Why would an individual increase his level of consumption during inflationary periods?
The real value of any amount saved falls over time
Interest rates are generally low
There are varieties of goods to buy
Wages and salaries stagnate during inflation
Correct answer is A
Because during inflation, much money is used to buy few goods. The value of money drops and the need to satisfy an individual's want rises. Money spent in buying basic goods increase.
Elastic supply
Joint supply
Exceptional supply
Competitive supply
Correct answer is B
Joint supply is where an increase or decrease in the supply of one good leads to an increase or decrease in supply of a by-product. For instance, an increase in the production of computers would lead to a corresponding increase in the supply of computer software, because a computer requires a software to operate.
Which of the following is an asset of a commercial bank?
Reserve funds
Shareholders capital
Customers' deposits
Treasury bills
Correct answer is D
Treasury securities include short term bills, intermediate term notes and long term bonds. These bonds are an asset for banks in the same way that loans are an asset. The bank will receive a stream of payments in the future.
Which of the following is a function of money?
Medium of Communication
Measure of securities
Store of Wealth
Discounting bills of exchange
Correct answer is B
No explanation has been provided for this answer.
The value of money is effected by the
Speculative motive
Price level
Precautionary motive
Intervention of development
Correct answer is B
No explanation has been provided for this answer.