Money
Commerce · 50 practice questions
Evolution of money; its forms and qualities; its functions.
- Discuss the origin of money.
- Analyse the forms and qualities of money.
- Appraise the functions of money.
Try a few questions
- Practice question 1
Some legal tender laws set limits on the amount of coins (as opposed to banknotes) that must be accepted in settlement of a debt, mainly to
- A.Avoid impractical situations where a large debt is settled entirely using a very large number of low-value coins
- B.Guarantee that only coins can ever be used for payment
- C.Eliminate the need for banknotes entirely
- D.Prevent coins from ever being used in any transaction
Show the answer
A. Avoid impractical situations where a large debt is settled entirely using a very large number of low-value coins
Limits on coin acceptance prevent impractical situations where large debts are settled using excessive numbers of coins.
- Practice question 2
A 'cheque' functions as a form of near money because it
- A.Has unlimited legal tender status everywhere
- B.Is itself a physical commodity with intrinsic value
- C.Is an instrument instructing a bank to pay a stated sum from the drawer's account, readily convertible into cash
- D.Can never be used to settle any form of debt
Show the answer
C. Is an instrument instructing a bank to pay a stated sum from the drawer's account, readily convertible into cash
A cheque instructs a bank to pay a stated sum, making it readily convertible into cash, hence 'near money'.
- Practice question 3
'Money illusion' refers to the tendency of people to focus on the
- A.Interest rate on their savings account exclusively
- B.Real, inflation-adjusted value of their income or wealth only
- C.Exchange rate of foreign currencies exclusively
- D.Nominal (face value) amount of money they have or earn, rather than its real, inflation-adjusted purchasing power
Show the answer
D. Nominal (face value) amount of money they have or earn, rather than its real, inflation-adjusted purchasing power
Money illusion is focusing on the nominal amount of money rather than its real, inflation-adjusted value.
More UTME Commerce topics
Practise with instant feedback
Answer questions one at a time and see the right answer and the reason straight away. Free to start.
Start practising