GSEB Money and Inflation MCQ — Class 12

What is barter?

Barter exchanges goods or services without a monetary intermediary.

Which problem requires each barter trader to want the other's goods?

Both parties must simultaneously want what the other offers.

Which money function makes buying and selling easier?

Money separates selling one's goods from buying other goods.

Which money function allows saving purchasing capacity for later?

Money can be held and used for later purchases, though inflation can reduce its purchasing power.

Which money function provides a common price yardstick?

Money units express and compare values of different goods.

Inflation is a sustained rise in what?

Inflation concerns a continuing general price rise, not one isolated price change.

What generally happens to money's purchasing power during inflation?

The same amount buys fewer goods when the general price level rises.

Inflation driven by excessive aggregate demand is called what?

Demand pressure beyond available supply can push prices upward.

Inflation driven by higher production costs is called what?

Higher input costs can raise prices from the supply side.

Which is an example of commodity money?

Commodity money uses a good itself as the accepted medium.

1. A farmer wants shoes but the shoemaker does not want grain. What is the obstacle?

1. Too much bank credit
2. An export subsidy
3. High literacy
4. Lack of double coincidence of wants

2. Money lets a farmer sell grain to one person and buy shoes from another. Which function operates?

1. Only income redistribution
2. Only a tax function
3. Medium of exchange
4. Only store of value

3. A household compares a ₹500 bag with a ₹700 bag. Which function is clearest?

1. Only wealth taxation
2. Measure of value
3. Only store of value
4. Only credit creation