MONETORY ECONOMIC

The functions of money are to serve as a

• resource allocator, method of counting and means of income distribution.

• measure of value, store of value and medium of exchange.

• measure of value, standard of deferred payments and income distributor

• unit of account, medium of exchange and resource allocator.

If every person is willing to accept money in payment, rather than goods and services, money serves as a

• medium of exchange

• unit of account.

• store of value.

• standard of deferred payment.

anything can be money if it acts as a:

• unit of account.

• store of value.

• medium of exchange.

• all of the above.

According to Bank Negara Malaysia (BNM), money supply consists of

• fiat money.

• narrow near money.

• broad near money.

• M1, M2 and M3.

Keynes believed that people wanted to hold money for three (3) purposes namely:

i) transaction

ii) precautionary

iii) speculative

iv) wealth

v) liquidity

• (i), (ii) and (iii).

• (iv) and (v).

• (ii), (iii) and (iv).

• all of the above.

The main job of Bank Negara Malaysia is to

• control the rate of growth of the money supply.

• manage the national debt.

• provide low-interest loans to all financial institutions.

• none of the above.

Which of the following statements is incorrect?

• The precautionary demand for money is not related to income.

• There is a precautionary demand for money because of uncertainty about the receipt of future income.

• The precautionary demand for money is unaffected by the opportunity cost of holding M1 balances.

• There is a precautionary demand for money because of unexpected expenditures.

Bank Negara Malaysia is often considered as bankers' bank because it

• demands more money than what it has.

• lowers the discount rate in order to restrict the money supply.

• holds bankers' reserves, provides banks with currency and loans, and clears their checks.

• has no monopoly power in printing paper currency.

As the number of goods and services increases, barter becomes

• easier because the chance of there being a double coincidence of wants increases.

• harder because the chance of there being a double coincidence of wants increases.

• easier because the chance of there being a double coincidence of wants decreases.

• harder because the chance of there being a double coincidence of wants decreases.

The speculative motive of demand for money depends mainly on the

• general price level.

• money supply.

• interest rate.

• level of income.