Tag: liquidity preference and profit

Questions Related to liquidity preference and profit

Which of these statements is true?

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. Precautionary demand for money is due to uncertainty of income and expenditure

  2. Uncertainty of future leads to precautionary demand for money

  3. Precautionary demand for money is related to income level

  4. All the three

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Correct Option: D
Explanation:

Precautionary motive of money refers to the demand for money to store it for future uncertainties. In other words, if money is demanded so that it can be kept for bad days then the demand of such money is known as precautionary money. In such cases, money functions as the store of value. Precautionary money balance in needed in a company so that it can be used if there is any uncertainty of receipt in the income and expenditure statement which means the company can make use of this money if the expenditure exceeds the income in a particular year. 

 

 

_________ affects the demand for money.

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. Real income

  2. Price level

  3. Rate of interest

  4. All the three

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Correct Option: D
Explanation:

The following variables affects the demand for money: 

1. Real income: It refers to the income which is used for consumption of commodities in the market. If it is high, then the demand for money will also be high and if it is low then the demand for money will also be low. 
2. Price level: If the general price level in the economy for all the commodities are high as in the case of inflation, then demand for money will be more as now more money will be required to purchase the same set of commodities and if the general price level in the economy for all the commodities are low as in the case of deflation, then demand for money will be less  as now less money will be required to purchase the same set of commodities.
3. Rate of interest: Rate of interest is the rate charged on the loans offered by the commercial banks to the people with or without any collateral. If rate of interest is high then it will decrease the real income with the people as a result of which purchasing power would be decreased which will decrease the demand for money in the economy and if rate of interest is low then it will increase the real income with the people as a result of which purchasing power would be increased which will increase the demand for money in the economy.

NABARD is the Apex Bank for _________ credit in India.

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. Real Estate

  2. Small Scale Industries

  3. Agriculture

  4. None of the above.

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Correct Option: C

Which of the following is NOT the feature of monopoly form of market?

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. Not elastic in nature

  2. Legal barriers

  3. Size of the market is too small

  4. All of the above

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Correct Option: A

In a free market economy, the optimal quality of goods and service is determined by ____________.

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. customers

  2. workers

  3. firms

  4. government

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Correct Option: A
Explanation:

Customer is one who purchase goods and services from the seller. Customer satisfaction is the main aim of the seller to earn goodwill in the market. Free market economy is one where there are no government or less government interventions. Hence, in a free market economy, the optimal quality of goods and service is determined by customers.

When elasticity of demand is equal to one, MR will be equal to _______.

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. one

  2. zero

  3. infinity

  4. negative

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Correct Option: B

Marginal Revenue will be negative if the demand is _________.

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. relatively elastic

  2. unitary elastic

  3. relatively inelastic

  4. perfectly elastic

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Correct Option: C

Marginal revenue will be positive if elasticity of demand is _________.

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. less than one

  2. more than one

  3. equal to one

  4. equal to zero

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Correct Option: B

Marginal revenue will be zero if the elasticity of demand is _________.

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. less than one

  2. greater than one

  3. equal to one

  4. equal to zero

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Correct Option: C

If a demand curve exhibits unit elasticity for all prices the MR curve ___________.

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. is identical with it

  2. lies below the demand curve

  3. is parallel to the x-axis

  4. is identical with the y-axis

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Correct Option: C