Question

Q4:As opposed to fiat money, commodity money

		a)is durable.
		b)must be acceptable to most people.
		c)is made of notes and coins.
		d)has intrinsic value.

Q5:

When inflation falls unexpectedly in the short run real wages _____ and so firms will provide _____ jobs.

		a)rise; more
		b)fall; fewer
		c)fall; more
		d)rise; fewer

Q6:

Which of the following is the M3 measure of the stock of money?

		a)Currency plus current deposits at commercial banks.
		b)Currency plus current deposits and other deposits at commercial banks plus deposits at other authorised deposit-taking institutions.
		c)Currency plus current deposits at non-bank, authorised deposit-taking institutions.
		d)Currency plus other RBA holdings

Answer 1

Q4. Fiat money is the currency that is issued by the government and regulated by the Central authorities

Commodity money is the money which is made up of physical object,metals such as gold, sea shells etc.

Option A is incorrect because Fiat Money is also durable as It can be stored and possess the characteristic of stability .

Option B is incorrect because since Fiat Money is issued by the government,it is more acceptable to the people .

Option C is incorrect because Fiat money is made up of notes and coins whereas, Commodity Money is made up of metals and commodities.

Option D is Correct because Commodity money has intrinsic value that is It has its own value even if it is not used as money. Whereas, Fiat money has no intrinsic value. It can be used only as a medium of exchange.

Q5. Real wages are the wages adjusted of wage is oinflation.Real wage is obtained as Nominal wages divided by the General price level.

Now, If there is a fall in inflation which means there is a decrease in general price level.

If the General level of Price decreases, Real wage will Increase as now there will be less adjustment needed for Inflation.

Since wages is a cost for firms, Increase in Real wage will increase the Cost for firms which will lead to less generation of jobs.

Therefore, the Correct answer is D) Rise, fewer.

Q6. M3 measure of stock of Money includes M1 ,M2 and near money. Here near money refers to the money that is not very liquid and which are more closely related to the finances of larger financial institutions and corporations than to those of small businesses and individuals .M3 includes M1, M2 and all other deposits of the Private non bank sector and foreign owned banks operating in the country

Therefore,the correct Option is C.

All other options are incorrect because none of them includes, deposits at non bank..