Basic Concepts of Macro Economics

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  • Q1

    What are the components of money in a modern economy?

    Marks:2
    Answer:

    1. Coins or metallic money,
    2. Currency notes or paper money
    3. Deposit money or bank money
    4. Credit cards

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  • Q2

    Mention any two functions of money.

    Marks:2
    Answer:

    Two major functions of money are:
    1. Medium of exchange: People holding money can easily exchange it for any commodity or service that they want.
    2. Measure of value: Money serves as a unit of measurement. Value of all goods and services is measured in terms of money

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  • Q3

    Define Business Cycle.

    Marks:1
    Answer:

    Business cycle is defined as recurring and fluctuating levels of economic activities that an economy experiences over a period of time.

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  • Q4

    What is Money?

    Marks:1
    Answer:

    Money is anything that is generally acceptable by people in exchange of goods and services. It is a medium of exchange agreed upon by an economy. At the same time, money is the measure and store of value.

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  • Q5

    What do you mean by Barter system?

    Marks:1
    Answer:

    Barter System is a system under which goods are exchanged for other goods. This is a commodity-for-commodity economy.

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