Money and Credit Test

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Money and Credit Test - 19

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Weekly Quiz Competition

Question 1
1 / -0

What are the factors responsible for the change in the form of money?

A
Political factors

B
Economic factors

C
Government factors

D
All of the above

Solution

Money refers to an asset in the economy that acts as a common medium of exchange issued under the law of government and acts as a legal tender for the whole country. The factors which are responsible for the change in the form of money are as follows:
(i) Political factors: Political factors refers to all such types of political activities that changes the form of money like political campaigning, political services etc. which leads to purchase of goods and services.
(ii) Economic factors: It refers to those factors that leads to exchange of goods and services against money in the market. Such factors include consumption, production etc.
(iii) Governmental factors: These factors include government expenditure, selling and buying of bonds by the government on the open market, providing subsidies to the poor which changes the form of money into various other things.
Question 2
1 / -0

Positive economic analysis ___________.

A
compares the desirability of alternative government policy outcomes

B
provides a framework within which we can study how some groups are better off than others

C
analyses the sources of improvements in the standard of living that result from favourable government policies.

D
is based on observed cause and effect relationship in the economy
Question 3
1 / -0

Money includes a host of financial assets. Which of the following is/are included in the financial assets?

A
Land

B
Stocks

C
Bonds

D
All the above

Solution

Money acts as a store of value, where money functions by helping individuals to store their wealth in the form of money. Therefore, money acts as an asset that sustains value over a period of time because it is non-perishable due to which it includes a host of financial assets as all the financial assets can be hosted or stored in terms of money. Therefore, money includes a host of financial assets.
Question 4
1 / -0

Raising of margin requirement _______ the borrowing capacity.

A
reduces

B
increases

C
stabilizes

D
none of above

Solution

Margin requirement refers to the difference between the current value of the security offered for loan (called collateral) and the value of loan granted. By raising the margin requirement, the borrowing capacity of the borrower reduces as with the same amount of loan borrowed, the value of the loan decreases due to high margin requirement.
Question 5
1 / -0

According to new nomenclature ________.

A
$$M_{1}$$ = currency + demand deposits + other deposits with RBI

B
$$M_{1}$$ = Time liabilities

C
$$M_{1}$$ =Term deposits of more than 2 years

D
All the above are true

Solution

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.

In India, 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. According to the new nomenclature by RBI,

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.
Question 6
1 / -0

Money acts as a means of calculating relative prices of goods & services (True/False).

A
True

B
False

C
Can't Say

D
None of the above

Solution

True.
Money refers to a common medium of exchange that is issued under the law of government and acts as a legal tender for the whole country. As a measure of value, money functions by determining the value of goods and services in the economy. Money is taken as the common denominator while calculating relative prices of all goods and services in the economy. Therefore, money acts as a means of calculating relative prices of goods & services.
Question 7
1 / -0

Money's function as a medium of exchange means that

A
money is a common denominators for expressing the value of goods and services.

B
money can be sued to store wealth.

C
money serves as an acceptable means of payment.

D
money is a standard of deferred payment on exchange contracts extending into the future.

Solution

Money helps to facilitate trade because people in the economy generally recognize it as valuable. Money is called the medium of exchange because money is a widely accepted token that can be used for exchange of any good or service.
Question 8
1 / -0

Which of the following is / are non-currency forms of money?

A
Cheques

B
Credit cards

C
Debit cards

D
All of above

Solution

A cheque is a document you can issue to your bank. When you pay using a cheque, you are instructing your financial institution to give money from your account to the person that is depositing the cheque.
Credit cards allows you to buy goods and services and payment will be made in the future in installments.
Debit cards allow you to spend money by drawing on funds you have deposited at the bank.
Hence, option D is correct.
Question 9
1 / -0

Difficulty with barter system was

A
Exchange was difficult due to lack of double coincidence of wants.

B
Credit purchase was difficult as nature of commodity kept changing.

C
Evaluation of the commodity was difficult as the commodities exchanged were different.

D
All of the above

Solution

The problem with the barter system was that both the parties had to agree to sell and buy each other’s product. This is known as double coincidence of wants. In barter system, where goods are directly exchanged without the use of money, it is essential that there is a double coincidence. Double coincidence is a situation where two persons need or desire to have each other’s product.
Question 10
1 / -0

Unlike other invariant physical units of measures kilograms, meter, liters etc., the value of money changes from place to place and over time.

A
True

B
False

C
Partly false

D
None of above

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Re-Attempt Weekly Quiz Competition

Money and Credit Test - 19

Result

Money and Credit Test - 19

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SHARING IS CARING

Question 1

Political factors

Economic factors

Government factors

All of the above

Solution

Question 2

compares the desirability of alternative government policy outcomes

provides a framework within which we can study how some groups are better off than others

analyses the sources of improvements in the standard of living that result from favourable government policies.

is based on observed cause and effect relationship in the economy

Question 3

Land

Stocks

Bonds

All the above

Solution

Question 4

reduces

increases

stabilizes

none of above

Solution

Question 5

$$M_{1}$$ = currency + demand deposits + other deposits with RBI

$$M_{1}$$ = Time liabilities

$$M_{1}$$ =Term deposits of more than 2 years

All the above are true

Solution

Question 6

True

False

Can't Say

None of the above

Solution

Question 7

money is a common denominators for expressing the value of goods and services.

money can be sued to store wealth.

money serves as an acceptable means of payment.

money is a standard of deferred payment on exchange contracts extending into the future.

Solution

Question 8

Cheques

Credit cards

Debit cards

All of above

Solution

Question 9

Exchange was difficult due to lack of double coincidence of wants.

Credit purchase was difficult as nature of commodity kept changing.

Evaluation of the commodity was difficult as the commodities exchanged were different.

All of the above

Solution

Question 10

True

False

Partly false

None of above

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