Which of the following statements about money is incorrect?

Question

Question

The velocity of money is always directly proportional to GDP.
The barter system was inefficient due to the problem of double coincidence of wants.
Cheques are considered credit instruments and not legal tenders.
Helicopter money refers to an expansionary policy involving direct money distribution.

Answer 1

Option 1 is incorrect

Key Points

Option 1 is incorrect because the velocity of money is not necessarily always proportional to GDP. If money supply increases but transactions do not, the velocity can decline.
Option 2 is correct , as barter was inefficient due to the difficulty in finding mutual wants.
Option 3 is correct, as cheques are credit instruments and can be refused.
Option 4 is correct, as helicopter money refers to direct distribution of money to stimulate the economy.