Regulated markets aim the development of the marketing structure to
(a) widen the price spread between the producer and the consumer
(b) narrow down the price spread between the producer and the consumer
(c) increase the non-functional margins of the traders
(d) maximize the non-functional margins of the commission agents
Solution: (b)
Regulated markets aim at the development of marketing structures to ensure remunerative prices to the producers and to narrow down the price spread between the producer and the consumer. It also aims at reducing the non-functional margins of the commission agents.
Which one of the following is an example of optional money?
(a) Currency note
(b) Coins
(c) Cheque
(d) Bond
Solution: (c)
On the basis of acceptability, money has been classified into legal tender and optional money. Legal tender money is enforced by law. Optional money is that money which may or may not be accepted as a means of payment; it has no legal sanction. Different credit instruments, like, cheques, bank drafts, etc., are the examples of optional money.
Deflation is a situation in which
(a) The value of money is falling.
(b) The price of goods is increasing.
(c) The value of money is increasing.
(d) The price level is stagnant.
Solution: (c)
Deflation is a situation where the prices of goods and commodities in a country go down. i.e., there is negative inflation. This is caused due to reduced supply of money/credit. Inflation reduces the real value of money over time; conversely, deflation increases the real value of money – the currency of a national or regional economy.
Which one is not a function of money?
(a) Transfer of value
(b) Store of value
(c) Price stabilisation
(d) Value measurement
Solution: (c)
Generally, economists have defined four types of functions of money which are as follows: (i) Medium of exchange (transfer of value) (ii) Measurement of value, (iii) Standard of deferred payments, and (iv) Store of value. Price stabilization is a function of monetary policy.
Variations in Cash Reserve Ratio and Open Market Operations are instruments of
(a) Budgetary policy
(b) Trade policy
(c) Fiscal policy
(d) Monetary policy
Solution: (d)
Bank Rate Policy, open market operations and variation of Cash Reserve Ratios, etc. are instruments of monetary policy. With the help of these instruments, the Reserve Bank of India controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability.
