Tag: economics

Questions Related to economics

Size of money multiplier is given by the inverse of LRR. 

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

  1. True

  2. False

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Correct Option: A
Explanation:

Money multiplier is inversely related to LRR as Money Multiplier $= \dfrac{1}{LRR}$.

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

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

  1. True

  2. False

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Correct Option: A
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. 

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

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

    1. 1, 2 and 3

    2. 2, 3 and 4

    3. 1, 3 and 4

    4. 1, 2 and 4

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    Correct Option: D

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

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

    1. capital markets

    2. money markets

    3. liquid markets

    4. short-term markets

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    Correct Option: B

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

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

    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

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    Correct Option: C

    A money deposited in a bank that cannot be withdrawn for a preset fixed period of time is known as a ____________________.

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

    1. term deposit

    2. checking account

    3. savings bank deposit

    4. no frills account

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    Correct Option: A

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

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

    1. Hedges against inflation.

    2. Unit of measurement.

    3. Medium of exchanges.

    4. Measurement of value.

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    Correct Option: A

    Which of these statements is true?

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

    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

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    Correct Option: D
    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. 

     

     

    _________ affects the demand for money.

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

    1. Real income

    2. Price level

    3. Rate of interest

    4. All the three

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    Correct Option: D
    Explanation:

    The following variables affects the demand for money: 

    1. Real income: It refers to the income which is used for consumption of commodities in the market. If it is high, then the demand for money will also be high and if it is low then the demand for money will also be low. 
    2. Price level: If the general price level in the economy for all the commodities are high as in the case of inflation, then demand for money will be more as now more money will be required to purchase the same set of commodities and if the general price level in the economy for all the commodities are low as in the case of deflation, then demand for money will be less  as now less money will be required to purchase the same set of commodities.
    3. Rate of interest: Rate of interest is the rate charged on the loans offered by the commercial banks to the people with or without any collateral. If rate of interest is high then it will decrease the real income with the people as a result of which purchasing power would be decreased which will decrease the demand for money in the economy and if rate of interest is low then it will increase the real income with the people as a result of which purchasing power would be increased which will increase the demand for money in the economy.

    NABARD is the Apex Bank for _________ credit in India.

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

    1. Real Estate

    2. Small Scale Industries

    3. Agriculture

    4. None of the above.

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    Correct Option: C