Transaction Demand for Money

Q.

State the four functions of money. Explain any one of them.

Q.

The opportunity cost of holding money is:

1. The car one could have purchased

2. The land that one could have purchased

3. The interest on alternate investment

4. The returns on mutual funds one could have started

Q.

What Are the Types of Circular Flow of Income?

Q. The demand for money arises out of the need to make payments for goods and services.

1. transaction
2. speculative
3. precautionary
4. excess

Q. Explain the 'store of value' function of money. How has it solved the related problem created by barter ?

Q.

Demand for money balances is called ___ .

Q.

What is the major difference between money markets and capital markets?

Q. The number of times a rupee is used in transactions is called of money.

1. speed
2. velocity
3. change
4. force

Q.

Q. The ability to convert one asset to another easily with no friction is called .

1. fluidity
2. liquidity
3. portability
4. uniformity

Q.

If money demand equals Rs. 50 and the velocity is equal to 3, what is the total amount of transactions?

1. 53

2. 50

3. 100

4. 150

Q. All the human activities undertaken for earning money and spending money are considered as ___ activities

1. Economic
2. Politival
3. Cultural
4. Environmental

Q. Extension or contraction of quantity demanded of a commodity is a result of a change in the ________.

1. unit price of the commodity
2. income of the consumer
3. tastes of the consumer
4. cliamte of the region

Q.

Q. In your opinion between formal and informal credit, which one is superior and why?

Q.

If k is 0.5 and T is 200, what is the velocity of money?

1. 400

2. 100

3. 2

4. 0.5

Q. Explain briefly, the law of supply.

Q. Distinguish between:
Extension of supply and Contraction of supply.

Q.

The ___ demand for money arises out of the need to make payments for goods and services.

Q.

4. Mr. Mehra buys a house for Rs. $2,20,000$ by taking loan from a finance company. He pays Rs. $40,000$ cash as down payment and agrees to pay the balance as annual installments of Rs. $10,000$ plus $10\%$ on the unpaid amount.

(i) In how many years will he clear the loan?

(ii) How much will the house cost him?

Q. The following statements true or false? Give reasons
Intermediate goods have a derived demand, while final goods have direct demand.

1. True
2. False

Q.

If the amount of transactions that have taken place is Rs. 200, and k is 0.5, what is total money demand owing to the transaction motive?

1. 400

2. 200.5

3. 200

4. 100

Q. Give any two examples of informal sector of credit.

Q.

The number of times a rupee is used in transactions is called:

1. Speed

2. Velocity

3. Change

4. Force

Q. Answer briefly:
What is a Demand Draft?

Q.

The ability to convert one asset to another easily with no friction is called:

1. Fluidity

2. Liquidity

3. Portability

4. Uniformity

Q. How does the nature of a good affect its elasticity of demand?

Q. Which among the following is a type of investment expenditure?

1. Real investment
2. Induced investment
3. Financial investment
4. All of the above

Q. The following statement is true or false? Give reasons.
Final goods include only those goods which are consumed by the households.

1. True
2. False

Q. The elasticity of supply is defined as the.

1. Responsiveness of the quantity supplied of a good to a change in its price
2. Responsiveness of the quantity supplied of a good without in its price
3. Responsiveness of the quantity demanded of a good to a change in its price
4. Responsiveness of the quantity demanded of a good without change in its price