Deck 4: Money and Monetary Policy: Understanding the Characteristics and Functions of Currency and Government Securities

Question 1

It implements monetary policy of the country:

A)Central bank
B)Commercial banks
C)Specialized bank
D)Finance department

Answer 1

Central bank

Question 2

Which property paper money does NOT Possess?

A)Acceptability
B)Divisibility
C)Durability
D)Portability

Answer 2

Durability

Question 3

Anything used as money must be:

A)Fixed in value
B)Fixed in supply
C)Legal tender
D)Readily acceptable

Answer 3

Readily acceptable

Question 4

What will promote savings?

A)Increase in credit facilities
B)Increase in taxation
C)Increase in personal incomes
D)Rising prices

Question 5

Liquidity of a monetary asset means:

A)Velocity of circulation of money
B)Easy availability of money
C)Ready acceptability of monetary asset
D)The monetary asset has lost it value

Question 6

Barter means:

A)Trade through metallic money only
B)Trade of goods only excluding services
C)Trade of very low value goods
D)Trade without use of money

Question 7

Government securities:

A)Mean currency
B)Are near money
C)Are bought and sold on stock exchange market
D)(b) and (c) of above

Question 8

Which is the characteristic of a good money:

A)Has good design
B)Has high value
C)Has a fixed value in gold
D)Is readily accepted by people

Question 9

This is NOT money

A)Currency
B)Prize bond
C)Demand deposit in a bank
D)Coins

Question 10

which of the following is true for Cross cheque?

A)Is issued only by a business firm
B)Is not accepted by banks
C)Ensures immediate payment of cash to the holder
D)None of the above

Question 11

This is a characteristic of good money:

A)High intrinsic value
B)Liquidity
C)Attractive design
D)Easy to duplicate

Question 12

This is a characteristic of good money:

A)High intrinsic value
B)General acceptability
C)Attractive design
D)High purchasing power

Question 13

It is a kind of money:

A)Credit money
B)Discredit money
C)Trust money
D)False money

Question 14

It is included in kinds of money:

A)Legal money
B)Credit money
C)Token money
D)All of the above

Question 15

Treasury Bill is a document used for:

A)A short-term loan to the exporter
B)A long-term loan to the government
C)A short-term loan to the government
D)A short-term loan to a govt. employee

Question 16

Which does NOT represent a method of payment?

A)Cheque
B)Saving certificate
C)Currency note
D)Bill of exchange

Question 17

Which is NOT a desirable characteristic of money?

A)Portable
B)Uniform
C)Easily recognized
D)Easily duplicated

Question 18

According to Keynes people demand money for purposes (motives):

A)1
B)2
C)3
D)4

Question 19

Speculative demand for money depends upon:

A)Income
B)Investment
C)Rate of interest
D)Central bank

Question 20

If money supply in a country decrease:

A)Prices will rise
B)Prices will fall
C)Rate of interest falls
D)(b) and (c) of above

Question 21

In the equation MV = PY, V represents:

A)Value of money
B)Velocity of circulation of money
C)Variation of nation income
D)All of the above

Question 22

In the equation MV = PY, M represents:

A)Money supply
B)Money demand
C)Maximum output
D)Minimum output

Question 23

According to Keynes, motives for holding money are:

A)Two
B)Three
C)Four
D)Five

Question 24

Quantity Theory of Money explains that:

A)Value of money depends upon quantity of money
B)Rate of interest depends upon quantity of money
C)Quantity of investment depends upon quantity of money
D)Supply of money depends upon quantity of money

Question 25

Cross cheque has a cross sign (X) in the:

A)Right side upper corner
B)Right side lower corner
C)Left side upper corner
D)It does not have cross sign (X)