Financial Markets Past Paper PDF
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This document contains multiple choice questions (MCQs) covering financial markets, including functions of money, equilibrium output and monetary policy. The questions are designed to test understanding of fundamental concepts in economics. Key concepts include precautionary motives, transaction motives, medium of exchange, and store of value.
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## Unit 6 - Financial Markets **Q1** Vijay is saving money for his retirement. Which type of money function does the statement represent? * Medium of exchange * **Store of value** * Standard of value * Measure of value **Q2** As compared to barter system, transaction costs are lower in money-b...
## Unit 6 - Financial Markets **Q1** Vijay is saving money for his retirement. Which type of money function does the statement represent? * Medium of exchange * **Store of value** * Standard of value * Measure of value **Q2** As compared to barter system, transaction costs are lower in money-based transaction. State whether the given statement is True or False. * **TRUE** * FALSE **Q3** Which of the following motives reflects the statement: “Saving money for uncertainties”. * Preventive * **Precautionary motive** * Transaction motive * Speculative motive **Q4** When the quantity of output demand is equal to the quantum of output produced, then the output is considered to be at ______ level. * Disequilibrium * **An Equilibrium** **Q5** According to the classical theory, if money supply doubles then the price of money will _____. * Reduce * Triple * Remain the same * **Also double** **Q6** The IS curve shifts to the right, when there is ______. * An upward shift in the LM curve * A decrease in government spending * A downward shift in the LM curve * **An increase in government spending** **Q7** Money functions as a _______ when you pay for grocery at the supermarket. * **medium of exchange** * instrument of speculation **Q8** Currency with the public + Demand deposits in banks + Other deposits with RBI = _____. * M4 * M3 * **M1** * M2 **Q9** Decrease in taxes, results in increase in output which will eventually lead to increase in interest rate. State whether the given statement is True or False. * **TRUE** * FALSE **Q10** Demand for money is influenced by ______. * Preventive, speculative and transaction motives * **Precautionary, transaction and speculative motives** * Precautionary, speculation and transformation motives * Precautionary, specialisation and transaction motives
