Tag: economics

Questions Related to economics

Which of the following is not a function of money?

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

  1. It is a medium of exchange

  2. It has general acceptability

  3. It is a standard measure of value

  4. It is hedge against inflation

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Correct Option: D

The chief function of money is that of __________.

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

  1. a medium of exchange

  2. a reserve base for credit creation

  3. providing liquidity

  4. none of the above

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Correct Option: A

Which of the following is not a function of money?

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

  1. Medium of exchange

  2. Unit of account

  3. Standard of deferred payment

  4. Store of metal

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Correct Option: D

Money is most liquid of all the assets because ___________.

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

  1. it is readily convertible into other assets

  2. it can be easily stored

  3. it gives income to the holder

  4. it has no carrying cost

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Correct Option: A

Which of the following are the functions of money?
(i) Medium of exchange
(ii) Unit of account
(iii) Store of value
(iv) Standard of deferred payments.

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

  1. (i) and (ii) only

  2. (i), (ii) and (iii) only

  3. (ii) and (iv) only

  4. (i), (ii), (iii) and (iv)

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Correct Option: D

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

Show answer
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.