Money as a store of value helps to shift purchasing power from present to future
True, Money has general acceptability and its value remains stable. So, it can be stored to transact with, in future.
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Use of money separates the acts of sale and purchase.
True, Money as a ‘Medium of Exchange’ enables a person to buy or sell at different points of time. Money works as a medium of exchange: As a medium of exchange, money has removed the major difficulty of lack of…
Money helps in capital formation and economic development of the economy
True, Money as a ‘standard of deferred payments’ simplifies the borrowing and lending operations, which help in capital formation and economic development.
Money supply includes demand deposits of the people with the Commercial Banks
True, Demand Deposits of people with commercial banks is one of the components of the money supply. The money supply consists of two components: 1. Currency with public 2. demand deposits of the public with commercial banks
Lack of double coincidence of wants exists in barter exchange as all commodities are not of equal value
False, It exists under barter exchange because of the difficulty in the simultaneous fulfillment of mutual wants of buyers and sellers. In a barter system, goods are exchanged for goods. The transaction happens when two people want to sell and…
M1 is also known as transaction money (True or False with Reasons)
True, As M1 can be directly used for making transactions. Money supply consists of: 1. Currency with the public 2. Demand deposits of the public with the banks. These two components of the money supply are also known as ‘Transaction…
M1 includes net demand deposits and not gross demand deposits
True, As net demand deposits do not include inter-banking claims. Demand deposits with commercial banks consist of: 1. demand deposits by the public 2. Inter-bank deposits M1 is the most liquid form of money supply. It only includes demand deposits…
High-powered money includes only the cash reserves of commercial banks
False, In addition to cash reserves of commercial banks, high-powered money also includes currency held by the public. What is high-powered money? High Powered Money is money produced by the RBI and the government. It consists of two components: 1.…
Money Supply is a flow concept (True or False with Reasons)
False, Money Supply is a ‘stock concept’ as it is measured at a particular point of time. Money supply consists of: Currency with public demand deposits of the public with the commercial banks thus when currency (notes and coins) quantity…
There is no common denomination under barter exchange to express the exchange ratios
True, All commodities are not of equal value and there is absence of common measure of value. Explanation:- In the Barter system, the goods are exchanged with goods. For example, A wants to sell its 1 Kg. rice and wants…