money supply, banking & financial institutions section 8 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (a)

Generally, economists have defined four types of functions of money which are as follows:

1. Medium of exchange (transfer of value)
2. Measurement of value,
3. Standard of deferred payments, and
4. Store of value. Price stabilization is a function of monetary policy.

Answer: (d)

Companies issue debentures instead of shares to extend their business. These debentures are issue to borrow loans from the general public; interest is paid on the borrowed money to the debenture holders.

So a debenture holder is essentially a creditor who simply gives a loan to the company.

The Unique Selling Proposition (a.k.a. Unique Selling Point, or USP) is a marketing concept that was first proposed as a theory to understand a pattern among successful advertising campaigns of the early 1940s.

It states that such campaigns made unique propositions to the customer and that this convinced them to switch brands. The term was invented by Rosser Reeves of Ted Bates & Company.

Today the term is used in other fields or just casually to refer to any aspect of an object that differentiates it from similar objects. The term USP has been largely replaced by the concept of a Positioning Statement.

Answer: (d)

Gresham's law is an economic principle that states:

"When a government compulsorily overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation."

It is commonly stated as: "Bad money drives out good.”

Answer: (a)

International Development Association (IDA), is a part of the World Bank that helps the world’s poorest countries.

It complements the World Bank’s other lending arm— the International Bank for Reconstruction and Development (IBRD) which serves middle-income countries with capital investment and advisory services. IDA was created in 1960.