Question : The measures of money supply, namely, M1, M2, M3 and M4, in this order, indicate:
Option 1: decreasing order of earning
Option 2: increasing order of liquidity
Option 3: decreasing the order of liquidity
Option 4: decreasing order of store of value
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Correct Answer: decreasing the order of liquidity
Solution : The correct option is decreasing the order of liquidity.
The measures of money supply M1, M2, M3, and M4, in that order, indicate a decreasing level of liquidity. M1: This includes the most liquid forms of money. It consists of physical currency (like coins and notes) held by the public and demand deposits (checking accounts) in banks. M2: This includes M1 plus additional forms of money that are not immediately spendable. It encompasses savings deposits, time deposits, and money market funds. M3: This is a broader measure and includes M2 along with large time deposits, institutional money market funds, and other larger liquid assets. M4: This is the broadest measure and includes M3 along with all other financial assets held by the public, including government securities.
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Question : Which of these measures of money supply is referred to as the aggregate monetary resources?
Option 1: M4
Option 2: M1
Option 3: M2
Option 4: M3
Question : Due to which of the following reasons can money be differentiated from other physical assets that can perform the function of store of value?
Option 1: Money has common acceptability
Option 2: Money possesses liquidity
Option 3: Money is neutral
Option 4: Money is easy to store
Question : Which of the following statements is true? A) Money Supply is a stock concept B) Currency and Coins with the public are not included in the M3 measure of money supply
Option 1: Only A
Option 2: Neither A nor B
Option 3: Both A and B
Option 4: Only B
Question : The velocity of circulation of money is _______.
Option 1: k times the value of transactions
Option 2: the number of times a unit of money changes hands during the unit period
Option 3: the number of times the same transactions can be repeated by a given volume of money supply
Option 4: the ratio of money balance to the value of transactions
Question : It is possible to derive the value of the Gross Domestic Product (GDP) of a country. Which function of money is applicable here?
Option 1: Store of value
Option 2: Unit of account
Option 3: Standard of deferred payments
Option 4: Medium of exchange
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