Money and BankingClass 12 Introductory Macroeconomics Assertion & Reason Questions

Assertion (A): Economic exchanges without the mediation of money, known as barter exchanges, are inefficient because they presume the double coincidence of wants.

Reason (R): In a barter system, an individual with a surplus of a commodity must find another person who not only wants that commodity but also possesses a surplus of the commodity the first individual desires.

Assertion (A): Money acts as a store of value, allowing wealth to be stored for future use.

Reason (R): The value of all goods and services can be expressed in monetary units, which simplifies the calculation of relative prices.

Assertion (A): The speculative demand for money is inversely related to the market rate of interest.

Reason (R): When the interest rate is high, people expect it to fall, anticipating capital gains from holding bonds, and thus prefer to hold bonds instead of money.