CA Foundation P4 · Chapter 8 · Question 1 of 15
The most fundamental function of money, which removes the need for a double coincidence of wants, is its function as a:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Medium of exchange
Explanation
Under barter, trade requires a double coincidence of wants. Money as a generally accepted medium of exchange removes this difficulty. Store of value, standard of deferred payment and unit of account are other functions.
More Money Market MCQs
- Q3According to Keynes, the three motives for holding money are:
- Q4In Keynesian theory, the 'liquidity trap' refers to a situation where:
- Q5Using Fisher's equation MV = PT, if money supply M = Rs. 500 crore, velocity V = 6 and volume of transactions T = 1,500 crore units, the…
- Q6According to the Cambridge cash-balance equation M = kPY, if k = 0.25 and nominal income PY = Rs. 8,000 crore, the demand for money is:
- Q7In the RBI's monetary aggregates, broad money (M3) is equal to:
