4. means that an increase in the money supply to an increase in the interest rate

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Correct Option: A
Explanation:

A liquidity trap is an economic situation where people hoard financial capital instead of investing or consuming it as the interest rates are low and savings rates are high which renders the monetary policy ineffective. So, people believe that the interest rates will soon rise which might decrease the prices of the bonds. Therefore, the demand for money depends on the rate of interest in the economy which hence makes the demand for money perfectly interest elastic. 

The contingent function of money are

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

  1. Distribution of national income

  2. Distribution from of capital

  3. Basis of credit

  4. All of the above

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Correct Option: D

It is uncommon for an item to be liquid if

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

  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

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Correct Option: D

Money is a matter of functions of four, ___________.

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

  1. medium, income, standard and store

  2. medium, measure, standard and store

  3. medium, measure, profit and store

  4. medium, quantity, standard and store

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Correct Option: B

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

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

  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

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Correct Option: C

In present days, the use of credit money like ___________ is expanding widely.

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

  1. cheque

  2. draft

  3. bill of exchange

  4. all of the above

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Correct Option: D

The relatively less important functions of money are called __________.

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

  1. secondary function

  2. derived functions

  3. both (A) and (B)

  4. derivative function

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Correct Option: C

Which of the following are the Contingent functions of money?

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

  1. Basis of credit

  2. Distribution of national income

  3. General form of Capital

  4. All of above

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Correct Option: D

________ has mentioned contingent functions of money.

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

  1. Prof. Keynes

  2. Prof. Kinley

  3. Prof. Marshall

  4. Prof. Frisch

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Correct Option: B